E-Commerce Subscription Pricing Model Leads to Consumer Complaints

May 31, 2016

Keyboard typingA wide range of e-commerce websites offer substantial price discounts to consumers, but those lower prices come at a cost.  An increasing number of consumers are upset as they believe that they have been misled by the online businesses.  State and federal consumer protection authorities are handling thousands of complaints based on this online pricing model, and those authorities are now directing substantial attention at the problems associated with e-commerce subscription services.

The pricing model at issue is subscription based.  Many popular e-commerce businesses offer attractive price discounts only to customers who purchase memberships.  By paying for those subscriptions, consumers obtain access to lower prices, free shipping, and premium products.

The subscription based discount pricing model is well-established and entirely legal.  Consumer protection issues emerge, however, when customers do not realize that they are subscribing to the service or they do not fully understand the terms associated with their subscriptions.

Matsuura Blakeley BannerIn general, subscription purchasing services require payment of a monthly subscription fee.  That fee is due even if the consumer makes no product purchases during the month.  After payment of the subscription fee, the customer can access the discounted prices and other benefits associated with membership.

A growing number of consumers complain, however, that the e-commerce websites do not clearly describe the terms associated with the subscriptions.  This complaint is the focus of attention from consumer protection authorities who are now striving to ensure that e-commerce businesses are required to provide clear and effective notice when subscription based pricing is used.

In this environment of heightened regulatory attention, e-commerce businesses should make sure that all notices and descriptions of terms they provide to their online customers are thorough and clear.  Consumers should exercise caution and should review carefully all of the notices and terms of service that are presented by the e-commerce businesses with which they interact.

Subscription based purchasing services provide a useful and popular e-commerce platform.  It is vital, however, that their terms of use are fair and are clearly described for consumers.  The increasing regulatory oversight should help to create an appropriate environment for subscription pricing.