On my first day of high school, not one teacher talked about math, or history, or German, or literature, or biology. Instead, each teacher handed out and then discussed lists of rules which explained, in excruciating detail, what would happen if we were late to class, or skipped class, or didn’t turn in assignments.
I had two immediate reactions.
The first was surprise. It had never occurred to me that you could just not show up for a class, or refuse to turn in the homework. Yes, I was pretty nerdy, but still, at my good-sized, public middle school, kids attended class and mostly did as we were told.
The second reaction was fear. So many rules! How would I remember them all? And each teacher had slightly different punishments–in some cases, you just had to make up the time, which didn’t seem like such a big deal. But in other cases, your grade might drop a full letter.
But then it hit me. If I just showed up every day, turned in my homework, and remembered to clear my absences, I was virtually guaranteed to pass every class. I didn’t need to remember the rules, because they were all superceded by one bigger rule–do the right thing.
Last week, I was reminded of that long-ago fall day at Menlo-Atherton High School (Go Bears). At Subscription Insider’s SUBSCRIPTION SHOW, two terrific speakers, Lisa Dubrow, an attorney who has worked with many of the world’s leading subscription brands, and Lesley Fair, who oversees subscription law for the Federal Trade Commission, had a fireside chat about legal risk in the wild west world of recurring revenue, Saas, memberships and subscriptions.
After all, it can be terrifying to be launching a new subscription or membership option to your customers, only to find that you’re inadvertently breaking the law, right? And those mean old baddies at the FTC are just looking for an excuse to slow down innovation, right?
Lisa knows her stuff and asked a lot of very specific questions about everything from billing regulation to state’s rights to the ideal font size for “the small print”. I could feel my own blood pressure rising as I thought about all of the details that could be cause for an FTC investigation or which could violate the laws of a particular state. Some of the states have rules that are more stringent than our national laws, particularly when it comes to the process of cancelling a subscription.
What’s an entrepreneur to do?
Well, here’s where it gets interesting. Even though there are a lot of rules, most of them boil down to a single thing. Make sure the customer understands what they will spend, the nature of their commitment, and how to cancel the subscription if they decide they no longer want it. In other words, if you are transparent and straightforward with your prospects and clients, you will probably be fine. Without the lawyers. (Note…I am not suggesting you not hire a lawyer! We need lawyers! Some of my favorite people are lawyers!) I’m just saying you will save yourself and your company a lot of legal expense and a lot of stress if you focus on building a relationship that’s so valuable that your customers don’t WANT to leave.
Here are a couple of examples of the kinds of companies the FTC is investigating:
- A “nutri-ceuticals” company whose T&C (you have to click the link in the fine print) states that when you place an order, you will be enrolled into their membership program, and be charged $4.95 today but $84.71 for the trial!
- A site, who according to the FTC’s own site, “offered false promises of ‘guarantees,’ failed to provide services to consumers who unsuccessfully disputed charges, and made it difficult for users to cancel their subscriptions.”
In other words, if you charge what you say you will charge, use a font that you yourself can read, and don’t hide the cancel button, you’ll probably be OK.
A little later in the day, I presented my keynote at the conference on my forthcoming book, THE FOREVER TRANSACTION (which is available for preorder!).
I decided to close with a pledge. Would you take it?
