If your reaction is wondering if this is legal then you should be interested in the passing of new laws that make it unequivocally legal. Society should be able to govern itself.
The marginal cost to a gym/ISP of the remaining duration of your contract is basically zero, especially if you're not going to use it, and they can get a few more dollars by being a jackass about it. In aggregate the incentives dominate.
But getting a discount in exchange for a longer-term commitment is often a benefit to consumers.
I just paid Visible for a year of cellular service up front and it was far cheaper than paying monthly – truly a great deal. I was able to front that money now, but if I paid a slightly higher per-month price in exchange for a year contract, that would be the same but with less money required up front.
The thing is that sometimes you need to actually cancel the service, not just stop paying for it, to remove your financial obligations. Depending on the contract you signed.
As much as I'm not a big fan of PayPal¹ I use that rather than separate credit card payments/subs for online purchases including subs for things like hosting accounts. Stopping a payment from their web UI seems like it would be easier than arranging a chargeback or calling the CC company to put a block on future payments, and it reduces the number of companies that I hand my credit card details too. When I cancel a service I make sure that the sub is cancelled there as well. I always follow the cancellation procedure at the other end too, unless it is obnoxiously bothersome, as just cancelling the payment method feels like I'm being dickish².
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[1] I'm not sure that I'd risk a business account with them, and I hardly ever keep a balance there, due to the many stories of accounts being frozen for long periods with litle reason and inadequate review.
[2] You might argue that often they'd be more than happy to be dickish, hence the cancellation procedures, but I prefer not to stoop to that level whether they would or not.
A problem with our contract law is that if you get anything out of a contract it becomes really hard to terminate if the terms don't allow for it (a peppercorn). With contracts now being written in dense legalese with multiple pages of terms and conditions, it's not really feasible to expect the common contractor to have a full understanding of exactly what they are signing up for.
This is already framing it in marketing terms. You're not getting a discount but being charged an artificial price premium for less/no commitment. This can get especially obscene in places where gyms are required by law to offer monthly membership options but they charge a significant markup if you go that route.
All of this has the effect of suppressing competition.
Which feels like it defeats the purpose of getting a new generated card.
A company has a simple avenue to avoid inadvertent cancellation, they just ask the customer "did you mean to cancel, please contact us by $date to continue your subscription".
But that's preferring the citizen over business interests.
Just make it so that you can remove the authorization of vendors to charge you. You see a vendor charging you for a service you no longer want - click a button and remove their authorization to charge you.
I contacted PayPal, who opened a case, according to their agreement with Steam (which I'm not party to). PayPal found Steam to be in breach of their agreement (PayPal & Steam's). I was refunded.
Then Steam enacted petty revenge against me, and continue to do so.
PayPal acted laudibly, imo, but there seems to be nothing one can then do about any revenge a company might take against a customer.
A hypothetical might be that you return damaged goods to Amazon, then they refuse to sell to you in the future because you demanded your legal rights.
A computer retailer appears to have done similar. I had to return goods to them that were broken on arrival; they refunded, but closed my account (I have assumed that this was because of the refund request). They do have a general right to drop a customer, or refuse service (outside of protected characteristics) but it seems wrong that "making a reasonable demand in view of legislation" (a device was broken when it arrived) is apparently an allowable reason for refusal of future service.
Last year I had a company (DomainsPricedRight/OwnMyDomain aka GoDaddy) that I last did business (a one time purchase) with 18 years prior (2005), bill me under a new "subscription" with no input on my part.
PayPal sort of allows you to prevent that but it seems only with companies you have recently done business with.
PayPal did do a good job of email notification of the automatic payment and cancelling the "subscription" but there is no easy way to reverse the fraudulent payment, so in the end the consumer still gets burned for profit (it was only $1 but how many people had $1 stolen?)
Years ago at Key Bank I even argued with a teller and manager about blocking a recalcitrant merchant from charging our account, "But you have ongoing charges with them and if we decline the transaction..."
Yeah, that's between me and them, you shouldn't be inserting into this to 'obligate' me to pay.
Afterwards, 1) if per month amount is greater than a regulated threshold, manual confirmation is needed. [ This is friction ] , 2) cancelling can be as simple as going to your bank's website and deleting the "mandate".
In all honesty, this is probably a really balanced approach, but the roll out was a real pain, with banks and merchants collaborating on who supports whom, etc. International payments got screwed completely - to this day, I can't subscribe to nytimes, after almost 2.5 years of this.
(A good summary - https://support.stripe.com/questions/rbi-e-mandate-regulatio... )
Jump to "Pre-payments in the Restaurant Industry"
Money now is more valuable than money later, and guaranteed future money is more valuable than no guaranteed future money.
What you really want is a system where a customer who issues a chargeback that isn't disputed gets the money back, but the merchant also doesn't get a chargeback fee because there is no dispute. And then if there is a dispute (and the customer still wants to do the chargeback), the chargeback fee is loser pays. Then you have a reasonable way for customers to issue legitimate chargebacks that still discourages illegitimate ones.
What we have instead is that if you do a chargeback, the merchant gets whacked with a chargeback fee in the range of $20-$50. Obviously the banks love this; they get the money. But the merchants respond by banning customers who do this, because if you make a $5 purchase with a $1.50 margin and then issue a chargeback, the risk that you do it again before you make enough purchases to even recover the first one is too large.
But if you prohibited merchants from dropping customers over that then there would be no deterrent to fraudulent chargebacks (or to using the chargeback system with the eye-watering fees instead of the merchant's RMA process), so there would be more of them, and merchants would have to raise prices on everybody else even more to cover the bank's fees.
Whereas if you had a balanced system that minimized fraudulent chargebacks while still allowing (and eliminating fees for undisputed) legitimate ones, that would minimize chargeback fees, which is exactly what the banks don't want.
If I've had to do a chargeback, I'm highly unlikely to want to spend further money with that company in future, so they can "ban" me all they like.
My original post in this trail described how I minimise the risk that I have to faf around because of the status quo, which also reduces the potential for my direct payment data leaking due to security snafus, in the absence of the virtual card option in my locale. The one you replied to questioned one point in your description, which seemed to suggest that being banned by a bad trader was a problem.
Though I'll grant that being blocked could be an issue if that merchant was the only supplier for something that you particularly need.
Of course they don't care about that, it's the £10s across millions of customers that they possibly retain unlawfully that makes it worthwhile.