How much are your Internet subscriptions costing you each month?
A real godsend for companies, subscriptions for a few dollars collected each month on our credit cards end up being expensive.
At least 85% of Canadians subscribe to at least one subscription, according to an Angus Reid survey.
Whether for music, streaming, newspaper or shopping services , these subscriptions that we take out online for a few dollars a month and then forget about accumulate on our credit cards without us paying too much attention to them and end up being expensive.
Vanessa Bowen, who provides mentorship in personal finance management in Mississauga, Ont., says that last year, during a meeting with a client, the two women discovered on the lady's credit card statement a monthly subscription to Spotify which seemed to have popped up out of nowhere and which the client had been paying for for months.
The lady, who does not use the online music service Spotify, then remembered that she had accepted this subscription in the past for an ex-spouse. She was spending all that money on someone who wasn't even in her life anymore, Vanessa Bowen points out.
However, this lady is far from the only one to have made this kind of discovery on her credit card statement.
Today it is very easy to subscribe to an Internet service using of a credit card.
According to an Angus Reid poll conducted in October, more than 85% of Canadians subscribe to at least a monthly subscription.
Although the principle of subscription is far from new – it's been done for decades – the advent of Internet subscriptions for a few dollars a month with just a few clicks has propelled this business practice into unsuspected spheres for businesses.
Financial services company UBS predicts that the global subscription market will reach US$1.5 trillion by 2025, more than double the US$650 billion it was in 2021.
< p class="e-p">In addition to being easy for the buyer to contract with a simple credit card number, the subscription constitutes a regular flow of money for the companies which can moreover automatically renew the subscriptions on a regular basis without the customer having to do anything or even being informed.
The problem is that those subscriptions for music, recipes, movies, news or monthly boxes of surprise products accumulate and many people end up forgetting them while continuing to pay for them.
“We use it for a few weeks, but then we forget about it. […] But this charge is still present on our credit card and still has an impact on our finances. »
— Vanessa Bowen, Chartered Professional Accountant and Founder of Mint Worthy Co
The service of online streaming Netflix lost subscribers in the first quarter of 2022.
What's more, once you have a subscription, it's very hard to part with it, she adds. People like the idea of using a service whenever they want without worrying about the financial aspect each time.
But reality eventually catches up with consumers. Especially in times of high inflation. These subscriptions of a few dollars, in addition to adding up each month on credit card statements, are often increased using an email that ends up in the virtual trash. So that after a few years, these subscriptions can represent a very heavy financial burden to bear for our personal finances.
The economic context being more difficult today, more and more of Canadians mentioned in the Angus Reid study having canceled subscriptions in the last six months.
According to Adam Levinter, founder and CEO of Toronto-based Scriberbase, and author of The Subscription Boom[The subscription boom is the 2010 wave of e-commerce brands going direct to consumers through social media and internet advertising – like Dollar Shave Club, which delivers toiletries by courier – which sparked this surge in popularity of subscriptions.
Today, the vast majority of households subscribe to Netflix or Disney Plus, while others receive a monthly mystery box filled with cosmetics, teas and coffees in original flavors, or boxes of meals containing all ingredients already measured.
Over the past decade, more and more companies have gone down this path, not just commercial companies electronics, but also platform, software and service companies, says Levinter.
“This is a fundamental change in the way companies do business. And at the same time, it's a shift in how consumers interact with businesses.
—Adam Levinter, Founder and CEO of Scriberbase
Businesses are more interested than ever in building long-term relationships with the consumers who buy their products. Where previously it was up to businesses to keep customers coming back for repeat transactions, the focus on subscriptions has changed that.
In the case of a subscription, the responsibility now rests with the customer, so the company assumes that the customer is satisfied with the product or service and will continue to charge for it in perpetuity, unless the customer decides to cancel their subscription, says Levinter.
However, it is not always as easy as you think to cancel a subscription that only took us a few seconds to buy on a smartphone. If consumers are very attached to their subscriptions, companies are even more attached to them because of the large sums they represent and some make it very difficult to put an end to them.
Vancouver woman recounted last year on the show CBC's The Cost of Living that she was forced to cancel her credit card due to the overly complex process of unsubscribing from a service she no longer wanted.
A Canadian company pleaded guilty last year to tricking buyers into a monthly subscription for dietary supplements. The company was fined $15 million following a Competition Bureau investigation. #x27;subscription and time slots, believes Kenneth Whitehurst, executive director of the non-profit Consumers Council of Canada, in an email to CBC News.
Subscriptions to gaming services, for example, provide access to a catalog of hundreds of games, movies and entertainment for a fixed amount each month.
The fact that subscriptions can be canceled easily is not a requirement in Canada. It's usually related to the usability of the website, Whitehurst points out.
The council doesn't get many complaints about online subscriptions, but I think people's concern is that they allow term agreements with recurring payments, unintentionally.
< p class="e-p">There needs to be clearer rules around cancellation, in general, for low-value recurring subscriptions, argues Adam Levinter, founder and CEO of Scriberbase.
< p class="e-p">In the United States, horror stories led the Federal Trade Commission to tighten rules in 2021, after several high-profile companies – from Sirius XM radio to Apple – faced lawsuits from customers who claimed they had made subscriptions too difficult to cancel or engaged in suspicious auto-renewal practices.
In Canada, citizens trapped in this type of subscription do not have to cut their credit card. There's an easier way to deal with unwanted subscription fees: it's to ask their credit card company to issue a chargeback, an operation where a bank transfers x27;money from the merchant's account to the customer.
When a merchant refuses to reimburse a customer who is within his rights, the latter can indeed dispute the transaction by contacting to the credit card company. The institution then issues a chargeback by returning the money to the client.
However, companies that agree to transact by Visa or Mastercard, for example, are responsible for keeping their chargebacks below a certain threshold. If chargebacks increase, that's bad news for the business.
You may have your card processing interrupted, which means that in As a business, you will no longer be able to process Visa or Mastercard transactions, and without the ability to process transactions, you have no business, says Adam Levinter, founder and CEO of Scriberbase.
Consumers should regularly check their credit card statements and engage in a regular analysis of their personal finances in order to maintain control over their expenses and recover for other uses these sums of money that evaporate every month from our wallets, advises Vanessa Bowen.
With information from Jenna Benchetrit