Get ahead of upcoming subscription regime changes

By Katrina Anderson, Principal Associate at national law firm, Mills & Reeve

The new rules targeting “subscription traps” – originally slated to launch in April next year as part of the Digital Markets, Competition and Consumers Act 2024 (DMCC Act 2024) – now look set to be delayed until Autumn 2026. While this buys businesses a bit more time, retail brands still need to move quickly to review and adapt their practices.

What’s the DMCC Act?

The DMCC Act covers everything from digital markets to competition law. It brings sweeping updates to consumer protection rules while strengthening the CMA’s ability to investigate breaches and impose fines (of up to 10 percent of global turnover or £300,000 – whichever is higher) directly on companies without needing to go through the courts.

Why target subscriptions?

According to the government, unwanted subscriptions are thought to cost households around £1.6 billion each year.

The DMCC Act therefore sets out a range of measures that are designed to stamp out “subscription traps”. Companies will be expected to remove what regulators consider deceptive tactics – things like “dark patterns” and “sludge” (deliberate obstacles) – that mislead people into subscribing or make it unnecessarily difficult for them to cancel.

This, of course, represents just one aspect of the DMCC Act that will affect retail brands, and several others overlap subscription rules and are already in effect. That includes clampdowns on drip pricing, the handling of customer reviews, and high-pressure sales tactics.

What should retail brands do?

There’s no getting around it – reviewing and updating existing systems will bring short-term costs and complexity for retail brands. To get ahead of the upcoming subscription rules, companies in the sector should focus on:

• Mapping out the extra pre-contract information that’ll be needed for each subscription offering – covering essentials like pricing, contract length, how to end the agreement, and cancellation rights.
• Working out how to present this new pre-contract information to customers, keeping in mind that there are specific display requirements depending on whether the subscription is set up online, face-to-face, or by phone.
• Setting up processes for sending the required renewal notifications – including mid-term reminders and alerts when discounted periods are ending. An automated email system is likely the most practical solution.
• Training team members on the new cooling-off rights that let customers cancel when a free or discounted period expires, or when their contract auto-renews.
• Creating an online system that makes it simple for customers to end or cancel their subscriptions.
• Putting in place a procedure to confirm cancellations and handle refunds. An “end of contract” confirmation. Any overpayments will need to be returned without delay.

The CMA is also focused on combating dark patterns such as drip pricing. So, it’s also worth reviewing for compliance with the latest guidance on displaying prices, including:

• Reviewing all advertised prices to ensure they include any compulsory charges (such as sign-up fees). If customers can register online, audit the entire sign-up journey for misleading pricing or instances where full cost information is missing.
• Ensuring any optional add-on charges are displayed clearly and kept separate from mandatory fees. Take care not to present them in a way that suggests they’re required.
• When using “from” pricing or indicative prices, only do so if they’re genuinely available to a meaningful number of customers, and be transparent about any conditions – for example, discounted rates for students.

Take action now

Whilst the new subscription rules won’t land for some months yet, other provisions – like the ban on drip pricing – are already in force, so retail brands need to move on these points now.

Image courtesy of Unsplash. Photo credit: Brandable Box.