A newspaper executive once confided in me that the company’s goal was to get people to subscribe with credit cards so the paper could automatically renew the subscription annually.
It’s a business model that applies to virtually all companies that rely on subscriptions for revenue.
And a key reason many firms like it is because people often forget they’ve subscribed and don’t pay attention when subscriptions automatically renew.
Nowadays, with streaming services on the rise, this is a practice that consumers need to be especially wary of.
Researchers at Stanford and Texas A&M used credit card records to spot the pattern.
They found that when credit cards were lost or expired, and when card issuers would ask if the cardholder wanted to maintain various regular payments, many people canceled their subscriptions.
Which is to say, these subscriptions were largely out of sight and out of mind. But when reminded that they’re making monthly or annual payments, many consumers choose to clean house, subscription-wise.
NPR spoke with one of the Stanford researchers. Neale Mahoney said he signed up for NBC’s Peacock streaming service to watch a single season of soccer.
“When I signed up last fall, I intended to cancel at the end of the season in May,” he told the network. “But of course when it came to the summer, I forgot to cancel and I realized I paid for three extra months.”
It’s an all-too-common error on consumers’ part.
You sign up for multiple subscription services and you simply lose track of things. Before you know it, you’re paying every month for things you may neither want nor use.
Do what I do: Create a page in Google Docs that lists all your subscriptions and their monthly or annual costs. Check the list from time to time to determine if you still want the service.
You can also check your credit card statements on a regular basis. Unfortunately, many people choose not to do so.
The Federal Trade Commission has proposed new rules aimed at making it easier to cancel unwanted subscriptions.
Business trade groups are fighting the rules.
Which tells you everything you need to know.
