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Episode 5 - What are subscription traps and how can Subaio protect you against them?


Today we’re going to answer the question –  what are subscription traps, and how can Subaio protect you against them?

But let’s start by just saying what is a subscription trap.

So a typical subscription trap is when a user goes online in search of a product, let’s say that product is a perfume, and the user finds that product and it’s really cheap, it’s a great deal. It’s like “yes I found it!” and then when you go and pay for it, you don’t see the letters, the small letters saying that you’re actually also signing up for a subscription, and suddenly you’re paying on a recurring basis for a subscription that you didn’t know, and this is a typical way of falling into a subscription trap.

And this is actually something that is becoming a bigger and bigger problem within the European Union. So more and more companies are using these types of techniques to lure out money from the consumers.

And with Subaio we’re actually working together with the local consumer authorities on getting people out of subscription traps. And also detecting these traps before people even fall into them.

And what we can see from the data is actually that once people get exposed to this type of a subscription trap then 3.5% are actually falling into it, and on average these people are then wasting 115 euros on these types of traps. So that’s, of course, a huge amount of money for the individual consumer. It’s important to say that not all of these subscriptions that are built in this way are a subscription trap. So some of them are legit, but some of them are also scams.

And there are clear indications on how to detect these types of subscription traps. Let’s call them red flags. So we have three red flags. The first one is that you find a product with a huge discount. If that discount is just too good to be true, well, it might be a little bit fishy. Be aware that’s the first one, so the second one is that you find a product but you also get a huge gift by buying this product, and the gift is even worth more than the product itself. That’s also a clear indication that this might be a subscription trap.

The third one is actually pretty difficult to see. It’s called ‘dark patterns’ and these dark patterns are pushing consumers between different screens where they can’t see exactly what it is that they’re signing up for, because suddenly they’re pressing on something and then, yes, they’ve signed up for a subscription trap. And this type of subscription trap is really on the rise at the moment. So these things here is just to, kind of, give you an example on what is the issue with this and what is a subscription trap even.

Now, how Subaio can protect the consumers against these types of subscription traps. 

And just to be really clear on what the subscription management platform of Subaio is doing, is that it’s basically showing the user all the different subscriptions that they have. They show all the different recurring payments and once a consumer is signing up for a subscription we warn them. We send out a message to the user saying “hey you’ve got a new subscription” and we don’t know at this stage if it is a subscription trap, or not, but we’re just warning the user about it. 

Secondly, we’re also able to detect some of these subscription traps before the users are actually able to to see that they are subscription traps. So we’ve tried to illustrate it here with a bunch of sheep, and the sheep are actually the data that we’re able to detect. And at the moment we are able to detect 22.700 different products, so that means that we have enriched 22.700 different products with logos, with names, and because of this huge amount of products and huge amount of data that we’ve gone through, we know what a subscription trap, or a subscription sheep, looks like. Right, so that means that suddenly we can go and we can tag all these different types of subscription traps that we are really trying to get the users to avoid.

The third thing that we can do, and this is where Subaio is really able to shine, is if we get a certain amount of detailed payment data from you as a bank, if we get the authorised payments from the users then we’re able to stop the payment to the subscription trap before it’s even madeAnd yes we already live with eight different banks, launched with eight different banks and some of them, they’re already giving us this type of data, so we’re on our way.

The big question mark here is of course why should you, as a bank, even care about this?

Well, I get that, of course, you want your customers to be happy. But what’s in it for you? What’s the revenue stream? How can you drive down costs? And that’s where the number from over here again is interesting. The 115 euro. Because what we see again and again in different European countries is, that once a user is falling into this type of a subscription trap, it’s actually the banks that at the end are liable. So that means, that if the user falls into a subscription trap, it’s going to be the bank that’s going to pay this bill at the end to the user, because the user didn’t know that they were signing up for a subscription, and thus they didn’t authorise this type of payment. 

So for you as a bank you have to decide – do you want to be the one that’s protecting your users against these types of subscription traps, or do you just want to pay that bill every time they fall into it. 

If you think that this was interesting then please watch some of our other sessions as well, and see you soon!

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