The Digital Markets Competition and Consumers Act 2024 (DMCC Act) sets out new rules for businesses offering subscription contracts and new rights for consumers entering into them.  With subscription contracts becoming increasingly commonplace, the new regime’s purpose is to address the £1.6 billion a year that the UK government says is spent on unwanted auto-renewing subscription contracts.

The DMCC Act requires businesses to provide clear information before a consumer enters a subscription contract, as well as including an obligation on traders to send reminders at key points and various cancellation rights for consumers including an easy exit route and initial and renewal cooling off rights. The new regime is not expected to come into force before Spring 2026.

Whilst the DMCC Act sets out the broad framework of rules for subscription contracts, secondary legislation setting out the detail is required to implement the regime. The Department for Business and Trade is now consulting on this detail. We highlight some key takeaways for businesses below.

Focus of the consultation

The consultation sets out proposals across seven areas of the new regime including return and refund proposals to apply where a consumer has cancelled a contract within the initial or renewal cooling-off period, proposals around contractual terms for exiting a contract and areas for guidance to be provided by DBT.

What should businesses look out for in the consultation?

Many of the proposals are consistent with the spirit of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs) which permit a consumer to cancel a distance or off-premises contract within a 14-day period. However, below we pick out some of the proposals worth a deeper dive.

• Refunds for goods, services and digital content supplied during the cooling off period – have your say!

Surprisingly, refund rights weren’t addressed in the DMCC Act, to the consternation of many subscription businesses. And if you followed the debates in the Lords during the passage of the DMCC Act, this was one of the most hotly debated issues. 

The consultation makes proposals for what consumers might expect to receive back if they cancel a subscription contract for goods in the cooling off period, as well as the trader’s right to recover those goods. The consultation also considers how refunds might work for subscription contracts for services and digital content – or a mixture of both. 

For services, the consultation proposes a pro rata refund to reflect the amount of time the consumer has received the services by reference to the total subscription period. This is broadly in line with the position under the CCRs.

For digital content, there are three options proposed. One takes the same approach as for services, where the consumer is charged on a pro rata basis for the time they have had access to the digital content, whereas the two other options would maintain the consumer’s right to waive their cancellation right in relation to the initial cooling off period. DBT says it would like to hear views on the different proposals.

• Cancellation provisions for breach of duties

The provisions around refunds to consumers who exercise their right to cancel because a trader has breached an implied term, such as to provide pre-contract information, appear to be cumbersome.  They require the consumer to establish the effect the breach has had on them. It is not clear what a consumer would have to do to achieve this.  If this requirement is established, then there is a presumption that the consumer is entitled to a refund of all payments made following the event which led to the breach of duty.  This presumption can be rebutted if the trader can establish that the consumer has increased their loss by taking an unreasonable amount of time to exercise the cancellation right.  Again, it is not clear how this would work in practice nor in a way which meets the DBT’s own criterion that “the remedies available to the consumer should be straightforward so they are easily understood by consumers and traders”.

• Terms relating to exit 

The consultation proposes that terms that make the consumer liable for a renewal payment before their subscription contract renews should have no effect. In addition, DBT proposes to make clear that consumers should be able to exercise their right to cancel at any time, to avoid the trader being able to set limits in their terms and conditions around when a right to bring the contract to an end can be exercised (e.g. within a specified time window).  However, the consultation recognises that the business may need to include terms which provide the last day on which the consumer can exercise their right to end the contract (to give time to stop an imminent payment being processed).  No indication is provided of how far in advance of the payment such notice could be required.  If businesses have operational concerns, then feedback will assist shaping the detail of the regulations.

• Proposed DBT guidance 

The consultation envisages providing further clarification in guidance about the DMCC Act requirement that traders must ensure that there is a straightforward method by which a consumer can exit their subscription contract. This will cover what is likely to make an exit route “straightforward” and the interplay between an exit route and other offers or feedback requests that the trader might want to make to the consumer.

DBT is also proposing guidance to clarify how traders will be able to comply with the DMCC Act obligations to provide pre-contract information. DBT is interested to learn about any specific operational concerns about providing information.

Next steps

The consultation closes on 10 February 2025 after which DBT will take into account the responses in draft secondary legislation and guidance. The changes required by the DMCC Act are likely to require fairly substantive changes to the consumer journey and are not just “quick fixes” for terms and conditions. Therefore, businesses should already be thinking about whether and how to adapt current practices ahead of implementation in 2026.