The subscription trap

Just last month, a perfectly rational football enthusiast committed a grave mistake. He wanted to watch the Fifa World Cup and signed up for Zee5. Like millions before him, he assumed he was buying access to a sporting event that would last a few weeks. Instead, he unknowingly enrolled in a financial relationship that appeared designed to outlive several governments.

The service offered only a three-month subscription plan for Rs 799. There was no obvious warning during checkout that this would become a standing instruction renewing every three months. The payment was completed. Moments later, the customer’s bank helpfully informed him via email that recurring payments had been activated.

This was the first time he learned that his brief football fling had evolved into a recurring commitment. Immediately he attempted to cancel but things became interesting from then.

Zee5 offered no immediately visible remedy. The recurring mandate was difficult to locate. Even the credit card management microsite failed to display the instruction. The customer had entered the Hotel California of business transactions: he could check in anytime he liked, but checking out appeared more complicated.

This is not merely a story about one streaming service but about modern subscriptions, perhaps the greatest behavioural economics experiment ever conducted on humanity. Economists have long observed that human beings possess two operating systems. One is fast, intuitive, and effortless. The other is slow, analytical, and exhausting. The late Nobel laureate Daniel Kahneman described them as System 1 and System 2.

Subscription businesses understand this better than most psychology professors. Signing up is designed entirely for System 1. Watch football tonight. Click here. Pay now. Done.

Cancelling, however, is a System 2 marathon. Find the account settings. Navigate six menus. Locate “Manage Subscription”. Discover that it isn’t there. Search help articles. Read FAQs written by people who appear to dislike punctuation. Contact customer support. Wait. Repeat. Eventually question your life choices.

The genius of the model is that companies are not necessarily betting on customer satisfaction. They are betting on customer fatigue. Every additional click becomes a revenue stream. Behavioural scientists call this “choice architecture”. The rest of us call it being trapped.

The subscription economy runs on a simple insight: consumers are surprisingly willing to spend 15 minutes signing up for something and remarkably unwilling to spend 15 minutes cancelling it. This is why businesses increasingly resemble gyms. The ideal customer is not someone who actively uses the service every day, but one who forgets it exists.

Streaming platforms, software providers, fitness apps, cloud services, dating apps, newspapers, and productivity tools have all discovered the same magical formula. Recurring revenue is infinitely more attractive than persuading customers to buy something again. Why earn a sale every month when you can silently automate one?

To be fair, subscriptions themselves are not unethical. Many are transparent and genuinely valuable. Netflix, Spotify, and numerous SaaS providers have built successful businesses around recurring payments that customers knowingly accept. The ethical problem begins when consent becomes murky. When disclosure is buried. When cancellation is harder than enrolment. When customers discover important terms only after payment. Or when recurring mandates become harder to locate than a missing Aadhaar card.

This is precisely why regulators around the world have begun paying attention. In the US, the Federal Trade Commission has spent years pursuing companies that use confusing subscription practices. Several firms have paid millions in settlements after making cancellation difficult or auto-renewal disclosures unclear.

The FTC’s proposed “Click-to-Cancel” rule rests on a revolutionary concept that sounds almost embarrassingly obvious: cancelling should be as easy as subscribing. Imagine the radicalism. If one click gets you in, one click should get you out. Not 12. Not a chatbot conversation. Not a customer retention interrogation.

In India, despite the RBI regulations many companies are still getting away with it. There is a need for explicit customer consent, advance notifications before recurring charges, and additional authentication beyond certain thresholds. Customers should know what they are signing up for and should remain in control of recurring debits. Byju’s scammed many. Sometimes the merchant blames the bank. Sometimes the bank points to the merchant.

What makes this fascinating is that the entire system exploits a well-documented psychological bias known as status quo bias. Humans prefer leaving things unchanged. We postpone unpleasant administrative tasks, delay paperwork, avoid bureaucratic friction. Subscription businesses have industrialised this tendency.

Ethical questions come up here. Good business creates value customers willingly pay for. Questionable business creates friction customers reluctantly endure. The distinction matters. Trust, once lost, is expensive to recover. Consumers generally forgive mistakes. They rarely forgive feeling manipulated.

Ironically, many companies spend fortunes on customer acquisition while undermining customer loyalty through cancellation experiences that resemble escape rooms. Someone who enjoys your service might return later. Someone who feels trapped becomes a critic for life.

The broader lesson extends far beyond streaming platforms. As digital commerce grows, so does the temptation to use what designers call “dark patterns” — interfaces engineered to nudge users towards decisions they might not otherwise make. Pre-ticked boxes. Hidden disclosures. Confusing cancellation paths. Subscription defaults. All are designed by people who understand human psychology exceptionally well.

The World Cup customer only wanted to watch football. Instead, he received an advanced lesson in behavioural economics, digital design, recurring mandates, and the enduring creativity of new revenue models. Which raises another question for businesses everywhere. If a customer genuinely wants your service, why make it difficult for them to leave?

And if they don’t want it anymore, why continue pretending they do? The most valuable subscription any company possesses is not a recurring payment. It is trust.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.