The Committee on Advertising Practice says that research from Citizens Advice has found that three in four people in the UK (73%) have at least one subscription, while one in four (26%) have signed up to a subscription service by accident, in most instances, because they didn’t get round the cancelling a free trial.
Subscription models have grown during the pandemic, are usually entered into online, and are being considered by several regulators and government bodies, including the CMA, the European Commission and the FTC in the US.
CAP has now issued an enforcement notice. It aims to ensure companies offering subscription services understand how to promote their products and services in a compliant way.
The development comes shortly before the expected publication of the Digital Markets, Competition and Consumer Bill in the UK. Among other things, it is planned to require certain pre-contract information about the nature of the subscription contract, sending compulsory reminders to consumers, and ensuring that consumers have a straightforward, cost-effective, and timely mechanism to exit a subscription contract.
The enforcement notice says that ads for a “free trial” or other promotional subscription offer must communicate all significant conditions likely to affect a consumer’s decision to participate.
If significant conditions are not displayed with sufficient prominence, the ad is likely to break the rules in the CAP Code. The notice gives the example of saying “T&Cs apply” – this will not be adequate; the significant conditions must be stated in the ad.
Advertisements must make clear:
- Whether a paid subscription start automatically (after the trial) unless cancelled;
- The extent of the financial commitment if the subscription is not cancelled (during the trial), and
- Any other significant conditions: for example, costs to participate.
- In terms of the placement of significant conditions, advertisers must ensure that significant conditions:
- Are immediately visible, prominent and distinct from other information (pop-ups are not sufficient);
- Immediately follow the most prominent references to the trial or offer; and
- Are clear and legible both in size and clarity of font.
CAP says that from 27 April 2023, its compliance team will take targeted enforcement action to ensure non-compliant ads for free trials or promotional subscription models are amended or removed.
