Dear Liz: I paid for several magazine subscriptions online. At the end of the transaction, I received notice that I had also been signed up for automatic renewal. While I will be notified prior to the end of the current subscription period and given the opportunity to cancel the subscription, this seems like an underhanded way of subscriptions being renewed.
Answer: Many companies in recent years have adopted automatic renewal as a way to take advantage of customers’ inertia. Some companies have even made it difficult to cancel subscriptions as a way of further boosting profits.
Research led by the Stanford Graduate School of Business has found that this may be a short-sighted strategy. The researchers found that subscriptions that automatically cancel attract more customers than those that auto-renew. Many potential customers understand inertia as well and are more willing to try a subscription if they don’t feel locked in.
New York and California now have laws requiring businesses to get affirmative consumer consent before renewing subscriptions. Businesses must also provide an easy cancellation method.
If you’re not in one of those states, consider researching cancellation methods before you sign up for any new subscription. Avoid any company that makes it much harder to cancel than to subscribe. If you can sign up online, for example, you should be able to cancel online and not have to call in during limited business hours or visit a physical location. If you do subscribe, add a note to your calendar when the subscription or trial period ends, so you can evaluate whether you’re getting enough value to continue subscribing.
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