Beware the Subscription Trap: How Misleading Conduct Can Cost Your Business

Subscriptions can be a convenient business model—until they cross the line into misleading and deceptive conduct. When a customer thinks they’re buying a single item but ends up locked into unwanted charges, your business could face serious legal risks. The Australian Competition and Consumer Commission (ACCC) recently took action against The Bradford Exchange Ltd, highlighting the dangers of so-called 'subscription traps.' Here’s what businesses need to know to stay compliant—and how The Franchise & Business Lawyers can help.

The ACCC instituted proceedings against The Bradford Exchange Ltd for practices that misled consumers. The allegations include:

1.  Advertisements in newspapers and magazines for collectable coins and ingots;
2. A single item was advertised for sale;
3. Representation that the customer would only be agreeing to the purchase of one item;
4. After the initial purchase the customer was either charged through direct debit or subsequent invoices for further items;
5. If the consumer failed to pay then a debt collection agency would be appointed.

This pattern of behavior, dubbed a 'subscription trap,' breaches consumer protection laws by failing to clearly disclose ongoing obligations.

Businesses must be transparent in their dealings with consumers. Charging for items a customer hasn’t explicitly agreed to purchase can violate the Australian Consumer Law (ACL), exposing your business to penalties, reputational damage, and legal action. The ACCC’s case serves as a wake-up call: failing to disclose subscription terms upfront isn’t just bad practice—it’s unlawful.

Don’t let unclear terms or hidden subscriptions put your business at risk. The Franchise & Business Lawyers specialise in helping businesses navigate their obligations under the ACL. From drafting compliant contracts to reviewing your sales processes, we’re here to ensure your dealings with consumers are above board.