Programme Design
Paid loyalty memberships
Plan a paid loyalty membership around usable benefits, sustainable delivery costs and clear payment terms.
A paid loyalty membership charges a fee for access to defined benefits during a stated term. Consider it when members can realistically use the benefits and the retailer can deliver them at plausible levels of use. The fee, the value a member may receive and the retailer’s cost are separate figures; assess each before launch.
Paid Loyalty Membership: Key Considerations Before Launch
- Fee
- Charged for access to benefits over a stated term
- Member Value
- Actual savings or benefits members can realistically use
- Retailer Cost
- Cost to deliver benefits at plausible levels of use
Australia’s Loyalty Program Market Outlook (2025–2029)
- CAGR Growth
- 13%
- Market Value by 2029
- US$1.96 billion
- Key Drivers
- Instant rewards, subscription clarity, member trust
Define the promise
State what is available on joining, what requires another purchase, and what depends on stock, location or booking capacity. A delivery benefit needs an eligible-order rule; a bookable service must say whether a place is guaranteed or subject to availability. Put limits that materially affect value beside the offer.
| Member decision | Information to provide | Retailer check |
|---|---|---|
| Join | Benefits, eligibility and limits | Can each advertised benefit be supplied? |
| Pay | Total charge, term and payment dates | Does checkout match the stated price? |
| Use | How to claim each benefit | Can members complete a claim in the advertised channels? |
| Leave | Renewal and cancellation terms | Do billing and access follow those terms? |
The ACCC can require businesses to substantiate claims about their products or services. Apply the same approved offer across checkout, account information and staff explanations.
A single purchase must not leave a customer unaware they are also agreeing to an ongoing paid membership. In 2016, the ACCC warned online retailers to display ongoing fees clearly and prominently, including through the checkout process.
Pre-Launch Checklist for Paid Loyalty Memberships
- Clearly state benefits available on joiningInclude eligibility, limits and conditions
- Specify what requires an additional purchaseAvoid ambiguity around extra costs
- Clarify availability constraints (stock, location, booking)Do not guarantee delivery or service without capacity
- Display ongoing fees clearly during checkoutComply with ACCC guidelines on transparency
Substantiate the promise
Keep evidence for claims about what members can receive and the conditions that apply. The ACCC can require a business to substantiate claims about its products or services, and may investigate and take compliance or enforcement action for misleading conduct.
Check that claims remain supportable wherever they appear, including in advertising and during checkout. A benefit description that is accurate in one channel but overstates what members can actually access can still give a misleading overall impression.
Check member value
Use the retailer’s purchase history to examine likely opportunities for new, regular and occasional customers to use the benefits during a term. Show any further purchase needed to obtain a saving. Compare a savings claim with the price the customer could otherwise pay, including applicable promotions. Describe convenience or access plainly without assigning it an unsupported dollar value.
Check the commitment
Estimate completed benefit use, fulfilment resources, support work and capacity, including a higher-use case. If a business case works only when members cannot use the main benefit, design a different offer.
Compare the fee with membership costs and any credible change in contribution from purchases. Keep those effects separate: membership does not automatically cause member purchases, and do not deduct again a discount already reflected in net order receipts. Use a consistent GST and refund basis.
Manage the paid term
Before payment, explain the initial total charge, term, renewal arrangement and cancellation route. A monthly figure must not obscure a longer minimum commitment.
The ACCC has warned about unclear ongoing membership fees, and its reported eHarmony case illustrates the risk of misleading impressions about subscription duration, renewal and price. Refunds, unused benefits and access after cancellation depend on the actual offer; explain those terms rather than assuming one outcome.
After launch, review entitlement, attempted and completed benefit use, failed claims, fulfilment cost, complaints, cancellations and renewals. Low use may reflect limited appeal, poor visibility or difficulty claiming. Investigate the cause before changing a benefit, and account for commitments already made to members.
The ACCC’s Fabletics example shows why the first transaction needs particular scrutiny: after a discounted first purchase, customers were charged a monthly US $49.95 VIP membership fee. Complaints included customers being unaware of the subscription and having difficulty cancelling; the retailer agreed to make ongoing fees clearer on its website and throughout checkout.
A further fee should not disappear behind a monthly price. In its eHarmony case, the Federal Court found that statements of monthly subscription prices omitted an additional mandatory monthly fee and that the minimum total payable was not displayed as a single price alongside the monthly amount. The Court also found misleading representations about membership duration and automatic renewal.
Treat complaint patterns as evidence to investigate, not as proof that every member had the same experience. The ACCC said it uses reports to inform education, compliance and enforcement work; it does not resolve individual disputes or provide legal advice.
Pros and Cons of Paid Loyalty Memberships in Australia
- Pros
- Higher customer retention, predictable revenue, enhanced perceived value
- Cons
- Risk of misleading claims, cancellation challenges, ACCC scrutiny on renewal terms
Key Regulatory Actions and Cases Involving Paid Loyalty Subscriptions
- 2016ACCC warns online retailers to display ongoing fees clearly during checkout
- 2024Fabletics case: customers unaware of monthly VIP fee after discounted first purchase
- 2025Federal Court finds eHarmony misled consumers about automatic renewal and total price
Use review decisions to protect the offer
Set review questions around whether members can understand the commitment before paying and whether the promised benefits remain deliverable. Where the evidence reveals confusion about fees, term or renewal, treat that as a reason to examine the offer and its presentation rather than assuming members understood the terms.
A decision to change or withdraw a benefit should account for what members were promised for their paid term. Review whether the change would materially alter the offer members joined for, and make any revised claim consistent with the benefit that can actually be supplied.
In this guide
- Estimating the cost of paid membership benefitsEstimate paid-membership benefit costs from completed uses, running expenses and realistic use scenarios.
- Pricing a retailer's paid loyalty membership against benefit costsAssess a paid membership fee against benefit costs, realistic member value and higher-use scenarios.
- Explaining renewal and cancellation clearlyExplain paid-membership charges, automatic renewal, cancellation steps and the effect on benefits.
- Measuring whether paid members use the promised benefitsMeasure entitlement, attempts, completed uses and failed claims for each paid-membership benefit.
