FCCA report: Consumers lose millions of euros each year due to subscription traps

Each year, around 200,000 consumers become the victim of subscription traps and lose a total of around 5–10 million euros. Estimates are based on a consumer survey carried out by the Finnish Competition and Consumer Authority (FCCA) that focused on subscription traps and the extent of damages caused by them. In addition to damages to consumers, subscription traps distort competition and erode consumer confidence in online commerce.

Subscription traps are one form of scams targeted at consumers. FCCA’s survey focused on subscription traps, which means that a consumer has ordered a free or an inexpensive product sample or participated in a competition or a draw and submitted their contact details while doing so. At the same time, the consumer has committed to an agreement on the basis of which they will receive products and be invoiced for them.

A total of 1,032 persons between the age of 18 and 84 were interviewed over the phone for the survey. Five per cent of them had encountered a subscription trap within 12 months prior to the survey. Based on the results of the survey, FCCA estimates that each year around 200,000 consumers become the victim of a subscription trap and nearly 150,000 of them suffer financial losses. The losses amount to a total of around 5–10 million euros each year.

In addition to financial losses, subscription traps cause emotional damage, such as stress and fatigue, and health issues, such as insomnia. According to the survey, 90% of people who had encountered subscription traps had experienced some emotional damage.

Financial loss encountered by a consumer may be minor as well as the annoyance but subscription traps also damage society as a whole on a wider scale. Consumers’ losses are deducted from purchasing power and they erode confidence in the reliability of companies and online commerce. Honest companies suffer from the fact that illegally operating companies have competitive advantage in relation to them. Subscription traps tie up authorities’ resources from other supervision.

Subscription traps cannot be prevented only by the measures of consumer authorities

Only a minor share of subscription traps encountered by consumers are reported to consumer authorities. According to a scoreboard compiled by the European Commission, only 4% of Finnish consumers contact consumer authorities in the case of any issues.

”Contacts we receive are only the tip of the iceberg considering the issue as a whole. In reality, the phenomenon is so extensive that consumer authorities have worked on subscription traps for the whole of the 2010s. We actively cooperate in order to prevent subscription traps both in Finland and abroad,” says Consumer Ombudsman Katri Väänänen.

Current methods available to a Consumer Ombudsman are not sufficiently effective in order to address subscription traps. According to the law, a Consumer Ombudsman must first negotiate with a company and if there is no resolution, the Consumer Ombudsman orders a ban on the company or takes the matter to court. However, companies that use subscription traps cannot usually be persuaded to change their operations through negotiations. On the other hand, if the matter is processed by the Market Court, it may take a considerably long time meanwhile the company may continue its illegal operations.

Consumers have been assisted by intervening the collection of receivables related to subscription traps. Consumer Ombudsman has also assisted dozens of consumers in payment demand cases related to subscription traps in the district court and has won all cases. In addition, FCCA has provided information on its website and social media channels on how consumers can identify subscription traps and guidelines on how to proceed to people who have become the victim of a subscription trap.

  • FCCA’s survey on subscription traps and related damage to consumers
  • Further information on subscription traps