Online home improvement platform hipages Group Pty Ltd (hipages) has admitted it likely engaged in misleading or deceptive conduct in breach of the Australian Consumer Law from October 2018 to January 2022 by failing to adequately disclose contract terms that allowed it to automatically renew subscriptions and charge an early termination fee.
Following an ACCC investigation, hipages has provided the ACCC with a court-enforceable undertaking under which it has committed to clearly disclose its subscription renewal and cancellation policies in its telephone scripts and email communications.
The hipages platform connects tradespeople and small businesses who subscribe to hipages with consumers who need work completed.
"Many subscribers were unaware that they had to specifically opt out of hipages' automatic 12-month renewal, and that there was only a very short cooling off period in which they could avoid paying an early termination fee," ACCC Deputy Chair Mick Keogh said.
"When some people attempted to cancel their auto-renewed contracts, they were told they would have to pay out the full 12-month term."
Hipages also admitted that it likely contravened the Australian Consumer Law by making false and misleading representations to some subscribers. This conduct occurred between 18 April 2020 and 16 April 2021, when hipages informed particular subscribers that they needed to take additional steps to cancel their contract and that hipages had the right to enforce payment for a further term of the contract. This was not the case because the subscribers had already given valid notice of cancellation before the automatic renewal date.
The undertaking given to the ACCC also includes commitments by hipages to review its complaints handling system, review and seek to resolve outstanding complaints by subscribers (including by remediation) and to implement a consumer law compliance program.
"The rise of online marketplaces has brought greater convenience to many people, but it's also led to an increase in sneaky tactics such as subscriptions that are difficult to get out of," Mr Keogh said.
"Businesses, including online platforms, must be clear and up-front with their customers about important contract terms such as renewals and cancellations. Failure to do so risks breaching the Australian Consumer Law and may result in enforcement action."
Hipages cooperated with the ACCC and responded to the ACCC's investigation by taking steps to more clearly disclose its subscription contract terms, and providing additional email and SMS reminders to subscribers ahead of any upcoming automatic renewal.
A copy of the undertaking is available at hipages Group Pty Ltd
Background
'Subscription trap' is a term that describes practices used by online businesses that make it difficult for consumers to cancel a particular subscription service. The fact that the subscription involves ongoing fees is usually not adequately disclosed, and consumers are often enticed into it with a free trial or discounted price.
Hipages is an ASX-listed Australian online sales lead generation platform connecting consumers and tradespeople in the home improvement industry. Tradespeople and small businesses (subscribers) pay a monthly subscription fee to hipages and, in return, receive sales leads. The leads allow subscribers to quote on jobs that prospective customers post on the hipages platform.
The platform has more than 34,000 subscribers who pay between $25 and $999 per month for an initial subscription term of six to 12 months.
