Many subscription businesses continue to resort to black hat subscription tactics without realising that they are on a slippery slope. Match Group is now in the line of fire as it faces allegations of using deceptive tactics to boost subscriptions.
For the past couple of years, deceptive practices by subscription businesses have been increasingly coming to the fore. From automatically converting free trials into expensive paid subscriptions, to making it increasingly difficult to cancel subscriptions, many companies have found novel ways to trick customers out of their money.
As we reported
last year, one particular app on the iOS App Store made as much as $14.3 million per year in subscription revenue on the back of such unfair practices, whilst another tricked customers into signing up for a $156 annual subscription plan.
Then earlier this year, US-based lingerie retailer Adore Me was in the eye of the storm for enrolling buyers into subscription programs by default
instead of them explicitly opting in. Shoppers were automatically signed up for a $39.95 monthly subscription program and customers realised it only after their debit cards were declined or when they checked their bank accounts.
The US Federal Trade Commission (FTC) did take action against Adore Me by asking it to pay $1.3 million to the customers affected by its practices. In addition, Apple also cracked down on apps which were misleading customers into signing up for subscriptions on the iOS App Store. It would have been hoped that regulatory actions and bans would have stopped other companies from employing such tactics, but clearly that’s not been the case.
Match.com sued by the FTC
Match Group - parent company of leading online dating sites such as Match.com, OKCupid and Tinder – is now the latest company to be in the regulatory crosshairs. According to reports
, the company allegedly used fake accounts to turn people into paid subscribers.
Free users cannot view or respond to messages they receive on Match.com. According to the allegations, Match.com notified users of messages despite knowing that these were sent by fraudulent accounts. The company allegedly led users to believe that these messages were genuine romantic interests from real people and encouraged them to sign up for subscriptions. The users realised that these accounts were fraudulent only after they signed up for the service. The FTC claims that Match.com managed to get 499,691 new subscriptions due to these tactics in the period between June 2016-May 2018.
Furthermore, Match.com offered a free six-month subscription to any user who didn’t “meet someone special” during the first six months. However, the promotion came with many rules and conditions, including one where users had to submit their photographs for approval by Match.com within seven days of signing up for subscriptions. The FTC claims that only 32,438 people received the free six months among the 2.5 million subscribers that signed up between 2013 and 2016. The company allegedly billed 1 million people after their first six-month package to automatically extend their subscriptions.
In addition, the FTC claims that Match.com also made it extremely difficult to cancel subscriptions. The dating website allegedly locked people out of their accounts after they disputed charges, even though they had time left on their subscriptions. The regulator is now pushing for monetary compensation to those affected by such practices.
Deceptive tactics have no place in the subscription industry
While Match Group has denied these claims, these allegations against a company which is the market leader in its space is definitely not a good advertisement for the subscription industry.
The allure of subscription businesses comes from the fact that they are geared towards the customers, offering them products and services at apparently lower costs along with a payment frequency that suits their specific needs and the flexibility to opt-in and opt-out whenever they want. The use of deceptive business practices to boost recurring revenue stands in absolute contrast to the ethos of the subscription industry. Not only do such businesses lose out on revenue in the long run, it also impacts the reputation of the business and its leadership.
Our advice to any young business in the space is that you need to stick to organic growth tactics. Sure, deceptive subscription tactics may lead to a temporary boost in revenues, but it is not going to help you win brand loyalty and credibility. Instead, focus on winning trust through transparent practices, employ a good subscription billing platform
to gain a competitive edge in how your price and package your services, and deliver consistent value to your customers. Do all this and you will be well on your way to subscription success!
Download your copy of our free e-book: Subscription Industry in Evolution: Key Challenges and Solutions which details some of the modern challenges in front of the subscription industry and how incumbents can tackle them.