The concept of subscription contracts is not new; in fact these types of contracts are increasingly common and well-known across a range of industries. From gym memberships to Netflix, subscription contracts are common place in many aspects of our life. It is therefore not surprising that the Digital Markets, Competition and Consumer Bill (DMCC Bill), aimed at updating and strengthening UK consumer law, places a large focus on the fairness of subscription contracts.

The DMCC Bill was mentioned in the first King’s Speech, given in November 2023, and is anticipated to become law sometime in Spring 2024. The Government states that the DMCC Bill has the aim of empowering consumers and increasing their confidence in the products they buy and services they use. One key area targeted is the in relation to the use of subscription contracts.

What are the key changes?

Regardless of sector, if your business offers consumers subscription services, you may need to reevaluate your practices to ensure legal compliance. The key changes to subscription contracts introduced by the DMCC Bill are as follows:

• Pre-contractual information requirements – under the DMCC Bill, businesses will need to provide enhanced, written ‘pre-contract information’ to consumers prior to the formation of any contract. This includes full details of any charges, auto-renewals and exit provisions within the contract. This information will also need to be readily available and clearly visible on the final webpage before the consumer agrees a contract, without the need to follow a link to download a document.
• Reminders – businesses will be required to provide consumers with certain reminder notices, such as for payment dates, auto-renewal periods or when free trials are ending. Businesses must also clearly communicate the steps a consumer can take to cancel their contract before any auto–renewal period.
• Cooling off periods – the DMCC Bill will increase the reach of the cooling-off period already available under consumer law. There is currently a 14 day cooling-off period for consumers upon entering a new contract, during which the consumer has the right to cancel and receive a full refund. The DMCC Bill looks to extend this by creating a ‘renewal cooling off period’ which would apply this same right for a full refund to consumers after a subscription contract has auto-renewed or rolled over.
• Exiting subscription contracts – businesses will have to enable consumers an easy exit from subscription contracts. The DMCC Bill states that consumers must be able to cancel a contract in a single communication without any unreasonable extra steps and the instructions for how to do so must be easily located.

Further Considerations

The DMCC Bill will also look to provide the CMA and the courts increased powers to impose large fines for breaching consumer law, meaning businesses will need to carefully consider whether their subscription services are compliant with the new regulations.

Businesses utilising subscription contracts will need to ensure that they make the necessary changes to their practice, such as the provision of pre-contract information and a system of regular reminders. In particular, many businesses may find themselves on the wrong side of the DMCC if they do not allow consumers the ability to easily exit their subscription contract.

The Commercial & IP Team at Berry Smith can provide specialist advice on reviewing and refining commercial contracts, as well as general commercial and business advice.

Please contact us if you would like more information about the issue raised in this article or any other aspect of Commercial law at 029 2034 5511 or commercial@berrysmith.com