Updates to auto-renewing subscriptions: What can businesses do to prepare?

Background

The Digital Markets, Competition and Consumers Act 2024 (“DMCC Act”) introduces a new regime for consumer subscription contracts. The subscription contract provisions of the DMCC Act were passed in 2024, but will take effect in spring 2027, after further secondary regulations are finalised by the government.

The provisions will apply only to new contracts and new renewals agreed after that commencement date. The Competition & Markets Authority (“CMA”) and Trading Standards will enforce the regime.

These changes target subscription traps - situations where consumers get stuck in ongoing subscriptions due to unclear terms or difficult cancellation.

What is covered as a subscription

A subscription contract means a consumer contract for goods, services, or digital content with recurring payments including:

1. contracts that auto-renew (continue indefinitely or roll over for set periods) until the consumer actively stops them; and

2. contracts with an introductory free or discounted period that then convert to full-price ongoing charges unless the consumer cancels.

Most everyday subscriptions fall within this scope, provided the customer is an individual consumer paying money.

Key new obligations of businesses:

Clear Pre-Contract Information

Before a consumer signs up, businesses must present all the key terms of the subscription up front, in plain language. This includes:

• the price and payment schedule;
• any initial trial rate and later price increase;
• the contract length or minimum term;
• how auto-renewal works; and
• how the consumer can cancel.

Renewal Reminder Notices

Businesses will be required to remind subscribers before key renewal points. For example, businesses should send a clear notice before a free trial or discounted introductory period ends, alerting the customer that paid billing is about to start and how to cancel if they don’t wish to continue.

For longer subscriptions (e.g. annual plans), businesses must send a renewal reminder before each renewal, and in some cases an extra reminder, if the renewal commits the customer for another long term.

Even for rolling monthly or quarterly subscriptions, a reminder every six months is mandated. These notices have to include the upcoming charge date, amount, and straightforward instructions for stopping the renewal.

Easy Exit Cancellation

Businesses must ensure that ending the subscription isas easy as signing up. If a customer subscribed online, they must be able to cancel online in a few simple steps. In short, the cancellation process should be transparent, quick, and always accessible.

14-Day Cooling-Off Periods

The Act builds on existing consume rights by introducing two cooling-off periods for subscriptions.

First, the consumer will continue to have a 14-day right to cancel after initially entering the contract

Second, and new to subscriptions, there is a 14-day cooling-off window after a renewal in certain cases. If a subscription auto-renews for a long period (12 months or more) or after a free trial converts to paid, the customer gets a two-week grace period to change their mind even after the renewal payment is taken. If they cancel within those14 days, they are entitled to a refund of that renewal payment.

Summary

Businesses should view these reforms as an opportunity to build trust with customers, by improving transparency, sending helpful reminders, and making it painless to cancel if the customer chooses to do so.

For more information on how our Corporate & Commercial Team can assist with navigating these changes, and how they may impact your business, please contact us via email at info@leathesprior.co.uk or by telephone at 01603 610911.