Subscription Pricing – What Your Business Needs to Know

Government estimates indicate that consumers waste £1.6 billion annually on unwanted subscriptions, largely due to unclear terms and complex cancellation processes.

The Digital Markets, Competition and Consumers Act 2024 (the "DMCC") introduces significant reforms to subscription contracts, aiming to enhance consumer protection and transparency. 

These reforms address the growing concern over fair consumer treatment in the digital economy, aiming to eliminate "subscription traps" and strengthen the powers of the Competition and Markets Authority to enforce these changes.

Which businesses are impacted?

The DMCC applies to "traders", which generally speaking, will include any person or entity acting for business purposes. In other words, the Act's application is very broad and will apply to most (if not all) businesses.

What's Changing?

• Pre-Contract Information: Businesses must provide clear and comprehensive information about subscription terms before the contract is signed. This includes details on pricing, duration, and cancellation policies.
• Renewal Reminders: Companies are required to send renewal reminders at specified intervals, ensuring consumers are aware of upcoming renewals and any changes in terms.
• Easy Termination: The DMCC mandates that businesses offer straightforward mechanisms for consumers to terminate their subscriptions. This includes providing cooling-off periods at the start of the contract, after any introductory period, and upon renewal.
• End of Contract Notices: Upon termination, businesses must send an “end of contract notice” which acknowledges that the contract has been cancelled or terminated and that informs consumers of their rights and any further steps they need to take, as well as about the and refund of any overpayments.

What do businesses need to do?

• Review and Update Contracts: Ensure all subscription contracts include the required pre-contract information and are easily understandable.
• Implement Reminder Systems: Set up automated systems to send renewal reminders to consumers at the specified intervals.
• Simplify Cancellation Processes: Make it easy for consumers to cancel their subscriptions online or through other accessible means.
• Communicate Clearly: Regularly inform consumers about their rights and any changes to their subscription terms.
• Engage with Legal Experts: Consumer aspects of the DMCC are not yet in force and will be implemented through secondary legislation, which is needed to clarify aspects of the rules affecting subscriptions – see our fake consumer reviews article in relation to the expected timing of implementation. We will be keeping abreast of these changes and can advise on how to best navigate the DMCC and its implications for your business. 

By adhering to these new regulations, businesses can not only avoid penalties but also build trust and loyalty with their customers.

Contact us to discuss any of the points raised here or for guidance on staying ahead of the upcoming consumer law amendments introduced by the Act. For more on the changes to consumer law as a result of the DMCC, see our articles on fake reviews and drip pricing.