It is being reported that the Attorney general of the State of Florida is investigating Sirius XM Radio for their automatic subscription renewal practices. Also under scrutiny is Sirius XM’s subscriber retention efforts. Various Florida agencies have allegedly received over 200 complaints from consumers who feel that they are being billed for services they did not order.
In fairness to Sirius XM, the policy’s are laid out clearly at the time someone subscribes. The company requests and gets permission to automatically renew subscriptions as they expire. For the most part this issue is forgetfulness on the part of the consumer. However, news laws in various states are looking into automatic renewals because as the months, or years pass, consumers simply forget that their service is about to expire. In the consumers mind, they simply believe that if they do not pay, the service will simply stop. The automatic renewal essentially hits a consumer credit card, which is not anticipated by the consumer. In a healthier economy people are more apt to simply absorb the cost and move on. With people being more budget conscious than ever, a sudden hit to the credit card causes a lot of angst and frustration.
Sirius Xm has also been very active in retention efforts. I have experienced this myself, when I canceled one of my Sirius subscriptions to get an XM one for the Skydock. The company made several efforts to convince me to keep that Sirius subscription alive while I was on the phone, and to this day send me invitations to activate that subscription again. The offers in the mail are not very cumbersome. It is the pressure while on the phone, and repeated phone follow-ups that likely draw the ire of consumers.
Sirius XM’s Patrick Riley has stated that the company believes they are in compliance with the laws, and I would agree with that statement. In my opinion this issue is consumer forgetfulness combined with the business knowledge that most consumers will not remember their renewal date, and then only a certain percentage will complain. Call it aggressive, or call it smart business, the issue is gaining the attention of agencies such as the Better Business Bureau and Attorney’s General. I think Sirius XM needs to find a middle ground. When consumers get frustrated and begin to complain to government agencies, the existing company policy needs to be revisited.
Position – Long Sirius XM Radio