ASX-listed tradesperson platform Hipages Group has conceded to regulator the Australian Competition and Consumer Commission (ACCC) that it potentially engaged in misleading or deceptive conduct over four years involving its subscription renewals and termination fees.
The ACCC said the company’s actions were in breach of the Australian Consumer Law between October 2018 to January 2022 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 lead platform for tradies who pay monthly subscription fees to quote on jobs. The platform has more than 34,000 subscribers paying between $25 and $999 per month for 6 -12 month subscriptions.
It listed on the ASX in November 2020, raising $100.4 million at $2.45 a share. Hipages currently trades at around $0.725 a share.
Rupert Murdoch’s News Corp is the company’s biggest shareholder, having nabbed a 25% stake when the tech company was still private in 2015.
The ACCC has been examining what they call ‘subscription traps’ – where online businesses make it difficult for users to cancel subscription services, alongside adequate disclosures.
ACCC Deputy Chair Mick Keogh said hipages Hipages cooperated with the regulator during its investigation and subsequently agreed to more clearly disclose its subscription contract terms, and providing additional email and SMS reminders to subscribers ahead of any 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 in which they could avoid paying an early termination fee,” he 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.”
Keogh said the rise of online marketplaces had led to an increase in “sneaky tactics” such as subscriptions that are difficult to escape.
“Businesses, including online platforms, must be clear and up-front with their customers about important contract terms such as renewals and cancellations,” he said.
“Failure to do so risks breaching the Australian Consumer Law and may result in enforcement action.”
Hipages also admitted that it likely contravened the consumer law by making false and misleading representations 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 cancel their contract and that the company had the right to enforce payment for a further term.
But that was not true because the subscribers had already given valid notice of cancellation before the automatic renewal date.
The company has also committed to a review its complaints handling system, alongside moving to resolve outstanding complaints by subscribers.
CEO Roby Sharon-Zipser said Hipages has improved its subscriber experience.
“After our first contact with the ACCC, we moved quickly to review and implement changes to our processes,” he said.
“We’ve also revised our contract terms so they’re clearer when tradies join the platform; we’ve installed extended cooling-off periods to give tradies more time; and overall we hold ourselves to account to deliver a more transparent onboarding experience.”