Subscriptions, Savings And Scrutiny: New Consumer Reforms Put Business Practices Under The Spotlight

Consumer protection has moved firmly back up the political agenda, with the government announcing a "series of everyday fixes to help people with the cost of living". While the measures are being presented as practical solutions to financial pressures, they may also require businesses to review their pricing, marketing and subscription practices. In yesterday's press release, the Prime Minister stated "We’re putting an end to phoney bargains. If something is advertised as half price, it should actually be half price. We’re also making it as easy to leave a subscription as it is to join" and indicated this is just the start of the "everyday fixes" he's looking to implement.

Subscription friction

First on the agenda is the long-awaited implementation of the new subscription contract rules under the Digital Markets, Competition and Consumers Act 2024 (DMCCA).

These provisions were originally expected to come into force in 2026, before being delayed to Spring 2027. The Government has now announced that the new rules will instead take effect in January 2027, timed to coincide with the period when consumers often sign up for new subscriptions at the start of the year. Think "new year, new me" gym memberships.

While there are a number of exclusions, including certain utilities and healthcare-related contracts, the new regime will generally require businesses to provide:

• enhanced pre-contract information;
• cooling-off rights following sign-up and certain renewals;
• reminder notices before free trials and introductory offers end, and at regular intervals thereafter; and
• cancellation mechanisms that are straightforward and easy to use.

For many businesses, these requirements are likely to necessitate changes to customer journeys, contract terms and renewal processes. With the implementation date now confirmed, businesses would be well advised to start reviewing their subscription models sooner rather than later.

The "was" that wasn't

Only a few weeks ago, the High Court rejected the Competition and Market Authority's (CMA) argument that a reference price (the example given by the court was "Was £1,000, Now £500") should generally be treated as misleading unless at least one product was sold at the higher price for every two sold at the discounted price.

As we noted at the time, however, that judgment did not signal the end of regulatory scrutiny of reference pricing. Quite the opposite…

The Prime Minister has now announced plans to tackle what he described as "phoney bargains", with a particular focus on misleading discount claims. The Government's press release specifically refers to practices such as "artificial "was" prices, invented discounts and misleading recommended retail prices.

The next step will be a consultation this autumn on whether these types of pricing practices should be added to the DMCCA's list of automatically prohibited commercial practices. If implemented, this would make enforcement significantly easier, as regulators would no longer need to establish that the practice influenced a consumer's transactional decision.

For retailers and advertisers, the message is clear: reference pricing remains firmly on the regulatory agenda. Now is the time to revisit discounting strategies and ensure that any savings claims can withstand increasing scrutiny from both regulators and Government.

Read the original article on GowlingWLG.com