How FTC Enforcements Are Creating Subscription Management Opportunities for FIs

We recently blogged about Super Apps and the role they play in successful customer acquisition and retention for financial institutions. One of the Super App services we highlighted as important to consumers is subscription management.

Up to 80 percent of U.S. consumers overpay on their monthly bills and one major contributor is unwanted or unused recurring subscriptions. At one time or another, all of us are guilty of falling for the “free” trial. Maybe there’s a movie or buzzy new TV series on a streaming service that isn’t currently part of our regular monthly bills, but a teaser encourages us to “sign up for our free trial for 14 days and get unlimited access to your favorite shows and movies.” So, we enter our information, watch the movie or TV series and maybe enjoy the additional, unlimited access for the 14 days, and then we cancel it.

Except that we don’t.

In most cases, the subscription automatically activates and may go unnoticed for months, even years, before consumers notice it or take steps to cancel it. Even when a consumer wants to cancel a subscription, the process is often difficult by design. The lack of a clearly stated “opt in” function and the ease with which consumers are automatically subscribed to services has actually triggered the attention of the Federal Trade Commission (FTC).

In October 2021, the FTC announced that it is targeting “Illegal dark patterns that trick or trap consumers into subscriptions,” and requiring that sign-ups be “clear, consensual and easy to cancel.” In an effort to crack down on the problem, the FTC shared three requirements for subscription businesses:

1. “Disclose clearly and conspicuously all material terms of the product or service, including how much it costs, deadlines by which the consumer must act to stop further charges, the amount and frequency of such charges, how to cancel, and information about the product or service itself that is needed to stop consumers from being deceived about the characteristics of the product or service.”

2. “Obtain the consumer’s express informed consent before charging them for a product or services.” 

3. “Provide easy and simple cancellation to the consumer.” 

While the FTC’s initiative is a good start, there is a role for banks and credit unions to play in helping their customers and members navigate subscription cancellations and management.
Traditionally, when a consumer wanted to cancel a service but was unable to do so, they would contact their financial institution to initiate a dispute. FIs saw this (and some still see this) as a source of fee income, charging a dispute fee for each individual request. This is entirely the wrong mindset for FIs to have.

In today’s competitive market, user experience and customer stickiness are paramount and subscription management is just one way for FIs to strengthen their existing customer and
member relationships. Financial institutions need the capability to help customers and members easily unsubscribe with the click of a button – all within their banking app. In doing so, they’re providing a service that generates immediate, meaningful value to consumers’ wallets, saving them money that can then be redirected toward other banking products like savings accounts, retirement accounts, college savings, etc.

At ApexEdge, we have proven experience in helping financial institutions better engage with their customers through the digital channel – and do it at scale. To learn more about how your institution can start down the Super App pathway, contact us.