Shanghai Authorities Investigate Auto-Renewal Payments on Apps

app
(Source: MD Logistics)

On Tuesday, the Shanghai Consumers Council issued a report about its investigation into the renewal deduction time of 12 apps. Most apps charge one day before the expiration date, while several apps don’t have a specific deduction time. Bilibili deducts money the earliest at three days in advance.

Most apps, such as iQiyi, Ximalaya, Ele.me, Keep and others charged the renewal one day before expiration, and consumers can cancel it by themselves as late as one day before expiration. Meanwhile several apps don’t set a specific deduction time. For example, Youku deducts between one and three days before expiration and Mango TV charges 48 hours before expiration or even after expiration.

In response, Bilibili said the company was concerned about the issue, and has started self-examination, self-correction and optimization immediately. The automatic renewal period is now changed to 24 hours in advance and the fee is collected after expiration.

The Shanghai Consumers Council holds that a paid membership system is actually a great business model for major platforms to establish strong relationships with their consumers. But instead of enhancing the stickiness of members by quality services and experiences, some platforms only think about putting shackles on members.

Many consumers pay for the membership because they want to watch a specific drama or a movie, or they accidentally pay for it. They may have no intention of becoming long-term members. Deducting fees three days in advance violates the principle of independence and fairness to a certain extent, and shortens the consumer’s choice cycle.

SEE ALSO: Tencent Video Supports Unlocking of User Collections

On November 19, Zhejiang Consumers Council released the rectification commitments made by seven video websites (Tencent, iQiyi, Youku, Mango, Sohu, PP Video and LeTV). They all promise to cancel compulsory automatic renewal, and allow users to decide whether to renew automatically. Before automatic renewal, users will be informed three to five days in advance by SMS and in-app messages. Absolute propaganda words such as “become a member to avoid advertising” are no longer used.

The progress suggests most of the seven video websites will complete rectification by the end of November or mid-December.