The Digital Markets, Competition and Consumers Act 2024 develops the law regulating subscription contracts. This article explores the new rules relating to subscription contracts set to take effect in 2026.
The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) represents a significant change to the enforcement of consumer protection law in the UK.
Accordingly, the Competition and Markets Authority (CMA) will take significant new direct enforcement powers for the enforcement of consumer protection law.
In addition to restating much of the existing consumer protection law, the DMCC Act also introduces a range of new legal requirements, in particular relating to "subscription contracts" which come within the scope of the legislation. Against this background of increased enforcement risk, it is particularly important to ensure compliance with the new requirements.
Much of the DMCC Act is not yet in force and will be activated through secondary legislation (Regulations) made by the Secretary of State for Business and Trade. There are a wide range of areas where further details or specifications (including certain "gaps" in the DMCC Act itself) may be made by further Regulations.
This article is based on our current understanding of the DMCC Act. Further requirements may arise once Regulations are made.
The subscription contract element of the DMCC Act will come into effect in Spring 2026 at the earliest.
What is a subscription contract?
The DMCC Act defines a subscription contract as:
"...a contract between a trader and a consumer—
(a) for the supply of goods, services or digital content by the trader to the consumer in exchange for payment by the consumer;
(b) to which either or both of subsections (2) and (3) apply; and
(c) which is not an excluded contract (see section 255)."
Where the contract has terms which have the effect of providing:
"(a) for an automatically recurring, or continuing, supply of goods, services or digital content to the consumer for an indefinite period or a fixed period;
(b) for the consumer to automatically incur liability for each supply, or recurring liabilities for the continuing supply; and
(c) a right for the consumer to bring the contract to an end."
Additionally, this also applies to contracts with terms which have the effect of providing:
"(a) for a supply of goods, services or digital content to a consumer free of charge, or at a rate specified in the contract (the "original rate"), for a period specified in the contract;
(b) for the consumer to become automatically liable for payments, or payments at a rate higher than the original rate, for supplies after that period (including where the trader has an option to impose a charge or a higher charge after the end of the period); and
(c) a right for the consumer to bring the contract to an end before such liability is incurred."
What impact does the DMCC Act have on subscription contracts?
The DMCC Act introduces a variety of obligations on traders that provide subscription contracts, including:
- An obligation to provide a) the key pre-contract information before a consumer enters into a subscription contract and b) the full pre-contract information to the consumer as close to contracting as possible. Definitions of key and full pre-contract information can be found in Schedule 23 Part 1 and Part 2.
- Traders that provide a subscription contract must provide six-month reminder notices to allow consumers to bring the contract to an end every six months.
- If Traders provide annual contracts, then the trader must provide a 12-month reminder notice to allow the consumer to bring the contract to an end before the annual renewal period.
- Consumers can cancel their contract during the cooling-off period (the first 14 days after beginning the contractual relationship), after every renewal period, .
- Traders must provide cooling-off notices to allow consumers to end their contractual relationship during the cooling-off period.
- Consumers can bring their contract to an end by providing a clear statement of their intention to end the contract, without the consumer being required to undertake any unnecessary steps.
- Consumers also have a cancellation right during the cooling-off period or if traders breach an implied term.
- Traders will also have duties to:
- give the key pre-contract information;
- make the full pre-contract information available;
- provide reminder notices;
- specify the reasonable period for giving the reminder notices;
- enable consumers to straightforwardly (with no unreasonable steps) bring about an end to the contract and acknowledge the end of contract and return overpayments.
What are the consequences for Traders who fail to adhere to the DMCC Act?
Once fully commenced, under the DMCC Act the CMA will take enhanced powers to investigate suspected contraventions and practices that harm the collective interests of consumers in the UK.
As part of its enhanced enforcement powers, the CMA will be able to issue enforcement notices without proceeding to court first.
The CMA will have powers to:
- Issue provisional and final infringement notices where a trader has engaged in or is an accessory to a relevant consumer law breach.
- Take enhanced consumer measures. This can include part of an enforcement order or undertaking; introducing redress measures, such as offering consumer compensation or the option to terminate the contract early; and compliance or choice measures.
- Issue online interface notices to traders operating websites, apps, or other digital content which can require the removal or modification of content, or the deletion of a domain name.
- Seek undertakings after an investigation, without issuing an infringement or online interface notice, and can issue enforcement notices if they are not complied with.
- Issue enforcement directions.
- Issue information notices to require information to be produced to the CMA.
The CMA can impose fines of up to £300,000 or 10% of the Trader's global annual turnover, whichever is higher.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
