Peak tech industry lobby group Tech Council of Australia (TCA) has pushed back against proposed government reforms that would crack down on unscrupulous tech firms raking in millions from “unfair and dodgy practices” such as subscription traps and drip pricing.

Such practices – in which tech firms entice users to sign up for new services at heavy discounts, then jack up prices and often force consumers to navigate labyrinthine ‘dark patterns’ to cancel – have come onto Treasury’s radar amidst the ongoing cost of living crisis.

Now common as a way of paying for apps, online publications, streaming services, and software licenses – as well as offline purchases like gym subscriptions – a November Treasury consultation paper notes that subscriptions can be “convenient” and “efficient”.

Yet many businesses fail to give consumers the information they need “to make informed decisions about a subscription,” the paper noted, with many subscriptions “overly complex” to cancel and others that “quietly renew” or surge from promotional to full pricing.

A recent CPRC study found that 48 per cent of Australians spent more time than they intended when trying to cancel a subscription, with three-quarters reporting some form of negative experience while trying to cancel; one in ten ultimately gave up trying.

The Treasury paper also calls out ‘drip pricing’, in which the advertised price for online goods or services increases with the addition of multiple fees and charges.

Treasury outlined four reform options, with Assistant Treasurer Stephen Jones this month reporting that submissions from the month-long consultation included “defence from business” that existing subscription practices may be confusing but “aren’t unlawful.”

“It’s true,” he said. “A lot of them are legal in Australia but illegal in other countries… We’re going to bring Australian laws up to scratch and ensure that they’re brought into the same sort of standards that many of these businesses are operating under in other countries.”

Looking overseas for guidance

Australia’s ACCC has been warning consumers about subscription traps for years – particularly as the accumulation of streaming subscriptions exposed customers to multiple price rises at once – but occasional fines have been favoured over targeted legislation.

The new crackdown echoes similar changes in countries such as the UK, where the new Digital Markets Competition and Consumers Act (DMCC) was passed last May and comes into effect this year.

Credit-card companies have implemented new rules that require overseas merchants to inform customers when subscription prices change, while in October the US Federal Trade Commission finalised a new ‘click-to-cancel’ rule mandating easier cancellation.

Officially called the Negative Option Rule, it will apply across “any media” and prohibit sellers from misrepresenting material facts; force them to provide details before charging consumers; and require sellers to obtain informed consent before charging them.

Treasury proposed similar options for subscription reform, with Jones saying that Australian authorities are examining rules in the US, UK, EU, Japan and elsewhere as they “look at picking up the best of what’s operating in other countries.”

Tech industry thinks consumers can’t handle it

Yet even as consumer groups welcome the government’s reform, the TCA has called for restraint, arguing in its submission that the “best option” is to maintain the status quo.

Of three policy changes outlined in the paper, the TCA argued against a proposed general prohibition on unfair trading practices, preferring the “testing” of existing consumer law and less-arbitrary controls on tech companies including its more than 100 members.

Dark patterns should only be banned “where there is clear, material, financial harm arising to consumers,” the TCA suggested while warning that forcing businesses to provide “prescriptive lists of specific information” could see consumers tune out.

Mandating the sharing of subscription detail “risks being both over and under-inclusive,” the TCA warned, “and can lead to large blocks of text that are less likely to be read and understood by consumers.”

Rather than stating the specific date that a consumer will be charged for a service, for example, TCA wants “more flexible” terms like “one week from today” because “it may not be possible for businesses to communicate the exact date” when consumers will be charged.

The organisation also opposes mooted requirements that firms publish pricing data in terms of “indicative cost per annum” – intended to help consumers compare ongoing service costs just as grocery store shelf tags include per-unit or per-kilogram prices.

Such practices “could confuse consumers into thinking that a one-year commitment is required when it is not,” the TCA said.

And while the TCA said it agrees that making cancellation “straightforward” is “reasonable and fair,” it also argues that businesses should not be forced into doing so because “cancellation is a very different process than signing up.”

“The ease of sign up should not be the measuring stick for cancellation,” the TCA said, arguing that such a rule “could have the opposite of the intended effect” if businesses complicate their signup processes to justify complex cancellation rules.