Microsoft has stated that it will provide refunds to the qualified subscribers of its Microsoft 365 personal and family subscription that have fallen victim to a price hike that occurred due to the incorporation of Microsoft Copilot AI functionalities.
The company claims that it realized communication on pricing change was not as transparent as it would have been, and this time, it is offering options to the users to upgrade to a lower priced version of the plan called Classic and be refunded the price difference backdated.
What Has Occurred and Who Is Eligible
In October 2024, Microsoft revised its model of Microsoft 365 subscriptions in Australia (and likewise in certain other countries), which includes its Copilot AI assistant with its Personal and Family offerings.
This increased the prices of the Personal plan by approximately 45 percent and the Family plan by approximately 29 percent, as per the regulatory filing.
The Australian Competition and Consumer Commission (ACCC), which is the national competition watchdog, filed a lawsuit against Microsoft accusing it of failing to inform millions of its users clearly regarding a cheaper alternative without the AI add-on.
Microsoft, in its response, apologized that it failed in its transparency standards.
The company currently offers two options to the affected users, including remaining on the existing plan and being provided with Copilot and a higher cost, or changing to the so called Classic plan, which does not have Copilot and is charged with the former, cheaper cost.
Those who opt for the latter and pass some of the criteria will get refunds back to the time they were initially renewed at the end of 30 November 2024.
The qualifying subscribers are usually required to have been on the affected Personal or Family plans, to have received the official email offered by Microsoft, and to make the transition to the Classic plan by the deadline imposed, which is 31 December 2025.
Refunds will be done to the first mode of payment about 30 days after the switch is confirmed.
How to Claim Your Refund
In case you feel you can get the refund, you have the following simple guidelines to follow:
- Microsoft email check: The company has started a personalized communication to users affected. These messages clarify your choices, and they contain links in order to change plans.
- Select your package of choice: You will have the option to either stay with the existing Copilot-included plan (at a premium price) or consider the alternate, the so called Classic plan without Copilot, and obtain the refund.
- Switch to Microsoft 365 Classic: make sure to go to the Microsoft account portal subscription management. Find the alternative to use the Microsoft 365 personal, classic, or family types. Ensure the switch prior to the cut-off date (31 Dec 2025).
- Check on refund processing: starting on 1st February 2025, Microsoft will give back the difference between what you have paid and what you ought to have paid under the Classic plan during your initial renewal between 30 Nov 2024 and 24 January 2025. The refund should be issued within 30 days or so.
- Keep billing on recurring mode: to continue to qualify for switching to the Classic plan, continue with your subscription’s recurring billing. Revoking your subscription might render you ineligible for your refund.
What This Means for Users
To the customers who suffered losses, this offer provides them an opportunity to reclaim the reduced subscription price and repay an added amount that has already been paid.
It gives an indication that even big tech may be subjected to some regulatory pressure on subscription pricing and disclosure, and that discontinuation of changes to a pricing policy, which impact a user, may be subject to user rights.
In case you are already kept on the higher priced plan and you are not aware of what you have been getting, this may be the time to review your subscription and make a decision on whether the additional AI capabilities are worth the money.
And even were you to remain, it is to your benefit to know about the Classic plan and, in that case, be able to negotiate or amend your renewal in the future.
To conclude, Microsoft’s refund proposal deals with the criticism of the way Microsoft processed the recent price increment of Microsoft 365.
In case the company sent you an email or thinks you are in the affected group of subscribers, you may want to consider the possibility of changing to the Classic plan and requesting the refund to determine whether it is relevant to you.
The quicker you act, the better; the more chance you have of recouping the money.
