For businesses that sell subscriptions to consumers, the fact that the Digital Markets, Competition and Consumers Act 2024 (DMCCA) introduces a new subscription regime is unlikely to be surprising news. However, until recently the government had stated it was working to a spring 2027 timeframe, with a view to draft secondary legislation and further guidance being published in the lead-up to this to help businesses further understand the obligations required of them; particularly given the inevitable grey areas and questions that arise under the existing limited framework of the DMCCA.
However, the level of urgency was ramped up a degree recently following the new government’s announcement that, as part of Andy Burnham’s series of “everyday fixes” to help address some of the current cost of living issues faced by the British public, this new regime would be brought forward to January 2027. This therefore requires businesses to get their houses in order several months earlier than previously anticipated.
At the time of writing, it's still unclear exactly when the necessary secondary legislation will be published and what (if any) further guidance will be produced by the Competition and Markets Authority (CMA) before January 2027 to further help businesses prepare to understand some of the finer points around this regime. However, for those businesses that were hoping to have time to review and consider these before starting their preparations in earnest, this new timeframe means this is now unlikely to be a viable proposition. New processes must be acted on and implemented in the near future in order to avoid potential enforcement action by the CMA as an unwelcome start to the new year.
What is the subscription contracts regime?
As a brief reminder, the subscription contracts regime has the primary aim of preventing so-called “subscription traps” (ie where customers inadvertently renew their subscription and get locked into making further payments for products or services they no longer want to receive) and, subject to a few limited exceptions, will apply to any contract with a consumer that involves recurring payment for an ongoing or recurring supply of goods, services or digital content.
Key requirements for businesses
Where this regime does apply, there are a number of requirements that businesses must comply with, including:
Pre-contract information
“Key” and “full” information must be separately provided before the customer enters into a subscription so they understand what they're entering into.
Renewal reminders
Subscribers must be notified in advance of the upcoming expiry of any free/discounted period or prior to the auto-renewal of a subscription, so they have time to cancel before incurring further payment obligations.
Cancellation method(s)
Subscribers must be given a “straightforward” way of cancelling their subscription - for subscriptions taken out online, this means providing an online means to cancel (rather than requiring customers to have to call up to cancel, for example).
Cooling-off periods
Customers will be given an additional safety net, in that not only will they retain a right to cancel their subscription within an initial 14-day period after their contract commences, but also to cancel within the same timeframe following the end of any free or reduced price period and upon any auto-renewal which commits the subscriber to a further period of 12 months or more.
How we can help
The Mills & Reeve consumer regulatory team will of course be keeping a close eye on developments in this area, but if you require advice or assistance with your compliance efforts in the meantime, or you want to further understand the implications of this subscription regime, please don’t hesitate to contact us.
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