Apple will automate price hikes for app subscriptions: Is this legal?

Posted: 7 April 2022 10:30 am
News
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Here's what you need to know, including the thoughts of the ACCC.

Update: 17/5/2022

Apple has officially announced their plan to automatically charge users for subscription hikes, to developers in a blog post. In the post, Apple lays out some ground rules; the subscription increases cannot occur more than once a year, and they cannot exceed USD$5/month or USD$50/year. In these cases, users will be made aware of the bump via push notifications, emails and in-app messaging, and will have to opt in to the new price.

It appears Apple's piloting of this scheme was successful, and it's all set to be fully rolled out. As the ACCC outlines below, Apple is likely to run into some issues with this operation here in Australia, but we'll have to wait to see how exactly it plays out.

Original text: 7/4/2022

After raising eyebrows with a plan to treat purchasing an iPhone like a subscription, Apple is heading back into the fray of controversial business practices. The App Store is set to pilot a scheme in which subscription price increases will be charged to the user automatically.

Apple's developer documentation states that consumers must manually agree to subscription increases through the price consent sheet. A Twitter user noticed this rule had been subverted by Disney Plus, when a notification regarding Disney Plus' subscription hike came with a large "OK" button, rather than inviting the user to actually consent to the changes. There was fine print giving the user a link with a chance to cancel.

This fuelled speculation that Disney Plus had been given a licence to operate outside of the App Store's usual parameters. When asked to comment in the original report, an Apple spokesperson instead claimed this was part of a testing process for a new way to run subscriptions on the platform.

"We are piloting a new commerce feature we plan to launch very soon. The pilot includes developers across various app categories, organisation sizes and regions to help test an upcoming enhancement that we believe will be great for both developers and users, and we'll have more details to share in the coming weeks."

App Store automatic subscription price increases in Australia

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Apple customers from all over the world have experienced this new pilot scheme, which means it will likely be heading Down Under too. Australia has some pretty stringent consumer protection laws, which has led to regulators butting heads with the likes of Amazon and Steam.

So how would such a scheme go down in Australia, if fully rolled out? We reached out to a spokesperson from the Australian Consumer and Competition Commission (ACCC) to see what the watchdog had to say. While the ACCC is unable to comment on individual cases or businesses, these are the points Apple will have to consider.

"Under the Australian Consumer Law, businesses are prohibited from misleading or deceiving consumers about the price of their goods or services. If a business decides to increase the price of an app subscription, but fails to adequately notify consumers of the price increase or otherwise manipulates them into accepting the price increase, this may be in breach of the Australian Consumer Law."

One example the ACCC gave was where a business notifies consumers of the increased price without providing an alternative option such as cancelling the service. It would appear the Disney Plus notice would fall under this example as it lacks clear options to consent to the change or cancel the subscription.

With that said, most apps and digital services have lengthy terms and conditions that hardly anyone reads. Would this give Apple some wriggle room? Not according to the ACCC.

"Businesses cannot seek to rely on unfair contract terms in their standard form agreements. While only a court can determine whether a term is 'unfair', a term may be considered unfair if it enables the business to unilaterally vary the terms and conditions of the agreement.

"Businesses should clearly disclose to consumers up-front any upcoming price increases for their services, including the date that the price increase will come into effect and the options available to consumers to cancel the service."

The spokesperson added that a key priority for the ACCC in 2022-23 will be manipulative or deceptive advertising and marketing practices in the digital economy.

"This will include focusing our compliance and enforcement efforts on businesses and platforms which use manipulative techniques to disregard consumer choice or exploit or pressure consumers into making particular purchasing decisions online."

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