ACM orders Privilege to adjust its conditions, and to make early cancellations possible
Privilege B.V. offers consumers paid subscriptions on its website www.mijnprivileges.nl. Privilege calls its subscriptions ‘memberships’. With these memberships, consumers gain access to online auctions of various products and services. According to the Netherlands Authority for Consumers and Markets (ACM), Privilege in its terms and conditions restricts the ability of consumers to cancel their subscriptions early. It does so by automatically renewing subscriptions for one year after the initial term (of one year) has expired. If consumers wish to cancel their subscriptions early anyway and wish to stop paying, Privilege subsequently threatens with high costs. This is not allowed. After the initial subscription term, all subscriptions (like these memberships) can be cancelled at any time with a one-month notice period. ACM orders Privilege to comply with these rules starting October 19, 2022. For each week that they fail to do so, Privilege will have to pay a penalty payment of 15,000 euros per week up to a maximum of 240,000 euros.
Edwin van Houten, Director of ACM’s Consumer Department, explains: “Strict rules are in place regarding taking out, renewing, and cancelling subscriptions. These rules protect consumers against unreasonable barriers raised by companies for cancelling subscriptions. We confront companies that violate those rules. And we impose sanctions on companies that fail to comply with the rules. We believe it is important that consumers are able to have confidence in the digital economy.”
What was this case about?
Privilege B.V. is the company behind the website www.mijnprivileges.nl. On this website, consumers are able to take out subscriptions, called memberships. With these memberships, consumers gain access to online auctions for various products and services, and to puzzle contests and win promotions. Consumers usually take out these memberships online in the form of subscriptions, which cost 165 euros. After a year, memberships are automatically renewed for another year. Consumers then pay 120 euros per year. The general terms and conditions do not include the option of early cancellation after that renewal. In addition, the general terms and conditions stipulate that cancellations are only possible by submitting a signed letter. These are unreasonable conditions, which companies cannot use. In its general terms and conditions, too, Privilege says that it will fine consumers that obstruct direct debit payments. That fine is three times the annual membership fee. Consumers that had reversed payments received letters from the company telling them that they would be fined severely if they did not withdraw their cancellations. That provision, too, is unreasonable.
What did ACM order Privilege to do?
ACM has confronted Privilege with the existing rules. As Privilege has continued to fail to comply with these rules, ACM has now imposed an order subject to periodic penalty payments. This is the company’s last chance to adjust its practices and to comply with the rules. If they company fails to do so within six weeks, it will have to start paying penalty payments of 15,000 euros per week up to a maximum of 240,000 euros.
What are the rules?
Companies that offer their products or services to consumers in the form of subscriptions cannot make cancellations unnecessarily difficult. This means that, if consumers took out a subscription online, they must be able to cancel it online as well. In that context, companies cannot create any new barriers in the form of fines, like Privilege does. Another rule is that, once the subscription’s initial term has ended, it must be possible to cancel the subscription at any time with a one-month notice period. It is not allowed to renew subscriptions automatically with another year without offering the option of cancelling them early, like Privilege does. And, in that context, it is also not allowed to pressure consumers to pay for wrongfully renewed subscriptions.
ACM and the digital economy
The digital economy is a key topic on ACM’s Agenda. The digitalization of the economy continues without abatement. New technological developments follow each other in rapid succession. Digitalization produces benefits, but it also carries risks. In the digital economy, ACM continues to ensure that markets function well. Through its oversight efforts, ACM wishes to ensure that consumers are able to participate with confidence in a digital economy that works for all people and businesses.