Money in Motion: Financial Literacy, Fintech and Behavioural Insights in Emerging India (ISBN: 978-93-49468-66-5)

The Hidden Cost of “Free”: An Empirical Analysis of Subscription Forgetfulness and Auto-Renewal Behaviour among Young, Educated Digital Consumers in India

Author: R Sneha Rathinam, Prachi Dureja & Prachi Mangla

Subscription-based service applications are a pillar of everyday life in the fast-growing digital economy, riding on the back of free trials and auto-renewal features to gain and maintain users. These mechanisms, while convenient, can lead to consumers making inadvertent payments and incurring hidden costs. This research attempts to explore the effect of free trials and auto-renewal terms in digital service apps on consumers’ accidental subscription payments and the hidden costs that result, which contribute to increased revenue and profit for app providers. The design of this study is quantitative research with primary data through the survey of the structured Google Form distributed to 157 respondents. Structural Equation Modelling (SEM) was used to screen and analyse the data in order to investigate the relationships between key constructs and to test the proposed research framework. The results show that poor renewal reminders, automatic conversion of free trials and lack of billing transparency are associated with higher subscription forgetfulness and consequent financial loss, frustration and loss of trust in digital service applications. Subscription management preferences: Consumers want better reminders and more transparency The study concludes that the persistence of unintended subscription costs is not because consumers are uninformed, but because digital subscription designs exploit inattention and friction. The path to really fair “free” digital services is to strengthen transparency and make subscription controls easier.

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