The High Cost of Forgetting Automatic Subscriptions

From bacon- and stationery-of-the-month clubs to gym memberships and credit monitoring services, automatically renewed subscriptions that may start out as a free trial can easily end up as automatic renewals that bleed your bank account.

You don’t notice your money slowly dripping away, and you could be forced to pay overdraft fees if your bank account balance drops to zero. Or you’re stuck with charges on a credit card bill that you rarely look at for services you don’t use.

The easiest solution is to monitor your bank and credit card statements, and to cancel subscriptions you no longer use. But that habit isn’t common among millennials, says David Callis, co-founder and CEO of Hiatus, a new app that cancels auto-renewed subscriptions for free.

“A lot of times people aren’t paying much attention to it,” Callis said in a phone interview about reviewing credit card bills.

The average consumer wastes more than $500 per year in subscriptions and services they don’t want because they forget or don’t get around to cancelling, according to Hiatus.

In a survey it did this year, the company found that almost two-thirds of consumers paid for unwanted subscriptions because they didn’t cancel the auto-renewal feature. It found that most people forgot about it, but 20 percent said it was too much of a hassle to cancel.

Hiatus isn’t the only company providing this service. A service called Trim also cancels subscriptions for free, though it charges $6 if it has to call or send a letter on your behalf.

How it works

After signing up for Hiatus, you provide it with your bank account and password to get into the account — such as a checking or credit card account — and it scans with read-only access where your money goes.

Before a subscription is about to be renewed, such as monthly subscription to Netflix or an annual fee paid to LinkedIn, the Hiatus app will alert you and ask if you want it to cancel the service. It also shows all of your subscriptions at once, and you can cancel an unwanted a service with a single tap.

For now, Callis is the only person at Hiatus making those cancellations for users. He’ll start by trying to cancel the service online. If that doesn’t work, he calls or emails the service and asks to have the user removed from the automatic subscription and that they be refunded.

Your password to the subscription site isn’t needed, though you may have to get on a quick call with Hiatus and the site you’re trying to leave so it can confirm your identity and that you want to leave.

Banks could send alerts on subscriptions

In theory, banks and auto-renew services should be offering this type of service as a way to provide good customer service, Callis says. But most don’t and rely on consumers’ forgetfulness to make money.

“We want consumers to be alerted before they make a purchase,” Callis says.

“We know that phone tree and we know how that business will try to screw you anyway they can.”

Hiatus’ insider knowledge of how to get through to customer service quickly helps it cancel a service faster than a customer would.

“We know that phone tree and we know how that business will try to screw you anyway they can,” he says.

But more than cancelling services, the main reason people come to Hiatus is to keep track of their subscriptions, he says. If nothing else, it’s a way to have a list of where your money is going at your fingertips instead of waiting for a bank statement at the end of the month.

Bill monitoring services and gym memberships are the most difficult subscriptions to cancel, Callis says. That shouldn’t be a surprise to anyone who has tried to get out of a health club membership.

“They will literally make you come in there and have all sorts of documents lined up,” he says of gyms.

Making life simpler

The site reminds me of Unroll.Me, one of my favorite apps. I use it daily in my work and personal emails to easily unsubscribe from unwanted emails that I signed up for months or years ago and forgot about. It’s a free service.

Instead of going to the site that I no longer want to get emails from and trying to figure out how to unsubscribe, Unroll.Me does it with one click from its website or app. I can also roll subscription emails into one email that I get from Unroll.Me each morning, or I can let the individual emails continue coming into my inbox.

If only there was such a service for door-to-door solicitors.