New UK legislation to mean stricter rules for subscription services

Membership models offer convenience and predictability, but a buyer protection framework addressing auto-renewals and cancellation rights is on the way. In the light of significant changes to auto-renewing subscription contracts that will be introduced from 2026 under the UK's new Digital Markets, Competition and Consumers Act 2024 (DMCC Act), pet businesses active in the country need to be prepared.

Timeline for enforcement

The key elements of the new subscription contract regime are not expected to be in force before April 2026. This article sets out the main changes, what you may expect from secondary legislation and associated guidance from the UK's consumer law regulator, the Competition and Markets Authority (CMA), and how you can start preparing for compliance. 

The DMCC Act has also introduced direct fining powers for the CMA. This means that the consequences of non-compliance with consumer law are now much more severe, as these fines can be up to 10% of annual global turnover.

Complying with varying laws

Subscription contracts are becoming an increasingly tricky area to get right. The rules in the US often even vary per state and are in turn different to the UK and the EU. Subscription businesses need to pay careful attention to this and devise a strategy for trying to find a model that works everywhere, or for implementing different models in different markets. 

While the EU's Omnibus Directive and national laws have already imposed enhanced consumer protection rules for subscriptions, the UK has not previously had such strict legislative requirements. The current best-practice position is similar, however there was a lack of enforcement action in most sectors.

The DMCC Act introduces measures that go beyond some key elements in the EU's current framework, particularly certain pre-contract information requirements, notice requirements and cooling-off rules. 

What are the new rules?

The DMCC Act is designed to strengthen consumer rights in digital markets. Among its key aims is tightening up on subscription contracts, particularly so-called 'subscription traps'. Although the DMCC Act establishes a broad framework for the new subscription contract regime, it also provides for secondary legislation to clarify how it will work in practice. The UK government is currently reviewing the responses from its consultations on the new regime.

Legislative framework

The DMCC Act splits the framework for subscription contracts into the following main areas:

Pre-contract information

The DMCC Act introduces a clear distinction between key pre-contract information and full pre-contract information for subscription contracts. Both are treated as contractual terms, and failure to provide this results in consumers not being bound by the agreement.

Key pre-contract information must be provided all together - separate from the full information - at the point at which the consumer enters into the contract. So you cannot provide this information via a hyperlink. It includes frequency, amounts and ongoing obligations in respect of payments; the consumer's minimum total liability; a summary of cancellation rights; and timing of reminder notices of renewals.

Full pre-contract information must also be provided all together before the consumer enters into the contract. This will include information such as the company's identity, its contact details and cooling-off rights.

Reminder notices

Reminder notices must be issued to consumers before a subscription renews and a payment becomes due. Frequency and timing depend on the duration of the subscription, e.g. for yearly subscriptions, a reminder must be provided every six months. The notice must also contain specific information as prescribed by the legislation.

Ending the contract

Consumers must be able to cancel their subscriptions in a straightforward manner, without the process including any unreasonable steps. For contracts entered into online, cancellation must also be possible online. Cancellation instructions should be in a place where consumers are likely to find them and businesses must provide a written confirmation of cancellation. For online cancellations, this confirmation must be sent within 24 hours - otherwise, it must be issued within three working days.

Cooling-off notices

Cooling-off rights are non-waivable, non-conditional cancellation rights that apply more broadly than standard cancellation rights. Cooling-off rights allow consumers to cancel a contract within 14 days of entering into it, and again within 14 days of becoming liable for a renewal payment - whether after a trial period or at the start of a new annual term.

These rights apply regardless of how the contract was formed, including in-store. A business must also issue a cooling-off notice on the first day of the renewal cooling-off period, clearly informing consumers of their rights, separately from all other information.

Possible secondary legislation

The UK government's recent consultation sought views on how to implement any secondary legislation and guidance required to operationalize the DMCC Act. A major focus was on cooling-off cancellation rights, which aimed to clarify when consumers are entitled to refunds. The government also addressed cancellation remedies for breaches of trader duties, such as failing to provide key pre-contract information or reminder notices.

Further proposals suggested prohibiting contractual terms that make consumers liable for renewal payments before the actual renewal date, and ensuring consumers are able to exit contracts at any time - including immediately after a subscription begins or renews. The government suggested that exit processes should not require the consumer to have to contact the trader multiple times.

The next step is for the responses to be analyzed in order to draft secondary legislation and formal guidance. 

Preparing for compliance

A good idea might be to set up a compliance calendar, making sure you anticipate upcoming regulations, guidance releases and the timeline for your own subscription renewal cycles. Below is a non-exhaustive list of other strategies that pet businesses should consider implementing.

1. Review current subscription contract practices: Changes to the user journey might be required to ensure that you are notifying consumers of the full list of required information, reminder notices have been built in, and the cancellation process is compliant.

2. Review current contract terms: Are there automatic renewal clauses buried in your terms and conditions? Do you rely on pre-checked features? Do your terms allow for adjustments in subscription prices at any stage during the contract? If so, assess for compliance.

3. Plan for a new notification schedule: You should map out how and when to send renewal and reminder messages.

4. Establish a simple cancellation mechanism: If your subscription is difficult to cancel, you could quickly draw scrutiny.

5. Consult legal experts: The legislation and guidance can be intricate, especially for businesses that cross borders or deal with multiple categories of regulated products (like veterinary medication). Bird & Bird, for instance, has a combination of international regulatory and consumer law experts who often help pet businesses with all aspects of compliance.