The DMCCA’s new rules on subscription traps: What do they mean for your business?
The new subscription rules targeting ‘subscription traps’ in the UK form part of the Digital Markets, Competition and Consumers Act 2024 (DMCCA) and are intended to enhance consumer protection.
The new subscription rules were due to be implemented in Spring 2026 (as explained in our previous article “DMCCA: Saying goodbye to subscription traps from spring 2027”. However, Prime Minister Andy Burnham recently stated that he intends to bring forward the ban on ‘subscription traps’ to January 2027. Either way, businesses offering subscription payment methods should begin reviewing and amending their terms and conditions, updating their customer journeys and training staff on the new requirements now.
To help you steer clear of DMCCA breaches related to subscription services, Pippa Garden, trainee solicitor in our commercial team, has answered some frequently asked questions on what the new subscription rules mean for businesses.
What information must be shown before the sign-up process?
Before signing up to a new subscription contract, customers must be given sufficiently clear details on the total costs, billing cycles, auto-renewal terms and any steps they must take in order to cancel the contract.
All of this information should be made at the outset in a prominent position.
When are renewal reminders required?
Under the DMCCA, customers must now be sent regular reminders about their subscription contracts, in particular:
· Before trial periods end;
· Before 12-month+ terms renew; and
· Every six months for rolling monthly plans.
How easy must it be for a customer to cancel their subscription contract?
Customers must be able to exit their contracts in a straightforward way without unnecessary hurdles. Ideally, it should be as easy to exit a subscription contract as it is to enter one.
Can you force consumers to cancel their subscriptions over the phone?
No. If a consumer can sign up online, they must be able to exit their subscription contract online too.
Businesses can offer customers the option to cancel their subscriptions over the phone, but they cannot mandate it.
When does a 14-day cooling off period apply?
1) ‘initial cooling off period’ – when the subscription contract is initially entered into by the customer.
2) ‘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.
It is a criminal offence if a business fails to provide a consumer with their cooling-off rights.
Are penalties allowed for cancelling early?
If a customer chooses to cancel their subscription during either of the cooling off periods, no penalties can apply.
Who enforces the rules?
The DMCCA, under which the new subscription rules sit, is primarily enforced by the Competition and Markets Authority (CMA).
What are the consequences for businesses that fail to comply with the subscription rules?
In terms of enforcement action, businesses that fail to comply with the DMCCA could face significant fines (up to 10% of their global annual turnover). Additionally, businesses may face public scrutiny and reputational damage.
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. We recently reported on Virgin Media’s £28 million fine for repeatedly preventing customers from cancelling subscription contracts and the CMA’s investigation into Microsoft following concerns that customers had not been given adequately clear information upfront in relation to subscription options.
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, associate in our commercial team, on [email protected] or 0191 211 7831.