I have switched to prepaid gift cards instead of giving apps the right to take money from my bank account. No payment information linked to Google- got burned by auto renewal once and never again.
Not paying a debt you legitimately owe doesn’t eliminate the legitimacy of the debt. Most app owners probably won’t take any further action against you because it’s not usually worth the time and money (at least in the US), but they’re entitled to. If they sell your debt to a debt collector, have fun with that.
(Tangent: there is usually a certain number of years of inaction after which they can’t go after you for the debt, unless you again acknowledge the debt. The details and the ways to reset that clock vary by jurisdiction.)
Non-USA here (which might affect things): Isn't the point of paying with e.g. a Netflix gift card that they auto-cancel/pause your subscription to Netflix after the gift card runs out of funds? How would that incur a debt?
The subscription is a recurrent commitment that you sign up for through a contract. They cancel it automatically because they don't want to bother collecting the money - it's expensive to do so and will lead to permanent churn. But they can; it's your problem to fix the payment method to cover your monthly/yearly commitment. All they have to do is to keep the service available and put something in the contract to that effect.
It's similar with power/water bills. They can't/won't cut utilities, a form of subscription with a fixed cost in addition to the usage cost, right away (there is a process for that), but you owe the money all the way until they are cut.
Netflix is not a basic utility. The only thing they have in common are similar billing intervals.
But that’s kind of beside the point.
When you sign up for a subscription, they only commitment you have made is for the chosen billing interval.
If it’s a month you’ve committed for a month, if three years then you’ve committed for three years.
But you have not in any way shape or form committed to a single second beyond that.
Most (all?) have auto renewals clauses that are very convenient for both the seller and buyer, but to enforce it when the buyer wants to quit is basically extortion.
Not being a basic utility is not relevant for the legal implications here, as the renewal terms aren't tied to being an utility - that was just a familiar example. The renewal laws are clearly specified in the contract you accept when signing up for these services, for instance Disney Plus says:
"If you do not timely cancel your subscription, your subscription will be renewed at the price in effect at the time of the newel, without any additional action by you, and you authorize us to charge your payment method for these amounts...We do not refund or credit for partially used used billing periods."
This can be easily read and argued as: if you do not cancel, you owe them. You can argue this in front of a judge, but it will be really hard to say it's "extortion" if the cancellation process is streamlined.
Of course I realise the terms and they may even be legal someplaces.
But the basic reality is that none of these firms would enter into a contract with terms like these because they are outrageous.
Just think about it. The act of doing nothing over a certain short time period is supposed to legally bind you in a new contract and even with unknown pricing?
This is not business between equals and people behaving this way deserve all the crap they can be tossed.
In the US, yes. If the letter of the contract says that you are responsible for a monthly payment, how that debt is settled every month does not change the terms of the contract. A gift card just allows you to settle the debt with a mutual debt owed.
I was mostly wondering if the contract is indeed the same or if the services have a separate fixed-term contract for gift cards. But I guess it’s par for the course (ie. really customer-hostile) if they indeed force even gift card paid subscriptions to be perpetual…
Everything I said is true in many countries outside the US too, except possibly the prohibitive legal cost of pursuing a small unpaid debt in court. In particular, I know for sure that invalidating a payment method does not invalidate an otherwise valid obligation to pay in Canada or Germany, and I think that’s the typical rule worldwide.
If Netflix chooses to cancel or pause the subscription after the gift card runs out of funds, that’s their business decision. It’s probably wise as a practical matter for them to limit access to unpaid services when it won’t usually be worth their time and money to force the matter judicially.
But other things they could choose to do include continuing the subscription and using any and all legal debt collection methods until you catch up on the accrued debt, imposing reasonable penalties for nonpayment as per any specific contract wording or any applicable legal defaults, and claiming any damages and/or lawyer fees incurred depending the specific circumstances and the rules of the relevant legal jurisdiction.
The details do vary between countries and between some countries’ subdivisions, sure. But the general principles of what I’m saying are typically true in most countries.
On quite a lot of services the contract term is the billing term, and it just renews every time a successful payment happens. For example a month-long contract that auto-renews monthly. If the payment fails, the current contract simply ends and no debt is created.
Obviously: read the terms of what you’re signing up for, to check.
True but it's good to have reminders that this isn't universal behaviour. Say, in Germany the local companies (even purely online services) have no qualms about sending your bills to collections if you just stop paying.
Charging me for a service I've asked to cancel doesn't really feel legitimate either. I've been through this with a gym that wouldn't cancel and then got sent to collections, which honestly just showed me how worthless collections is. So I get a few more spam calls or spam mails - I'm already ignoring those anyway.
The next time you apply for anything that depends on your credit history, the collections history will show up on the credit report (assuming you’re in a country that has those - far more than just the US) and either cause your application to be refused or to be approved with bad terms. This will stay on the credit report for years.
It’s probably not worth anyone’s time to go after you more aggressively than that merely for the amount of a gym membership, but if they so choose they’re absolutely allowed to sue you to get a court judgment which appropriate authorities will enforce for them against your assets and income. For larger debts, this is in no way unlikely, if they think you can afford to pay.
To be clear, I support the proposed FTC rule and think it should be as easy to cancel as to sign up. But that procedural question is separate from what commitments may exist. for example, if they give you a discount for a 12-month commitment but still allow you to pay monthly, or if they only offer memberships with a minimum commitment of 12 months, canceling in month 3 would very reasonably still require you to pay the rest of the current 12-month term before your obligation ends.
For some contracts, I can imagine allowing the alternative of repaying the amount of the discount received so far due to the annual commitment, plus interest on that amount. But if you received and used any perks through the annual commitment which would otherwise not have been available to you, or if they incur significant upfront costs for new members which are amortized across the first 12 months of membership, allowing this would not produce a fair outcome.
You’re lucky then, in a way that doesn’t generalize to the broader question of collections being or not being worthless. Many debt collectors will routinely report longstanding uncollected debts to credit reporting agencies.
Maybe you got a rare debt collection agency that doesn’t bother, or one which decides your debt was too small to be worth their bother for that, or maybe your debt collector is actually the accounts receivable department of the gym (which probably isn’t set up to submit credit reports) rather than an external collections agency (which usually would be set up for that).
The thing about it is - fuck them - I'm not paying someone who scammed money out of me, no matter how they threaten me. If debt collection is part of that scam, then fuck them too.
I respect your feelings, and as I said upthread I do want it to become mandatory for cancellation to be as easy as signing up. Gym membership cancellation hassles are an awfully common abusive scam that should be legislated or regulated away and turned to something that’s actually fair for both sides instead of predatory.
My earlier replies to you were simply discussing the law as it is and the practices and consequences currently typical in debt collection, aside from when I agreed that changes in the legal rules would be a good thing. Neither your feelings nor my policy preferences change how the world currently works.
> If they sell your debt to a debt collector, have fun with that.
If you have the time and volition, and aren't terribly concerned with your credit rating, it can actually be quite fun because a lot of debt collectors routinely violate the law in terms of what they're allowed to do, and you can usually make some money off them in that way.
Of course, I'm talking about small debts. If you owe enough money, the collector will probably sue you, and that truly is no fun.
What i don't understand is that it is essentially a necessary service for consumers, because corporates have the luxury to can and will not care about problems with automatic (over)charging.
So therefore i'm all for 1-click canceling subscriptions.
well, it's not only cancel protection, it's a privacy tool. Imagine your credit card # like a SSN common across multiple platforms. Now imagine that SSN being different every time.
Furthermore, if a platform gets cracked that credit card # has a limit with little to no value.
The ease of pulling the plug on one platform is an added bonus.
Yep. Revolut let’s one create new virtual cards on demand (for recurring purchases), as well as virtual cards that get cancelled after a single purchase.
Why not just setup virtual card service like privacy? Been using them for the last few years. It has been too damn good so far. I just hope they do not get greedy in the neae future. Not sire why the personal banking does not do this already.
> Not sire why the personal banking does not do this already.
Bank of America used to do this. It was a flash program that generated the numbers and of course once flash was discontinued they didn’t care enough to port the program over to a modern web app.
