Beefed-up legal protections are needed to protect people from online subscription strangleholds, the head of the consumer watchdog has warned in a broadside against services that make it all but impossible for subscribers to stop paying for products.

Australian Competition and Consumer Commission chair Gina Cass-Gottlieb conceded the commission was struggling to keep up with a digital world that was constantly changing.

ACCC chair Gina Cass-Gottlieb says the watchdog cannot police emerging bad business practices without broader powers to ban unfair trading.Credit: Rhett Wyman

As an example, she cited existing bans on unfair practices under consumer law that were too narrow to adequately address practices such as stock countdowns, deliberately confusing website designs and subscription traps.

“There is a whole set of behaviour that actually takes place … that significantly harms and causes financial loss and frustration for consumers that we’re not able to properly police,” Cass-Gottlieb said.

Many online games, media and streaming services offer free trials or discounted periods for product subscriptions.

Those services were easy to subscribe to, Cass-Gottlieb said, but often incredibly difficult to unsubscribe, with lengthy notice periods or no responses to emails or phone calls.

“Everyone calls it a subscription trap,” she said. “The terms and conditions say you can unsubscribe, but the practice of it is … almost impossible or bordering on impossible to do.”

Websites pressuring online shoppers by stating there is limited stock availability is one trend concerning the watchdog. Another is website designers using people’s biases to confuse them, such as one part of a website using green for yes and another using green for no.

“We are looking for an ability to protect consumers because of the unfair way in which the business process and practice takes place. In many jurisdictions, that general unfair trading practice prohibition is in place,” Cass-Gottlieb said.

The commission chair, who will address the National Press Club on Wednesday, said a general prohibition would allow the watchdog to move quickly as business practices and technology changed, rather than requiring a protracted law change each time.

In a speech last week, Competition Minister Andrew Leigh said the government was continuing work that began in 2020 on unfair practices, and noted the commission recommended an economy-wide ban on subscription traps in a 2022 report.

Leigh also pointed out that many countries, including the United Kingdom, United States and Singapore, had banned unfair trading, and said the government was looking at overseas models and the commission’s recommendations to help shape Australia’s laws.

“Whatever path we take on this important area of consumer law, we know that competition depends on strong safeguards for Australian households and small businesses,” he told the Council of Small Business Organisations Australia summit.

“Consumer protections – and strong enforcement and compliance of them – improves consumer wellbeing.”

Cass-Gottlieb said the watchdog was also very concerned about exclusive dealing – where businesses with market power locked competitors out of supply.

Last year, the ACCC won a $12 million case against Peters Ice Cream after the company admitted to acquiring distribution services from PFD Food Services on the condition PFD would not distribute or sell any single-serve ice-creams from Peters’ competitors.

Cass-Gottlieb said the watchdog was closely monitoring the energy and telecommunications sectors for exclusive dealing.

“It had multiple effects down the supply chain, which is what we’re concerned about,” she said.

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