By David Wozniak, Muckle llp
What consumer-facing businesses need to know.
The UK government is introducing new rules aimed at tackling “subscription traps” and giving consumers greater control over recurring payments. The rules, intended to come into force January 2027, form part of the Digital Markets, Competition and Consumers Act 2024 (DMCCA) and will place new responsibilities on businesses that sell goods, services or digital content through subscription models.
Now is a good time for businesses to start preparing. Reviewing terms and conditions, checking the customer journey and ensuring staff understand the new requirements can help avoid a last-minute compliance rush.
So, what do the new rules mean in practice?
What information needs to be provided before a customer signs up?
Businesses will need to make important subscription information clear and easy to understand before a customer enters into a subscription contract.
This includes details about the cost and frequency of subscription payments, when the subscription renews, and how the customer can cancel. Key information must be prominent and accessible to customers.
When will customers need to receive reminders?
Under the DMCCA, customers must now be sent reminders about their subscription contracts, in particular before a trial period ends, before 12-month+subscription terms renew and every six months for rolling monthly plans.
How easy must cancellation be?
Customers must be able to exit their contracts easily without unnecessary hurdles. It must be as easy to exit a subscription contract as it is to enter one.
So, if a customer can sign up online, they must be able to cancel online. Businesses can offer other cancellation methods, such as by phone, but cannot make customers use a more difficult route simply to make cancellation harder.
What about the 14-day cooling-off periods?
The DMCCA introduces two types of 14-day cooling-off period.
There is the ‘initial cooling off period’ – when a customer first enters into a subscription contract. Then the ‘renewal cooling off period’ – at the end of a trial period or when a contract of 12 months+ automatically renews.
During both cooling off periods, customers have 14 days during which they are able to cancel and receive a full or proportionate refund.
Crucially, it is a criminal offence if a business fails to provide a consumer with their cooling-off rights.
Can businesses charge cancellation penalties?
If a customer chooses to cancel their subscription during either of the cooling off periods, no penalties can apply.
Who will enforce the rules?
The Competition and Markets Authority (CMA) will have significant powers to investigate breaches and take enforcement action, including imposing financial penalties directly in appropriate cases.
The potential consequences are significant. Businesses could face fines of up to 10% of global annual turnover, as well as the reputational damage that can come from enforcement action.
The CMA have made it clear that they intend to come down hard on any business that fails to comply with the DMCCA and there have already been several recent cases of them doing so. Virgin Media were recently given a £28m fine for repeatedly preventing customers from cancelling subscription contracts.
For consumer-facing businesses, the message is clear: subscription compliance should be treated as a business priority, not simply a legal exercise. Reviewing the customer journey now can help businesses build subscription models that are both compliant and easier for customers to understand.
If you would like advice on how to ensure your subscription payment options are DMCCA compliant, or you have any other consumer law-related queries, please contact: David Wozniak david.wozniak@muckle-llp.com
0191 211 7831