Online subscriptions payments and renewals in the EU explained

Technology has made a lot of companies move their businesses online. Even though most of them still run physical offices, they have online facilities that cater to those who prefer the convenience offered by the technology. There are some businesses, however, that can only offer their services online, such as subscriptions. 

It is important for consumers to understand what happens during subscription payments and renewals, especially the information that might be hidden from their view. Unfortunately, the harsh truth is that many businesses have been engaging in unfair commercial practices through subscriptions. 

This has led the European Union (EU) to regulate the practice of digital subscriptions. Even payment service providers (PSPs), like credit card companies and eWallets like PayPal, Google Pay, Sofort, and others have an obligation under the Payment Service Directive (PSD) to ensure that consumers understand the exact amounts they are agreeing to pay. 

For instance, Sofort is used by consumers to pay for goods and services directly from their bank accounts. Because it is convenient and easy to use, many businesses in Europe now use it to facilitate payments. It’s even spread to the gaming and entertainment industry and is used by Sofort casino platforms to facilitate both payments and withdrawals. 

Many players actually prefer this method because it does not ask you to go through a long registration process. All you need to start using it is a valid bank account with one of the many banks the service supports. 

As digital services have increased in the EU, there’s been a concomitant rise in online subscriptions. Almost every digital service, from streaming platforms to software applications, has subscription payments. Because businesses have not been transparent enough in how they manage subscriptions, especially in the information they make available to consumers, there are EU consumer protection laws now in place to regulate subscription contracts. These laws have several requirements that must be met by businesses to address the issue of lack of transparency and the frequent use of subscription traps and other scams. 

The Unfair Commercial Practices Directive requires businesses to disclose to consumers what the total cost of the subscription is, how often they will have to make payments, and whether there are any additional charges so that they can make informed decisions and avoid disputes later on. On top of this, customers have to give their consent before any payment is processed from their accounts. Normally, consent is given by clicking a corresponding checkbox or an Agree and Pay button after reviewing the subscription’s terms and conditions.

It is common practice for businesses to have automatic subscription renewal policies for their online subscriptions, but there are some businesses that are using these policies as a way to get money from consumers. The Consumer Rights Directive (CRD) exists to ensure fairness whenever companies try to use unconventional means of payment. Consumers must be informed, through confirmation emails, within a set number of days about the upcoming renewal so that they have enough time to cancel the subscription, in case they wish to do so before money is transferred from their accounts. 

In the event that consumers wish to cancel their subscription, they should be able to do so without being unnecessarily burdened by the procedure or without having to incur hidden fees. EU consumers have a right to withdraw from a subscription contract only once at the beginning of the contract, including a free trial, provided that they have been clearly informed of their right to do so. 

They have a 14-day cooling-off period, during which they can cancel the subscription, even if the service has already started. The reason why consumers are given this right is for them to get a clear understanding of the services they are receiving and if they need them since the contract is entered into online. After the initial right, consumers do not have an additional right to cancel their subscription after the free trial period comes to an end or when a paid subscription renews automatically. 

Consumers also have the right to a guarantee of a minimum of two years if whatever they have purchased is not working as expected or the service is not being delivered as advertised. If the supplier is not able to fix the problem free of charge and within a reasonable period, the consumer can ask for the price to be reduced, or they can terminate the contract.

The introduction of directives relating to consumer contracts has helped minimize the subscription traps that consumers are falling prey to every day. If consumers become fully aware of their rights, they will no longer fall victim to these traps.

The editorial unit