The Committee of Advertising Practice (CAP) has released new guidance on free trial subscription offers. Most readers of this blog will be aware of these sorts of offers, but just to be clear, they are deals where the consumer is invited to sign up to a subscription (e.g. for access to a streaming service or delivery of some products) usually in return for some incentive such as a first month free. The advertiser typically banks on enough consumers not cancelling their subscription before the end of the free trial period to make the promotion worthwhile.
There have been various ASA rulings over the past few years where the ASA has ruled that free trial offers breached the CAP Code as the ongoing nature of the subscription was not made sufficiently clear in the ad. For example, the ASA upheld a complaint against Amazon in relation to a 30-day free trial of its Amazon Prime service on the basis that the ad did not make sufficiently clear that payments would automatically be taken following the expiry of the trial. Beyond CAP, this issue has also been picked up by Trading Standards, the European Commission and, significantly, the Federal Trade Commission in the USA, which recently fined a firm $1.3million for setting up a membership program that was difficult to cancel. We understand that the Competition & Markets Authority may be getting interested as well.
CAP’s view is that any ad relating to a free trial or other promotion relating to a subscription must make clear (a) whether the paid subscription starts automatically unless cancelled, (b) the extent of the financial commitment if the subscription continues, and (c) any other significant conditions applying to consumers who want to take up the offer.
CAP provides some mock-ups of compliant and non-compliant ads, and stresses that the ongoing nature of the subscription must be made clear, e.g. “Subscription service. £10 per month. 1st month free.” Interestingly, the example given by CAP does not state that the payment will be taken automatically, so CAP appears to be saying that consumers will understand “Subscription service” to mean that a payment will be taken following the trial. While the mock-ups are helpful, advertisers would be well advised to read the guidance in full.
Subscription services with free or discounted trial periods are more popular than ever, and are increasingly advertised for everything from snack boxes to razors (grazers to razors, if you will). CAP’s position (and therefore the ASA’s position) is that any ad promoting such an offer needs to make crystal clear what the customer is signing up for in the ad itself.
Free trials and promotions can be a good way to showcase subscription plans but marketers need to be upfront about what consumers are signing up to. This guidance sheds light on how to make sure subscription promotions stick to the rules.