The UK government has published a consultation on the new subscription contracts regime under the Digital Markets, Competition and Digital Markets Act 2024. It seeks views on how the regime will work in practice. The feedback will inform secondary legislation and guidance, with the regime planned to come into force in 2026.
Cooling-off rights: return and refunds
On entering a subscription contract, the DMCCA gives a consumer a right to cancel a subscription contract during an initial cooling-off period. It also gives a consumer a right to cancel a contract in specific circumstances during the renewal cooling-off period. Although the DMCCA includes some provisions on these rights (for example, that cancellation ends both the consumer’s and trader’s obligations to continue to perform the contract), it gives the Secretary of State the power to make regulations about the consequences of the consumer exercising them.
The government’s proposals cover:
- when a consumer is entitled to a refund after they exercise a cooling-off right in a subscription contract for goods, services, or digital content (respectively);
- the trader’s rights to recover goods supplied before the contract is cancelled;
- how the cooling-off rights apply to a mixed subscription contract that is a subscription contract for the supply of two or more of the following: goods, services and digital content (known as ‘mixed contracts’);
- the effect of exercising a cooling-off right on a contract which is ancillary to the main subscription contract;
- extension of the statutory cooling-off periods set down in the DMCCA; and
- the application of the cooling-off rights to contracts for the supply of particular products.
The government has based these proposals on the long-standing cooling-off provisions in the Consumer Contracts (Information, Cancellation and Additional Charges) and Cancellation Regulations 2013, including the waiver for digital content. The CCRs’ provisions have been extended to consider the characteristics of subscription contracts. The consultation seeks views on the operation of these new rules.
Cancellation rights for breaches of duties
The DMCCA provides that certain contractual terms are implied into a subscription contract, which means that these terms form part of the subscription contract even when they are not written into the contract. The implied terms cover the trader’s compliance with certain duties imposed on to them under the DMCCA. Breach of these implied terms gives the consumer a right to cancel the contract. The government has set out its regulatory proposals for a consumer’s refund rights when they exercise this cancellation right.
Timing of repayment of refunds
If a consumer exercises a cancellation right in the DMCCA, a consumer may be entitled to a refund. The government has published its proposed policy for regulations on when and how the trader must make refunds to the consumer.
Contractual terms for exiting a contract
There is a risk that a trader could include terms that make the consumer liable for a payment for a renewed contract period unduly early, or unduly restrict when the consumer can exercise a contractual right to exit the contract. Both these types of terms may give rise to consumer detriment by having the effect of making the consumer pay for products which they no longer want. The consultation therefore discusses regulatory proposals that could stop traders using these types of contract terms in subscription contracts.
Arrangements for exiting a contract
The consultation sets out the requirements that the DMCCA places on traders to ensure that consumers can genuinely exercise their contractual right to exit a contract and without undue barriers. It also offers some proposals to clarify the legislation which are likely to be contained in guidance.
Information notices
The consultation has set out the requirements for the different information notices that traders are required under the DMCCA to send consumers at different points of a subscription contract. It also sets out regulatory proposals for additional requirements related to these notices.
Pre-contract information
The government has included information about some of the matters that guidance on the DMCCA’s pre-contract information requirements is likely to include.
The consultation ends on 10 February 2025.
