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  • Tradie marketplace Hipages police accuses consumer watchdog of misleading behavior over subscription cancellations

Tradie marketplace Hipages police accuses consumer watchdog of misleading behavior over subscription cancellations

ASX-listed trading platform Hipages Group has admitted to the Australian Competition and Consumer Commission (ACCC) regulator that it may have engaged in misleading or deceptive behavior over four years in relation to subscription renewals and termination fees.

The ACCC said the company’s actions between October 2018 and January 2022 violated Australian consumer law because Hipages failed to adequately disclose contract terms that allowed it to automatically renew subscriptions and charge an early termination fee.

Hipages (ASX: HPG) is an online sales leads platform for artisans who pay a monthly subscription fee to quote on job postings. The platform has over 34,000 subscribers who pay between $25 and $999 per month for 6 to 12 month subscriptions.

It listed on the ASX in November 2020, raising $100.4 million at $2.45 per share. Hipages is currently trading at around $0.725 per share.

Rupert Murdoch’s News Corp is the company’s largest shareholder, having acquired a 25% stake when the tech company was still private in 2015.

The ACCC has been investigating what they call “subscription traps” – where online companies make it difficult for users to cancel subscription services in addition to adequate disclosures.

ACCC vice president Mick Keogh said hipages Hipages worked with the regulator during its investigation and subsequently agreed to more clearly disclose the terms of the subscription contract and provide additional email and text reminders to subscribers ahead of an upcoming automatic renewal.

“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 during which they could avoid paying an early termination fee,” he said.

“When some people tried to cancel their auto-renewing contracts, they were told they had to pay the full 12-month term.”

Keogh said the rise of online marketplaces has led to an increase in “sneaky tactics” such as subscriptions that are hard to escape.

“Companies, including online platforms, must be clear and honest with their customers about important contract terms such as renewals and cancellations,” he said.

“Failure to do so risks breaching Australian consumer law and could lead to enforcement action.”

Hipages also admitted that it likely violated consumer law by making false and misleading statements to some subscribers over a 12-month period between April 2020 and 2021. The company told some subscribers that they needed to take additional steps to to cancel their contract and that the company had the right to demand payment for a subsequent installment.

But that was not true because the subscribers had already given a valid cancellation before the auto-renewal date.

The company has also committed to an overhaul of its complaint-handling system, in addition to taking steps to resolve outstanding subscriber complaints.

CEO Roby Sharon-Zipser said Hipages has improved its subscriber experience.

“Following our initial contact with the ACCC, we quickly moved to review and implement changes to our processes,” he said.

“We have also revised our contract terms to make them clearer when trades join the platform; we have set up extended cool-down periods to give trades more time; and overall, we hold ourselves accountable for providing a more transparent onboarding experience.

Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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