Increasing numbers of consumers have expressed concern about unexpected subscription charges appearing on their credit card statements lately, according to the Australian Financial Review
Research commissioned by ING Australia earlier this year found that on average, Australians are spending $1,261 a year on "unused subscriptions and forgotten outgoings".
As new sign-ups for services are surpassed by cancellations, many consumers are finding the process of cancelling their subscriptions more convoluted than anticipated.
In UK, the Financial Conduct Authority (FCA) has expressed concern over such online sales strategies for almost a decade, previously cautioning against practices forcing customers to 'opt out' to avoid extra charges.
Meanwhile, in the US, the Federal Trade Commission (FTC) recently sued Amazon, alleging the online giant tricked consumers into ongoing subscriptions for its Prime service.
In April this year, the ACCC said that it wanted new powers to crack down on online businesses that make it hard to cancel subscriptions.
Whilst it is acceptable for companies to attract customers with personalised offers, exploiting vulnerabilities to sell unnecessary services is an entirely different issue.
As AI's role in sales intensifies, businesses should brace for heightened scrutiny, regulatory bodies must set firm principles and procedures to tackle emerging abusive sales practices.
Regulation strategies
Matthias Holweg, of Oxford’s Saïd Business School, emphasises, “The more versatile AI becomes, the more we need regulation ... to ensure it doesn’t manipulate or exploit us.”
Along with suing Amazon, the US Federal Trade Commission (FTC) compelled Publishers Clearing House to repay $28 million AUD to customers coerced into making purchases and incurring fees whilst participating in its sweepstakes.
Regulatory pressure has led Amazon to adjust its policies in the EU and the UK, allowing customers to end their Prime subscriptions through a clearly labelled 'cancel' button requiring just two clicks.
These policy changes also came into effect in the US earlier this year, ahead of the FTC lawsuit. Amazon asserts that its cancellation procedures are "clear and simple ... by design".
Several strategies to regulate these practices are under consideration, the FCA’s new consumer duty warns against exploiting consumer behavioural biases.
The European Parliament is drafting legislation to limit AI technologies such as biometric categorisation, emotion recognition and generative systems.
Meanwhile, the FTC is demanding companies involved in deception cases to keep records of their psychological and behavioural research, including A/B testing.