Source: Radio New Zealand
New Zealanders spend millions of dollars a year on subscription services, including ones they no longer use. Unsplash/ Vitaly Gariev
When Kate subscribed to an overseas news website, she did not realise how difficult it would be to cancel.
“It was nightmarish … to the point where I won’t even look at any offers from them. Getting unsubscribed was like getting divorced … I wouldn’t touch them with a 10-foot bargepole, ever again.”
She said she thought she was signing up for a month but was held to a year, and at the end had to remove her credit card details to stop the subscription renewing.
She is not alone – New Zealanders spend millions of dollars a year on subscription services, including ones they no longer use, and they can be tricky to get out of.
Consumer NZ said the design of subscription services meant they often took multiple steps to cancel.
It said almost 30 percent of people report continuing to pay for a service because unsubscribing was too difficult. Its research estimated New Zealanders lost more than $60 million a year to “dark patterns” including unfair subscription models.
It follows earlier ASB research that found 20 percent of subscription-holders were paying for services they did not use. About a third spent more than $100 on subscriptions each month.
Everything from TV and music to the gym and toothbrushes can be bought on subscription.
David Verry, a financial mentor at North Harbour Budgeting Service, said he often dealt with people paying for Sky TV, Netflix and gyms.
“Sky can often be seen as one form of entertainment that is less expensive than going out or they may have an internet package attached.”
But he said it was sometimes worth asking whether people needed all the packages, or subscriptions to both Netflix and Sky.
He said people were often paying for gym memberships at $7 to $10 a week, too, but they were often not used.
“Unfortunately a lot of clients sign up to two-year deals which are collected by Debit Success via direct debiting accounts and there is usually no way out – if the client cancels the direct debit then Debit Success will keep hounding them for the payments and eventually issue a credit default to the credit agencies.
“I had one client who had signed up her three adult children and herself and was in default on all four. Think carefully about what you’re signing up for and the obligations that go with it.”
Westpac said its customers were paying an average of $33 a month on at least one streaming service up from $28 in 2024. Ten percent were spending $70 or more.
Another financial coach, Shula Newland, said people were more aware of how subscriptions could add up now and were able to use banking tools and apps to track where their money was going.
Labour MP Cushla Tangaere-Manuel. RNZ / Samuel Rillstone
Labour MP Cushla Tangaere-Manuel has submitted a member’s bill that would require subscriptions to be able to be cancelled in the same way that they were taken out.
University of Auckland commercial law professor Alex Sims said people who signed up for a year had agreed to an enforceable contract for a year.
“But sometimes the provider will allow people to exit early by paying a termination fee or cancellation fee. The fee must be a reasonable estimate of the provider’s losses arising from early termination. If it is too high, then legally it is a penalty and it cannot be enforced – but proving that would require going to court, which sensible people aren’t going to do.
“So you would have to work out whether the termination or cancellation fee is higher than the cost of what you would pay for the rest of the subscription time. Normally if there are only two or three months left, it is cheaper to continue to pay the subscription.”
She said people should also watch out for automatic renewals.
“It’s not just a case of the 12 month finishing and it is over. You need to check if it is one that auto-renewals that you cancel it before it renews.”
The law required that people were informed about a subscription rolling over before it happened but Sims said even if a business was not following the law, customers would often have limited options.
“That’s because only the Commerce Commission can enforce the unfair contract terms law. If you are caught out, please make a complaint to the Commerce Commission who will hopefully investigate and force the provider to change its practices.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
