New Measures Unveiled To Crack Down On Subscription Traps

18th November 2024

Government publishes consultation on new measures to tackle unfair and costly subscription traps, which cost consumers £1.6 billion annually.

Consultation launched on measures to crack down on "subscription traps" and better protect shoppers.

Proposed measures will stop complicated websites and restrictive call centres preventing refunds and cancellations.

Unwanted subscriptions cost families £14 per month per subscription and £1.6 billion a year in total

New proposals to crack down on subscription traps have been unveiled today as the government launches a consultation on measures to make it easier for consumers to get a refund or cancel unwanted subscriptions.

"Subscription traps" are instances where consumers are frequently misled into signing up for a subscription through a "free trial" or reduced price offer. In some cases if the consumer doesn't cancel the trial within a set amount of time, they are often automatically transferred to a costly subscription payment plan.

It comes as new figures reveal consumers are spending billions of pounds each year on unwanted subscriptions due to unclear terms and conditions and complicated cancellation routes. Nearly 10 million of 155 million active subscriptions in the UK are unwanted, costing consumers £1.6 billion a year.

Subscriptions can be for anything from magazines to beauty boxes, with many subscriptions having complicated or inconvenient cancellation processes such as phone lines with long waits and restrictive opening hours that can leave consumers feeling trapped.

The consultation sets out proposals to make the refunds and cancellation processes simpler, with a requirement on retailers for greater transparency on their subscription programmes in a way that is proportionate to balance consumer rights without placing unnecessary burdens on businesses.

Business Secretary Jonathan Reynolds said:

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.

Everyone hates seeing money leave their account for a subscription they thought they'd cancelled, or a trial that unexpectedly gets extended.

We're looking to hear from as many businesses, consumer groups, and other interested groups as possible to allow us to set fair regulations that stop this corporate abuse of power whilst retaining the benefits of subscriptions for consumers and businesses.

The government is committed to working with business and consumers alike to deliver competitive markets that see lower prices, more choice and a fairer deal for all.

This is why the government is inviting their views on developing proposals on how refunds should work when a consumer wants to exit a contract, how they should be notified about renewals or the ending of a free trial, and the arrangements businesses need to put in place to help customers conveniently cancel a contract. This includes clear websites that signpost them directly to the cancellation process.

By putting an end to these exhaustive processes and helping consumers take back control of their money, individuals could save on average £14 per month for each unwanted subscription they are able to leave earlier.

The consultation will seek views from a variety of groups who have an interest in the subscriptions market including businesses who offer subscriptions, consumer groups, and enforcement agencies.

The consultation follows the Digital Market, Competition and Consumers Act coming into effect earlier this year.

NOTES TO EDITORS

The government is consulting on the detail of how the regime may work, including:

How returns and refunds work if a consumer exercises their statutory 14-day cooling-off right to cancel after signing up or after a trial or long-term contract (12 months or more) auto-renews. This includes how the rules work depending on whether the subscription contract is for goods, services, or digital content.

How remedies work if a consumer exercises their statutory right to cancel their contract because a trader didn’t comply with certain duties, which are terms implied into a subscription contract.

How contract information and notices must be provided.

What arrangements traders must put in place to ensure exit processes are straightforward.

About the Digital Markets, Competition and Consumers Act

The Digital Markets Competition and Consumer Act gained Royal Assent in May 2024. The new rules will ensure consumers:

have clear information before signing up to a subscription,

receive reminders about their ongoing subscriptions

have a 14-day period to cancel after a trial or long-term subscription auto-renews

can exit a subscription generally as easily as they signed up, including being able to cancel online if they signed up online.

[url=https://www.legislation.gov.uk/ukpga/2024/13/section/258]Digital Markets, Competition and Consumers Act 2024[/url]

The subscriptions chapter in the Digital Markets, Competition and Consumers Act 2024 applies to the United Kingdom and future secondary legislation to implement the regime will have the same territorial application.