Manage Money

Free Trials and Subscription Traps Might Be Costing You Big Money

Published

2 years ago

May 27, 2021

Subscription traps are an increasingly popular way for companies to earn money from unsuspecting customers, creating an untrustworthy ecosystem that you either have to navigate and risk losing money or just avoid altogether.

But it doesn’t have to be this way!

Contents

Subscription Traps: The Scourge of The Online Shopping World

Beware The Offer That Leads to a Subscription Trap!

Could You be a Victim of These Subscription Traps?

Getting Out Can be Difficult

How Can You Protect Yourself Without Having to Compromise?

Go Virtual?

Sources

Subscription Traps: The Scourge of The Online Shopping World

There is no denying the benefits that digital marketing has brought to our daily lives over the past decades by making our lives easier and opening the doors to a wider offering of products and services… As well as letting you save money.

This was especially clear during the worst part of the Covid-19 pandemic as we saw ourselves forced to stay at home and avoid crowded places due to voluntary or enforced social distancing practices.

However, the digitization of the economy has also given birth to what is commonly known as “subscription traps”.

You surely have been in this situation: You are planning to acquire a product or service and see an incredible offer in the form of a discount, free shipping, free trial, or any other benefit you want to take advantage of.

Beware The Offer That Leads to a Subscription Trap!

Most of these subscription traps won’t happen only with the click of a button but will require you to add your credit card details and accept a subscription contract you might not have been interested in otherwise.

While some sites might be clearer than others about their intention to bill you for a monthly or yearly subscription, they usually are not.

Millions of internet users get unwittingly locked into such subscription contracts every year, either due to not being aware that they would be charged recurrent payments or just plain forgetting to cancel their “free trial”.

According to a Better Business Bureau (BBB) investigation initiative in 2018, the Federal Trade Commission says that more than $1.3 billion were lost due to such traps during the past 10 years, a number that grew to $1.4 billion in 2020. Doesn’t sound good for something that you expected to “save money” with, right?

It is important to note that these numbers only account for the number of cases that the FTC has identified, acted on, and settled for, which means the number is more than likely to be considerably higher.

While there are platforms that will help you see if you fell into a subscription trap, one of the best ways to keep up on your spending is by using a service like Acorns Spend, which will show you how the money you have flows every month.

Take some time to review your expenses – and avoid the subscription trap!

Could You be a Victim of These Subscription Traps?

If you haven’t fallen for one of these schemes so far, congratulations!

However, you might not be in the clear as cases continue to increase due to how easy it is for companies to make quick money using this scheme.

It is not only older or younger people falling for these traps. The report by the BBB shows that complaints about subscription traps are spread fairly across all age groups, showing an increase during the 30-39 range.

While it is easy to dismiss the notion of subscription traps if you don’t purchase goods or services from unknown vendors, free trials offered by companies in the streaming, cloud services, and software industries make use of these same tactics.

Getting Out Can be Difficult

The information about the subscription doesn’t necessarily need to be hidden from you… Companies can expect you not to cancel your subscription due to forgetfulness.

Asking for a refund in such cases can seem like an unnecessary hassle, is it worth it having to deal with a customer service representative for $10?

After all, you knew you had to cancel prior to a certain date… Well, think about it from the company’s perspective: If thousands or millions of customers think the same way, it is just good business.

This doesn’t mean that all free trials are intended to be a scam and you should avoid all of them. Companies can (and a lot of times are) genuinely interested in letting you try the product and decide if it is right for you.

It can also be a good practice for you to try before acquiring something you are not familiar with, be it to save money or just because it seems like a better option altogether.

How Can You Protect Yourself Without Having to Compromise?

The “easiest” option that comes to mind when most people think about subscription traps is not to make use of free trials or benefits requiring them their credit card information. Another approach is reading all the fine print or even setting a reminder to cancel the subscription they will acquire.

While these solutions might work for some, having to compromise in such a way might be more of a pain than anything else. You can miss part of the text or get confused by terminology, might really need the service for just a while, or might just miss the reminder.

“I will just demand a refund if I forget to cancel”, is another approach people might consider but can fail in a lot of cases. After all, discerning between those companies that will provide you a refund if you ask for it and those who won’t, might not be the easiest thing to do.

Well, if online shopping powered by technological advancement is causing this increasing struggle to those taking advantage of it, maybe technological advancement can solve it too.

Digital payment solutions are now more accessible than ever, which is why services like Venmo, PayPal, and Payoneer have become more popular over the years.

The use of gift cards has also been on the rise as an alternative to the use of credit cards when online shopping, providing a higher control over how much you are interested in paying and protecting your private information.

However, not all platforms might accept gift cards from all vendors, which can result in you losing time or money when you should be saving money.

The use of digital payments has also given rise to solutions like Privacy.com, which allows you to create virtual credit cards with different conditions depending on your needs.

In the case of fighting subscription scams, you could create a virtual card that will only allow for one payment if you require the service or the charge of a small fee for the verification of the card, which should allow you to get the benefit without being charged after the trial.

By using this kind of solution, you get an extra layer of protection when purchasing from new vendors you might not be familiar with, as they never have access to the information of your real credit card, preventing any malicious actor from taking control of your funds or charging you more than intended.

Go Virtual?

Another great use of virtual credit cards we have recently found out is for the payment of subscriptions that offer you a lower price for the first months, just to make you find out you will be charged more afterward.

By setting a monthly limit to the price you are interested in paying, you can avoid being charged more at a random month you were not expecting the value to increase.

There is always risk involved when purchasing something online but you should not just fear them and avoid taking advantage of the benefits of online shopping. After all, some of the best deals for our wallets can be found on the internet, right?

Well, by taking certain measures you can reduce the risk of being charged for something you didn’t intend to buy, all while getting those sweet deals you set your eyes on and allowing you to save money!