In this article for SaaS founders and businesses we will discuss ways to prevent free trial abuse or free plan abuse. This is especially relevant for AI products as they incur higher cost for free users than other products. We will look into many strategies for avoiding unfair free plan use. Before we do so let’s clarify what we mean by the term free trial abuse and why it hurts businesses. See TL;DR
What is free trial abuse?
Freemium is important for customer acquisition. More pronounced in B2C where your customers are individuals but also B2B tools are affected. Especially when catering to small businesses that can often be one-person shows.
How do users use freemium products unfairly?
There are many more ways in which users can unfairly use your SaaS product. Such behavior can amount to criminal use and the line is not always easy to draw. We will only discuss these two types of unfair use:
Free trial abuse
- Users signup for your free trial.
- When it expires they create another account with a free trial.
- Doing this continuously gives them access to paid features for free.
Free plan abuse
- Users sign up for a free plan.
- Once they reach the limitations of the free plan they open another account.
- They exploit mechanism where monthly credits replenish or monthly usage limits are reset.
- Multiple accounts are used in parallel to bypass these limitations.
How does trial abuse hurt companies?
Revenue loss is the most important way in which companies are hurt. You are providing value that should be paid for – but users find ways to get it for free.
Increased operational costs can hurt even more than revenue loss. Especially AI tools can incur substantial operating costs for catering to free users. They can only support so many free users per paid user. If the ratio tilts it can mean lights out for a business.
Inaccurate data about users can lead to businesses making wrong decisions. When teams use data like number of users, usage of a service, popularity of features etc. they need that data to be accurate. Users with multiple accounts and abandining accounts after trials poison this data.
How to prevent free trial abuse?
Here are the measures you can take, ranked by their effectiveness in reducing unfair use of your service’s freemium model.
Before implementing any of these please consider that you’ll need to balance user experience and effectiveness. Most techniques have the potential to negative effects on users with good intentions. When a regular users’ behavior is flagged as abusive it might prevent them from using or signing up for your service.
You’re not alone, though. Countless companies are moving to fight free trial abuse – and testify that benefits of avoiding free plan abuse outweigh the risks of losing a user every now and then.
Examples of companies blocking disposable email
Before we explain the various techniques, here’s a list of companies that have chosen to block signups from temporary email services. Some do it for free trial prevention. Others to reduce the number of single-use accounts that over time accumulate and are like deadwood in the user database.
- Steam – They block not only disposable email but apparently also do not accept some other emails. Here’s what they say when you try to use a fake email: “It appears you’ve entered a disposable email address, or are using an email provider that cannot be used on Steam. Please provide a different email address.”
- StackOverflow – Just like SaaS and AI products online communities also choose to block disposable email. A community clearly benefits from users with more long term and more honest commitments.
- Discourse – Also a community of communities. They don’t block per default but a plugin exists so that every one who chooses to do so can block temporary email.
- istempmail.com – As the maker of an API to block disposable email of course it does not allow them. This secures the free plan against abuse.
- Canny – when you use a throwaway email there message is clear: “Canny does not accept disposable email addresses. Please, use another email address.”
- Telemetry – they don’t actually tell you. But when you enter a disposable address, they won’t let you signup. You’ll be stuck at the signup form.
- InfinityFree – Disposable email is not allowed to sign up with them. Which makes sense for a provider of free hosting.
- FastCron – Another poster child SaaS that needed to block temporary email to save the free plan offering.
- … and many many more
#1 Prevent automated signups
Number one technique to prevent free trial abuse: make it hard or impossible to create accounts automatically. This requires unfair users to manually create accounts – many will simply be too lazy and give you their money instead.
Captchas can be used in signup forms so that only humans can submit a signup request. A couple of different approaches exist. We recommend using a premade library rather than rolling your own captcha. This also makes it easy to offer an accessible version e.g. for people with impaired vision.
Require email confirmation – chances are your sign up process does this already. Require users to open a link in an email you sent to thei raddress to verify the email address exists. This creates another and while it can be automated it is not super easy to do so. But there is a caveat: email confirmation only confirms the email exists at the time of signup. It does not mean people will be accessing the mailbox later on. This can make it hard to contact free users to promote your paid services. Make sure you read about blocking disposable email below.
Require phone verification – so that people who signed up have to enter a code sent to their number. This is a safer way to verify a user than email confirmation. Because, while burner phone numbers exist, they are way harder to come by than burner email addresses. Keep in mind that adding a phone number to your signup form will drive away some users who are not ready to share it.
#2 Validate emails to block disposable and fake emails
If you want to prevent free trial abuse we highly recommend looking into blocking temporary email providers for signups. This makes it harder for people to create multiple accounts and gives you better data for reaching out to free users through email campaigns. An added benefit is improved deliverability for your campaigns as disposable emails tend to bounce a lot.
You can get a disposable email block list and add it to your software. Multiple such lists exist for you to choose from. We have more on this in our article about temporary email block lists.
Our recommendation though is using a well maintained API to block temporary email. This will be more accurate solution. Because APIs typically have a more comprehensive database of disposable email providers and their domains. Using an API also saves you the headaches of updating the list in your software continuously – it will always be up to date.
IsTempMail is an API to block temporary email that you should definitely check out. It is budget-friendly (even has a free plan) and has outstanding accuracy.
#3 Prevent repeat signups to prevent free trial abuse
Fingerprinting is a controversial technique but can be effective in . Advanced users that know about the concept will be able to circumvent it – but that is true for most other techniques, too.
Limit signups based on IP address is something we would not recommend. While implemented easily it’s negative effects can easily outweigh the positives. When multiple users share an IP address. People who want to IP not going to work very well for manyRequire
Require phone number – See above. While burner phones exist they are not that easy to create. Comes with the drawback of some users not willing to enter their number on the web – that won’t sign up for your trial.
#4 Appeal to users’ conscience
If you are a small business or have an authentic style of communication, this may be for you. Just be honest and ask users to be fair. Detail how you pour your heart into this and would not be able to provide the service unless it is fairly paid for. This will persuade some into buying a paid plan that might have chosen a less virtuous path. You can also target the messaging to suspicious users.
Either repeat the messaging for free users throughout the product or when they sign up. Keep in mind free users might not be receiving email communication from you as many are using burner email addresses that they don’t really read. Think about blocking signups from temporary email services, too (see above).
#5 Kill free trials to prevent free trial abuse
Some AI tools like SiteGPT have opted to move away from freemium. They do not offer a free plan nor a free trial. Customers can usually use a demo to see if the product is for them.
This inevitably costs you signups – but can also lift revenues if you are offering a valuable product. The quality of your customer base will be top notch if you have paying customers only.
Another way for AI products to do this is to require customers to bring their own API keys. If you do this the expensive cost for AI API calls will be incurred directly by the customer. You’re only charging for the wrapper around the API. This can also make it cheaper for you to continue to offer a free plan.
#7 Manually verify new users
Another way to reduce free account abuse is manually verifying new accounts before they can be used. You can check if the people signing up really exist, if they are from companies you want to do business with and will be able to identify suspicious signups before they harm you.
The downsides are pretty obvious, though:
- This becomes hard (i.e. expensive) to do at scale
- It will lead to less trials. People expect to be able to try something right away. A delay of a manual verification will break people’s research flow. They try a competitor instead and may have chosen one before you send your verification. This is true if you can bring down verification time to be near instant. If it takes longer to arrive than an email – you’ll lose signups.
#8 Always ask for a credit card
We have included this for completeness – but would not recommend it. You can prevent free trial abuse significantly by requiring credit card details from every user who signs up. But you shouldn’t. Users just expect to be able to get a free trial or plan without providing credit card details. You’ll give your product a shady impression when you market your trial or plan as free but then require payment details. If you still implement it, be ready for a deteriorating conversion rate on your signup process.
Either way: monitor your signups
No technique will ever be perfect. The users that intend to abuse your service may use different approaches over time. Some will find ways to circumvent whatever technique you have in place. So it is important you measure your signup:
- Monitor number of signups for unusual signs like spikes
- Track IP addresses (either raw or anonymized) used for account creation
- Track logins to multiple accounts from the same devices. This can be legitimate, e.g. an agency using your tool for multiple clients. But it can also be a sign of free trial abuse.
- Check usage of free plans. Look at the free accounts that max out their usage limits every month.
These and more checks let you detect suspicious users. You can then implement and adapt your counter measures. Plus it lets you account for distortions in your user data. So you can keep them in mind when making decisions based on that data.
Bonus tip: Make sure to also monitor your promotional programs like free credits, or referral programs for any suspicious activity. This is sometimes connected to free account misuse.
You can prevent free trial abuse – although never completely. All techniques can be circumvented by people motivated enough to do so. You’ll need to accept some level of abuse – or get rid of free offers completely.
Our two recommendations are
- Preventing automated signups
- Using an API to block disposable email during signup
But before you implement anything: check if you actually have a problem with free trial abuse. If there is one or two free riders, it’s probably not worth it to spend time on preventing free trial abuse. Yet. Come back here after you have grown 10x 🙂
Ready to block disposable email?
Here’s a few resources to help you learn more and get started
- Checkout IsTempMail, an API to identify and block temporary email (124k blocked domains)
- Or alternatively check out the best disposable email domain list on github: disposable/disposable (52k blocked domains)
- Read more about what disposable email is in our glossary
- Learn about the bonus benefits of blocking temporary email: improved deliverability, security, improved customer communication…
Check 200 signups every month for free – Get started now!