Microsoft’s apology and refund offer to Australian subscribers has floundered, just a week after the Australian Competition and Consumer Commission (ACCC) launched legal proceedings alleging the tech giant misled 2.7 million consumers over subscription pricing and plan options for its Microsoft 365 software.
Microsoft began emailing its subscribers in Australia today about a cheaper Classic version of its Microsoft 365 Personal and Family plans that do not include its AI assistant, Copilot. The company added Copilot to Microsoft 365 in October 2024 and automatically raised prices without telling subscribers that they could keep their existing plans at the original price.
In a statement, Microsoft admitted it “could have been clearer” about this alternative, as it only revealed the Classic plans to customers who began cancelling their subscriptions.
“In our email to subscribers, we expressed our regret for not being clearer about our subscription options, shared details about lower-priced alternatives that come without AI and offered a refund to eligible subscribers who wish to switch.”
The emails were tailored depending on whether customers subscribe to a Personal or Family plan, and whether they pay on a monthly or annual basis.
Microsoft offered eligible subscribers a refund of the difference in price between the plans, starting from their first renewal date after 30 November 2024, if they chose to switch back to the Classic plan.
But soon after, customers began reporting glitches, according to The Sydney Morning Herald. Some said that the refund link didn’t work properly, and others found they could only downgrade to a Personal Classic plan, rather than the Family Classic version they had previously.
“One would have hoped that Microsoft would have checked this before sending out the mass email, but here we are,” one customer told The Sydney Morning Herald. Another called the situation “an epic fail by Microsoft.”
A company spokesperson later admitted that “some subscribers eligible for the refund received an incorrect link,” apologizing and saying Microsoft was fixing the issue.
ACCC Legal Action Highlights the Risks of Poor Customer Communication
The refund confusion comes as the Australian Competition and Consumer Commission (ACCC) pursues Microsoft in the Federal Court. The regulator has alleged the company misled customers when it told them they had to accept a price increase to keep their Microsoft 365 subscriptions or cancel entirely, without mentioning the cheaper Classic option.
The consumer watchdog argues this prevented subscribers from making informed choices.
“The Microsoft Office apps included in 365 subscriptions are essential in many people’s lives and given there are limited substitutes to the bundled package, canceling the subscription is a decision many would not make lightly,” ACCC Chair Gina Cass-Gottlieb said.
