Just like negative option marketing, otherwise known as “unauthorized charges,” automatic contract renewals tend to get consumers hot under the collar.
Jamie, of Raleigh, N.C., is upset at Consumer Reports for auto-renewing his subscription to its magazine. He says he cancelled the automatic renewal a year ago, noting that he hadn't opted for auto renewal in the first place. He said he also disabled auto renewal from his online subscription, but was charged for a new subscription anyway.
“I caught the transaction two days before it was supposed to post to my checking account and immediately went to their website to cancel,” Jamie told ConsumerAffairs.com. “But their website wouldn't allow me to cancel. It gave the message 'try again later' each time I attempted to cancel. So I looked for contact information and couldn't find any until I Googled it. I demanded a refund in an email to CR."
Regular source of grievances
Classmates.com, now known as Memory Lane, has long used auto renewals for its services and that practice has been a regular source of grievances.
“I signed up for Classmates last year, a special one year deal for $9.99,” said Thelma, of North Andover, Mass. “I was automatically renewed for another 12 months without being notified. They have taken $39.00 from my Bank of America checking. I'm trying to get my money refunded and have my name taken off the site. I'm not having good results. I want my money back.”
It only seems fair that consumers be given the chance to decide whether or not they want to continue paying for a service for another year. Should there be laws requiring that they be given that opportunity?
While that issue is debated, it's worth noting that there is legal precedent for declaring automatic renewal policy “deceptive.”
In 2006 the state of Iowa took against against Time, Inc., claiming its auto renewal policies resulted in consumers being charged for magazines they didn't want. Twenty-two other states joined Iowa in the suit. Not all of the states had laws on the books specifically outlawing auto renewal policies. The contention was simply that auto renewal polices are, in and of themselves, deceptive business practices.
As a result of the action, Time agreed to change several key marketing and billing practices.
"One of our top concerns was that Time Inc. quietly initiated an automatic renewal method without clearly notifying consumers that they had to cancel a subscription if they didn't want it renewed," Iowa Attorney General Tom Miller said at the time. "Some consumers' subscriptions were renewed despite their desire to let them end, and then some consumers faced heavy-handed collection efforts by Time Inc. when they refused to pay."
Altering long-standing practice
The states alleged that the automatic renewal method altered a long-standing industry practice of subscriptions being renewed at the end of a subscription period only if the customer affirmatively requested a renewal.
The states that were party to the settlement with Time include: Alaska, California, Delaware, Florida, Hawaii, Illinois, Iowa, Maine, Maryland, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Virginia, West Virginia and Wisconsin.
For consumers who believe they have been unfairly auto renewed for products and services they do not want, it means their argument was made and won five years ago. They should immediately contact their state attorney general's office with their issue, and specifically refer to the 2006 Time, Inc., settlement with 23 states. Consumers living in one of those states might have even more leverage.
In 2006, Time Inc. agreed to refund $4.3 million to more than 108,000 eligible consumers who made payments for magazine subscriptions that were automatically renewed between 1998 and May of 2004.