The UK government is cracking down on subscription traps, which cost consumers £1.6 billion annually. New rules will make cancellations easier and more transparent, protecting consumers from unwanted subscriptions and saving them money.
The Digital Markets, Competition and Consumers Act 2024 will require businesses to provide clear information, issue renewal reminders, and simplify cancellation processes.
Initiative or Solution Overview
Measures include the requirement for businesses to provide clear and prominent pre-contract information, ensuring consumers are fully aware of the terms and conditions before signing up.
This includes details such as the subscription fee, renewal periods, and the steps necessary to terminate the contract.
Requirements for reminder notices include:
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Separate and Prominent: Sent separately from marketing messages and other information.
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Timely Reminders: For monthly subscriptions, every six months; for annual subscriptions, two reminders before term end.
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Clear Information: Include renewal timing, payment amounts and cancellation instructions.
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Pre-contract Information: Businesses must provide consumers with key pre-contract information before entering subscription contracts ¹.
Benefits and Impact
The new rules are expected to have a significant impact on consumer finances and satisfaction. By making cancellation processes as easy as signing up, consumers will be able to exit unwanted subscriptions without the hassle of complicated websites or restrictive call centers.
This could save families an average of £14 per month per unwanted subscription, collectively amounting to £1.6 billion annually.
The measures also aim to reduce the number of unwanted subscriptions, currently estimated at nearly 10 million out of 155 million active subscriptions in the UK. This will help consumers regain control over their finances and make more informed decisions about their subscriptions.
Implementation and Steps
The UK government expects the Digital Markets, Competition and Consumers Act 2024 to become effective in Spring 2026, following Royal Assent in May 2024.
In the meantime, the government is engaging in a consultation process to gather views from businesses, consumer groups, and other stakeholders to ensure the regulations are fair and effective.
Businesses offering subscription services are advised to start reviewing their terms and conditions and customer journeys to comply with the upcoming regulations.
The Competition and Markets Authority (CMA) will have enhanced enforcement powers, including the ability to issue fines of up to 10% of global turnover and order redress and compliance measures.
The Final Word
The new measures to crack down on subscription traps mark a significant step forward in consumer protection in the UK.
Consequently, by ensuring transparency, simplicity in cancellation processes and robust enforcement, the government aims to put more money back into people’s pockets and improve living standards.
As Business Secretary Jonathan Reynolds noted,
“Our mission is to put more money back into people’s pockets and improve living standards across this country, tackling subscription traps that rip people’s earnings away is an important part of that.”
Sources: THX News, Department for Business and Trade, Justin Madders MP & The Rt Hon Jonathan Reynolds MP.
