Here’s what today’s column isn’t about: renter’s insurance.
I spent hours the other day assisting a Hancock Park reader who was having difficulty canceling her renter’s coverage after she moved back to her parents’ home because of the COVID-19 pandemic.
It was a convoluted situation involving a mishmash of corporate players, dropped phone calls, ignored emails and a threat of debt collection. Happily, everything seems to be resolved.
Although the $135 at stake for the reader ultimately didn’t strike me as column fodder, I came away from the episode marveling at the challenge people frequently face in ending a business relationship.
You know what I’m talking about. An insurance plan, a gym membership, a cable or internet service — sometimes breaking up isn’t just hard to do; it seems downright impossible.
Do a search for the phrase “why is it so hard to cancel.” You’ll find anguished posts involving dozens if not hundreds of companies whose cancellation policies and practices left customers at wit’s end.
Sally Greenberg, executive director of the National Consumers League, called automatic contract renewals and difficult cancellations “a predatory practice that many industries are addicted to for an obvious reason — a monthly stream of income.”
“Don’t sign contracts that bind you to monthly renewals with no option to cancel,” she warned.
To cite just one example of the challenges consumers can face, the Glendale online education company Age of Learning agreed to pay $10 million last month to settle Federal Trade Commission charges related to illegal marketing and billing practices.
The complaint alleged that Age of Learning and its ABCmouse website lured people into paying $59.95 for a 12-month membership without adequately disclosing that the membership would automatically renew each year “and what consumers must do to cancel.”
“Many consumers tried without success to cancel by calling, emailing or contacting Defendant through a customer support form,” the complaint said.
“Rather than accepting these cancellation methods, Defendant instead required consumers to find and navigate a lengthy and confusing cancellation path that repeatedly discouraged consumers from canceling and, in many instances, resulted in consumers being billed again without their consent.”
From 2015 to at least 2018, the complaint continued, “hundreds of thousands of consumers visited Defendant’s cancellation path but remain enrolled. Even consumers who completed Defendant’s cancellation path later discovered ongoing charges for additional content they believed they had canceled along with their base memberships.”
Among other remedies, the settlement requires Age of Learning to be much more straightforward about how to stop the service if so desired.
“People are relying more than ever on remote learning and other online services, and companies need to be upfront about automatic renewals and get permission before charging customers,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection.
Kathryn Green, an Age of Learning spokeswoman, told me in a statement that ending a subscription now requires “just two or three clicks.”
“We settled this matter to avoid a prolonged legal dispute and to fully focus on our work of helping families and teachers educate children,” she said. “We agreed to provide $10 million for the benefit of consumers. That payment is not a fine or penalty.”
Um, yeah, but it’s still millions of dollars, which nobody pays unless they’re really, really keen to make a serious problem go away (see: Trump, Donald, $25-million Trump University fraud settlement).
The stakes in the Age of Learning case were obviously much higher than the $135 on the line for my reader in Hancock Park, but the principle was the same.
Businesses all too often make it very hard — sometimes deliberately so — to cancel a service. Presumably this is done to continue pocketing regular fees or late charges.
There are laws at the federal and state levels against unfair business practices, but nothing that explicitly says it’s illegal to make the cancellation process unreasonably difficult.
That needs to change.
The business world needs to know clearly and definitively that muscling consumers in this way will result in hefty penalties and/or prison terms.
“If companies aren’t willing to do the right thing voluntarily, we should strengthen state laws to ensure consumers aren’t stuck with goods and services they don’t want and don’t need,” said Emily Rusch, executive director of the California Public Interest Research Group.
“Especially during a pandemic, you shouldn’t have to show up in person in order to cancel your gym membership, as some gyms require,” she said. “Nor should you have your phone call put on hold interminably in order to cancel your cable or internet service.”
At a minimum, all companies should be required to clearly disclose their cancellation procedure before any money changes hands. Their websites and apps should be required to make canceling easy to do online, including mandatory confirmation emails that the service has stopped.
I’ll go that one better. How about a law that says any consumer who cancels a service via registered mail, and who can verify that cancellation with a receipt from the U.S. Postal Service, cannot be held responsible for any subsequent fees imposed by a business?
Moreover, any such fees collected by a company would have to be immediately returned or the company would face stiff penalties.
This isn’t about putting honest businesses at a disadvantage. It’s about making the dishonest ones straighten up and fly right.