A new dawn for UK consumer law

Why should I read this?

Subscription contracts are very common and well-known to consumers, covering products such as online streaming, ongoing food delivery services, online news subscriptions and gym memberships. The Digital Markets, Competition and Consumer Bill ("DMCC Bill") proposes a number of changes to UK consumer law, with the aim to update and strengthen the UK consumer law regime (especially in relation to subscription contracts). 

The Bill featured in the King’s speech on 7 November 2023 and is expected to become law in around Spring 2024.

What should I do?

The key consumer law changes in relation to subscription contracts include:

• Enhanced pre-contractual information requirements for subscription contracts. The current draft of the DMCC Bill proposes an enhanced regime for subscription contracts. Businesses would need to provide consumers with ‘key pre-contract information’, separately and in writing, before the contract is made, which includes information about the contract's auto-renewal mechanism, the charges that apply after any initial trial period, and the details of how the consumer can exit the contract. The key pre-contract information would also need to be available on the final webpage before the contract is made, without requiring the consumer to click on any links or download separate documents.

• Reminder notices. The DMCC Bill includes requirements for traders to send certain consumer reminder notices. This includes providing information in relation to choices between services, on what date a renewal payment will be due unless the consumer takes steps to exit, and also clear communication on when auto-renewals happen, when free trials or low cost trials are ending, and easy access to cancellation.

• Cooling off periods. The DMCC proposes additional rights for consumers under subscription contracts which would provide consumers with a 14 day cooling-off period upon:
  • the entry into a new contract (an “initial cooling off period”), as is the case under current legislation; and
  • in certain circumstances, a “renewal cooling off period”

If the DMCC Bill is adopted, this would mean that UK consumers have additional rights to a full refund where they choose to cancel after a subscription contract has rolled over or moves from a free-trial or introductory offer to a full price basis. This is a different position in comparison to the EU, as the ECJ has recently ruled that EU consumers do not have an additional 14 cooling off period at the end of an introductory offer.

• Exiting subscription contracts. Finally, under the current draft of the DMCC Bill, traders must enable consumers to cancel the contract in a single communication and without having to take any steps that are not reasonably necessary to bring the contract to an end (for example, contracts formed online must be cancellable online), and the instructions for doing so must be displayed in a place online where the customer is likely to find them.

As a result of the pending reforms, including the proposed empowerment of the CMA and courts to impose large fines on traders for consumer law breaches, many subscription services will be rethinking their practices to ensure ongoing legal compliance.

Businesses providing subscription services to consumers will need to carefully monitor the implementation of the DMCC, review their sales processes, the technical capabilities of their websites, their terms and conditions and their after sales processes.  Even those businesses which currently adopt best practice in this area are likely to need to make changes to comply with the new prescriptive requirements in areas such as pre-contract information, consumer reminder notices and the ability for a consumer to exit a subscription arrangement. 

Businesses will also need to consider how they may implement the proposed measures differently for consumers abroad, given the increasing divergence between UK consumer law and that of the EU.

Further reading

• A new dawn for UK consumer law - the biggest shake-up in almost a decade could push consumer law compliance up your legal risk register
• Reforms to UK Competition and Consumer Law introduced in the Digital Markets, Competition and Consumer Bill: "Watershed" moment for UK Competition and Consumer Regulation