Subscription price increase, overcharging and the duty of disclosure: what the company may do

Service page: Consumer claims and class actions lawyer.

Why a subscription is not “just a monthly payment”

You asked to cancel a subscription, and the company showed you “terms you did not read”. After a year you were charged NIS 49 instead of NIS 39, and nobody sent an email. You discovered that your account is charged every month for a service you signed up for two years ago and forgot about. Each of these situations could be a breach of the Consumer Protection Law, and you have clear rights.

Legally, a subscription is a “continuing transaction”: a transaction in which the obligations continue over time. Such transactions have special consumer protections that apply even if you “agreed” to the terms when you joined.

The duty of disclosure: what must be shown to you before you signed

Under the Consumer Protection Law, a dealer about to enter into a continuing transaction with a consumer must disclose before the transaction: the consumer’s right to cancel it; in a fixed-term transaction, its length and end date; and the payments the consumer will be charged on cancellation and how they are calculated (section 13C(b)). Any price stated must be the total price, including VAT (section 17D). In a distance sale, the duty of disclosure in section 14C(a) also applies.

Terms that were not disclosed before you joined might not be enforceable. Say the company claims you agreed to a “cancellation fee” that was not explained on the sign-up page. The failure to disclose it in advance is a breach of section 13C(b), and you have a basis to dispute the charge.

Canceled and the charges continued? See Charged after subscription cancellation? 5 steps to get a refund.

Price increase: what the company must do before it charges more

You were charged NIS 49 instead of NIS 39, with no email and no SMS? The subscription price is part of the contract, and an increase that does not follow its terms is a breach of contract. A term in a standard-form contract that allows the dealer to change the price at its sole discretion is presumed to be unfair, unless the change results from factors beyond its control (section 4(4) of the Standard Contracts Law). In a fixed-term transaction charged under a debit authorization, the dealer must notify you of its end date, and continuing the transaction after that date is valid only on the conditions in section 13A. And a continuing transaction can be canceled at any time (section 13D(c)).

Were you charged under a debit authorization for an amount the dealer is not entitled to collect under the terms of the transaction? The dealer must look into your claim within ten business days. If it collected an excess amount, it must refund it within four business days, with interest and a payment for your expenses (section 13D1). And you can cancel the transaction at any time (section 13D(c)).

Did the price go up at the end of a promotion period? This is a ‘fixed-term transaction’. The duty to give notice before the end date applies to it, as does the rule that automatic renewal is not valid unless the conditions in section 13A are met. The details: Automatic renewal of a subscription: what the law requires of the business.

Personal data: what you are entitled to know and delete

Every subscription company that collects customer data (name, email, address, usage habits) is subject to the Protection of Privacy Law, 5741-1981. You are entitled to inspect the personal information about you held in the database (section 13). You can ask to correct or delete information that is not correct, complete, clear or up to date (section 14). And you can demand that information about you be deleted from a database used for direct mailing (section 17F).

To request inspection, correction or deletion, send a written request to the company’s privacy address. For a direct mailing database: if you were not notified within 30 days that your demand was carried out, you can apply to the Magistrates’ Court (section 17F(e)). You can also complain to the Privacy Protection Authority, and the head of the Authority may impose a monetary sanction for the violations listed in the Law (section 23Z).

Businesses that offer subscriptions: a checklist before launch

If you are a business that offers subscriptions, make sure your contract includes: a clear cancellation clause that complies with the Consumer Protection Law; a proven, documented notice mechanism for price changes; active, express consent to automatic charging; an up-to-date privacy policy; and terms of service that are accessible before the user agrees.

A claim over subscription terms that harm many customers can proceed as a class action (section 3(a) of the Class Actions Law, 5766-2006 and item 1 of the Second Schedule to the Law). Then the damage to all class members is examined in one proceeding, not only the refund to the single plaintiff. Checking the subscription terms against the law early reduces the exposure.

Frequently asked questions

The price went up at the end of the promotion period. Is that legal?

This is a “fixed-term transaction”, so the duty to give notice before the end date applies to it, as does the rule that automatic renewal is not valid unless the conditions in section 13A of the Consumer Protection Law are met. A continuing transaction can be canceled at any time (section 13D(c)).

The company claims I agreed to “cancellation fees” that were not explained when I signed up. What can I do?

Dispute the charge. Before the transaction, the dealer must disclose the payments the consumer will be charged on cancellation and how they are calculated (section 13C(b) of the Consumer Protection Law), and failing to disclose them in advance is a breach of that section. Terms that were not disclosed before joining might not be enforceable.

How do I delete my details from the subscription company’s direct mailing list?

You can demand that information about you be deleted from a database used for direct mailing (section 17F of the Protection of Privacy Law). If you were not notified within 30 days that your demand was carried out, you can apply to the Magistrates’ Court (section 17F(e)). You can also complain to the Privacy Protection Authority.

Can you file a class action against a subscription company?

Yes. A claim over subscription terms that harm many customers can proceed as a class action (section 3(a) of the Class Actions Law and item 1 of the Second Schedule to the Law). Then the damage to all class members is examined in one proceeding, not only the refund to the single plaintiff.