Sunday, May 10, 2020

Ghost Subscriptions?

Do people really pay monthly subscription fees for services they don't use?   I don't doubt it.

I saw an ad online (which of course was a come-on) saying that 83% (very specific!) of people have "ghost subscriptions" to various online services they no longer use.  If you clicked on the link, you could sign up for a service which would cancel those subscriptions for you!  How handy!

Wait....  what?

How could someone pay for a subscription they no longer use?  Wouldn't they notice the charge on their credit card?  Well, it turns out that a lot of people don't have "notifications" turned on for their credit card, and they don't monitor their credit card at all.  They charge things and at the end of the month, make a payment, without looking at what was charged or thinking about it too carefully. I know I did that, when I was in my 30's.   And I ended in in serious credit card trouble as a result.

The other day, a notice comes up on my phone. Amazon marketplace has put a $1.40 temporary hold on my credit card.  WTF?  What can you possibly buy on Amazon for a buck-forty?   It sounds an awful lot like a test charge such as the one I got for Apple iTunes (which I never used) for $1.11 before they tried to charge a one-way first-class ticket to Dubai.   Or the charge to a laundromat I had never been to, five States away, for $1.63, before they charged (or tried to charge) over $1000 for online advertising for non-existent dogs.

I can't dispute the charge until it goes through, but you can be sure I will be watching my account like a hawk.

But getting back to ghost subscriptions, one way to avoid this problem is to not sign up in the first place.   So many places want to give you a "free trial subscription" but require a credit card number, and unless you cancel right away, you are charged indefinitely.   Well, even if you cancel, they charge you.  Even if your card expires, they guess at the new expiry date and charge you.   Even if you get a new card number they may try to charge you.

The best way to avoid these negative option deals is to just not sign up for them.   You aren't missing out on anything, and I can tell you why.  If it was such a good deal, they would not have to resort to trickery to get you to sign up - you would willingly do it.  So whether it is Sirius XM or Pandora, or some other online "service", if they have to use negative option to get business, chances are, it is because most people don't like the business.   It says that most people end up cancelling the service, and the only way they can make money is to hope that some folks are so lazy they will forget to cancel, or if they make the cancellation process opaque, they will give up on cancelling.

Hey, it's only $8.99 a month, right?  Why hassle over such a small amount?   But over time, this adds up to a lot of money, particularly if you have a half-dozen or a dozen of such services automatically charged to your credit card.

What was interesting to me about this online ad, wasn't that they were selling some tomfoolery to get you to sign up for their service (another subscription - to eliminate subscriptions! - sort of like timeshare resale companies - a second bite at the apple of stupid!) but that the marketing technique they used was to make it seem 'normal' to have so-called ghost subscriptions.   Normative Cues, once again - the idea here being that is is normal not to check your credit card bill and wonder where all the money went.

I know I believed this back when I was in my 30's.   After all, credit card bills are opaque as all get out.  The interest rate you pay and how much interest you pay is usually on the last page.  The penalties and fees are all in fine, fine print.   Your minimum monthly payment is in 20-point font.  It isn't hard to figure this out - they want you to make the minimum payment, not pay off the whole amount, and they certainly don't want you thinking about how much interest you are paying.

I digress, but perhaps this is "Bob's rule of font sizes" - in any deal you get into, the smaller the font size, the more important the information.   Of course, they bury this stuff in a sea of text, so you have to read carefully.   But whatever is in a large font is the least important thing, or at the very least, what you should not be paying attention to.   The small font stuff?  That's where they screw you.

But getting back to credit cards and ghost subscriptions, if you feel this is an issue, signing up for another subscription service to cancel your subscription services isn't the answer.  That would be like an alcoholic drinking his way to sobriety (I suppose it's worth a try!).

The better answer is to keep track of these things.  When I go to the store, order something online, or when a recurring charge occurs on my credit card, I enter all this on Quickbooks  (any other financial software would work as well) so when the charge appears on my bank's website (which I check daily) I can am prepared for it and anticipating it. Any phantom charges, such as the $1.40 for Amazon stick out like a sore thumb  (It turned out to be a sales tax charge, by the way).  Recurring charges, I have Quickbooks automatically enter.

The idea of "managing" a credit card by glancing at a paper bill once a month and then making the minimum payment is sheer insanity.   You could have fraudulent charges this way, for months or years, and never realize it.   Like I said, when we settled Mark's stepmother's estate, we were shocked to see she was paying AOL dial-up internet access fees for well over a decade.   That essentially is their business model at this point - charge people and hope they don't notice.

Like I said before, if you can figure out a way to get $1 from everyone in the United States, that would make you a millionaire 300 times over.   And who would miss a lousy dollar?    Not many people, that's for sure!

But a dollar here, a dollar there, it add up, over time, and pretty soon, you're broke and wondering where the money went.

Ghost subscriptions!   What a concept!