The Department for Business and Trade has launched a consultation on the implementation of the new subscription contracts regime.

The consultation is in anticipation of secondary legislation being published to implement the new regime for subscription contracts under Chapter 2 of the Digital Markets, Competition and Consumers Act 2024 (“DMCCA”).

We have commented on this regime previously here. It sets out new rules for traders offering subscription contracts and new rights for those entering into them, including – for example – making it easier for consumers to exit contracts, ensuring that traders provide clear information before the contract is signed, and allowing for cooling-off periods both at the start of the contract and at renewal. The DMCCA also provides consumers with a statutory right to cancel a subscription contract if a trader breaches certain duties.

The consultation addresses each of these matters and more in considerable detail in a series of seven chapters, as follows:

1. Cooling-Off rights: return and refunds

The consultation sets out proposals for, among other things: the consumer’s right to a refund following the cancellation of a subscription contract for goods during a cooling-off period; how cooling-off rights will apply to subscription contracts for services or digital content (or both, referred to as ‘mixed contracts’); and how to treat so-called ‘ancillary contracts’ which are “related to the main subscription but subsidiary to it” such as warranties or insurance.

2. Cancellation rights for breaches of duties

Regulations are required to provide details on the consequences of a consumer exercising a cancellation right where certain duties or implied terms are breached by the trader. In this chapter, the consultation sets out, for example, proposals on: how a refund should be calculated; how to treat returnable goods; and safeguards for traders “to ensure that they are not automatically held liable for all payments made by the consumer from the time of the event that constitutes the breach”. Helpful examples are also provided as to how the proposed regulatory provisions could work in practice.

3. Timing of repayment of refunds

The consultation proposes that if a consumer cancels a subscription during a cooling-off period, the trader must make a refund to the customer “without undue delay” and, in the case of non-returnable goods, services, and digital content, no later than 14 days after the trader is notified of the consumer’s decision to cancel the contract. Separate proposals are made in respect of returnable goods, as well as if the contract has been cancelled because the trader breaches a specified implied term.

4. Contractual terms for exiting a contract

Proposals are set out to “strengthen existing consumer protections – for example under unfair terms legislation – in a way that prevents traders from using contract terms which can give rise to this type of consumer detriment.” Among other things, the consultation proposes that traders do not use terms in subscription contracts that make the consumer liable for a renewal payment before the contract actually renews. Furthermore, it proposes that “subject to a reasonably short period of time necessary for the trader to complete the steps to end the subscription contract before the consumer becomes liable for a renewal payment, we consider that consumers should be able to exercise their contractual right to exit the contract at any time including as soon as a subscription begins or renews”.

5. Arrangements for exiting a contract

Under the DMCCA, traders must ensure that there is a straightforward method by which a consumer can exit their subscription contract, and that for those entered online, consumers can also exit them online. The consultation offers guidance that clarifies each of these measures, stating that, for example, “an exit method is more likely to be considered ‘straightforward’ and without the consumer having to take steps that are not ‘reasonably necessary’ if it allows consumers to conclude their exit within a short period of time and without the consumer having to contact the trader more than once”.

6. Information notices

The requirements for reminder notices, end-of-contract notices, and renewal cooling-off notices are each set out in this chapter, including when traders must give such notice. To take the case of end-of-contract notices, the consultation proposes that: (a) the prescribed timeframe to send a notice begins after the trader has accepted the consumer has a statutory right to bring their contract to an end due to a breach of an implied term; (b) the prescribed information in these notices is to be given in a way that is more prominent than any other information given at the same time; (c) the prescribed information is to be given upfront so that it is the first information that the consumer sees; and (d) the primary purpose of the communication is to be immediately apparent to the consumer.

7. Pre-contract information

Finally, the consultation addresses the requirement in the DMCCA for the provision of two types of pre-contact information: ‘Key’ pre-contact information and ‘Full’ pre-contract information. It explains that how traders comply with this requirement will depend on the product and the medium used to conclude the subscription contract. However, it states that guidance is expected to reflect the following:

• in the case of online contracts, Key pre-contract information should be clearly and prominently visible in the location where the consumer will enter into the contract and is directly accessible without a need for the consumer to take any further steps to access and read it.
• the Key pre-contract information should be provided separately from other information including the Full pre-contract information and should be more prominent than the Full pre-contract information and come before it.
• the pre-contract information should not be obscured by the addition of other information which may compete for the consumer’s attention.
• all the pre-contract information should be easy for the consumer to understand.
• all the pre-contract information should be presented in such a way as to come to the consumer’s attention to enable the consumer to easily identify and read the information in an appropriate font, size, colour and position.

The consultation closes on 10 February 2025, and can be read in full here.