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The federal government is set to introduce a ban on “subscription traps” and the practice of drip pricing in Australia.
Assistant Minister for Competition, Andrew Leigh, announced that the Labor party plans to present new legislation to Parliament targeting these deceptive practices.
Leigh highlighted that subscription traps have affected an overwhelming majority of Australians, with three out of four individuals experiencing difficulties with subscriptions.
“Many Australians have encountered challenges when trying to cancel a gym membership or terminate an online subscription,” Leigh remarked today.
“There are instances where signing up can be done effortlessly online, yet canceling requires a phone call,” he added.
“In other cases, we’ve heard about subscriptions that can be started immediately online, but then if you want to cancel, it takes 28 days.”
The Consumer Policy Research Centre estimates subscription traps are costing Australians $46 million a year.
“There’s a place for subscriptions in a modern economy, but they should be as easy to get out of as they were to get into,” Leigh said
“A simple rule for businesses: if you can’t cancel a subscription through the same process that you started the subscription, then perhaps there’s a subscription trap going on.”
The government is also looking to ban drip pricing, where additional costs are added during the purchasing process.
“In one instance, a concert ticket that was advertised for $89 ended up costing $129 once additional surcharges were added in,” Leigh said.
“We had the case of a home internet plan which was advertised for a low introductory price, until the person went through and discovered that there was a non-negotiable $79.99 fee that was going to be added through the process.
“Right now, firms that don’t engage in drip pricing are finding themselves undercut by rivals who are offering a beginning price which isn’t actually the ending price.”
Leigh said the government would confirm a timeline for the reforms soon.