Businesses have until Spring 2026 to review their processes around providing subscription contracts. The Digital Markets, Competition and Consumers Act 2024 (“the DMCCA”) compels businesses offering subscription contracts to formalise their communications around providing subscription contracts, with hefty penalties for non-compliance.
1. What the DMCCA means for subscription providers
A business must implement practices to comply with the DMCCA’s provisions.
Failure to comply with the DMCCA can result in fines which can be levied by the Competition and Markets Authority. Fines can range from 10% of a company’s global annual turnover or up to £300,000, whichever is higher.
It is important to note, however, that the DMCCA may not be applicable to all businesses and you should seek legal advice to see if you are caught by the DMCCA.
2. New obligations for subscriptions and renewals:
Businesses often find success and convenience in offering consumers ongoing subscriptions for products such as coffee pods, food boxes, online streaming services and more. Subscription contracts allow businesses to retain a pool of customers. For consumers, subscriptions are helpful in granting quick (automatic) and fuss-free access to the products that they see as continuously essential or desirable.
However, the risk of a consumer keeping an unwanted subscription is also high. There are approximately 9.7 million unwanted subscription contracts in the UK valued at £1.6 billion. The legislation aims, amongst other things, to curb consumer sentiment around ‘subscription traps’, by prescribing compulsory rules around the below – which is an inexhaustive list of obligations:
A. Pre-contract obligations
Where a business offers free or reduced-price initial periods to a consumer, they should be particularly aware of their obligations under the DMCCA, especially those relating to pre- contract information, such as:
- providing consumers with the costs of a subscription following a free or reduced- price initial trial;
- frequency of payments;
- how to exit the contract.
You must provide this information separately from any other details, clearly and as close to the contract entry as practicable. Consumers should not have to take extra steps, such as clicking links or opening attachments to become aware of this pre-contract information.
B. Reminder notices
Businesses will breach the DMCCA if they fail to remind consumers, in advance, of the last day they can cancel a subscription without paying the next owed amount. They must send this notice within a “reasonable period” during that window, and disclose what constitutes a “reasonable period” at the pre-contract stage.
Similarly to the above, businesses must communicate this reminder clearly in a single message, without requiring consumers to take unnecessary steps. Failing to provide this
reminder notice, which allows consumers to end their subscriptions, will violate the business’s obligations under the DMCCA.
C. Cooling off period
The DMCCA introduces a mandatory two-week cooling-off period which would start on the date of the first payment (rather than on the start date of the subscription). This may have a negative impact for businesses that may, for example, choose to grant a free-trial period). Therefore, if a three-month free-trial is offered under a subscription, the consumer will be entitled to a free subscription for the duration of the free-trial and then 14 days after the end of the free-trial, which will be defined as the cooling off period. The introduction of this cooling- off period into subscription agreements is like the general 14-day cooling off period that consumers have when they order goods under existing consumer protection laws.
While the fact that the UK government have given businesses an extended deadline (Spring 2026) to comply with rules around subscriptions, businesses would be wise to use this interim period to ensure that their compliance functions are well placed to deal with the impact of this legislation once it is in full force.
Next steps
The correct compliance infrastructure can prevent breaches of these obligations. Without mechanisms in place for effective communication throughout the lifecycle of a business-to- consumer contract, such contracts could be deemed unenforceable and void; and non- compliance with the new obligations could result in enforcement actions.
Alongside changes to subscription contract laws, the effect of the DMCCA means that businesses will need to investigate any fake or incentivised reviews and misleading price displays that now constitute ‘banned commercial practices’. For more information, please see our article on fake reviews and drip-pricing here.
How can we help?
For further information, or to discuss the issues raised within this article, please contact us to speak to a member of our Commercial Team. We have a broad range of experience drafting subscription terms and are available to help during the life-cycle of your subscription agreements.
