With Andy Burnham’s announcement this week that he will bring forward plans to tackle so-called “subscription traps”, thousands of UK businesses face subscription service overhauls ahead of the New Year.
The consumer protection reforms were expected to come into force next spring, but Burnham’s government has promised they will now be implemented by January 2027.
The sweeping new consumer protection laws coming into force in January 2027 include making subscriptions easier for consumers to cancel and requiring companies to make it clear when contracts are due to auto-renew at a higher price.
Businesses looking to understand the wider impact of the Digital Markets, Competition and Consumers Act 2024 can read our detailed guide on new rules on subscriptions: what the DMCCA means for your business.
Commercial contract specialists at national law firm Clarke Willmott, say the changes will require businesses to provide customers with clear, prominent and easy-to-understand information before they enter into a subscription contract. Businesses will also have to issue reminders ahead of certain renewals and make it straightforward for customers to exit their subscriptions.
When the subscription reforms were announced in April, the government said they could save consumers around £400 million a year by tackling unwanted and misleading subscriptions.
Amy Peacey, a partner in Clarke Willmott’s commercial contracts team, said: “The new rules will directly target so-called ‘subscription traps’, introducing tougher obligations on businesses to make subscriptions clearer, fairer and easier to cancel.
“Although the changes are now expected to come into force in January 2027, businesses shouldn’t put preparations on hold.
“For many, particularly those with digital platforms or subscription-based models, the changes will mean major operational updates that take time to implement.
“Businesses might assume that this is just a legal exercise, when it actually affects websites, apps, payment systems, CRM software, customer service and marketing.”
The government is also planning action against misleading retail pricing, including the use of inflated “was” prices to create the impression that shoppers are receiving a bigger discount than they really are. Burnham has said such practices can trick consumers into believing they are getting better value. The government is expected to consult on further measures to tackle these so-called “pretend prices”.
Amy Peacey, who helps clients document their contract relationships with third parties, adds that businesses often think of compliance as a paperwork exercise – but says the reforms go much further than this.
“It’s really about the customer experience. Companies will need to look closely at how people move through their sign-up and renewal journeys, and make sure nothing is hidden, confusing or designed to trip them up.
“It means reviewing websites, apps, customer service processes and even the way teams communicate with customers. If you operate across multiple channels, you’ll need to make sure your messaging is consistent and genuinely clear.
“We expect the biggest impact on businesses that rely on free trials, as they’ll need to send customers clear, timely reminders before a trial becomes a paid subscription – something that will require solid systems and careful planning.
“Businesses should also pay close attention to how renewal pricing is presented. If a customer is going to be charged more when their contract renews, that information will need to be made clear rather than buried in the small print.”
The reforms form part of the consumer protection provisions under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), which includes requirements around pre-contract information, renewal reminders and straightforward cancellation of subscription contracts.
For businesses, preparation is likely to involve more than reviewing contractual terms. Subscription providers may need to assess their websites, apps, payment systems, CRM platforms, customer communications and internal processes to ensure that customers receive the required information at the right stages of the subscription journey.
With the implementation date now brought forward to January 2027, businesses operating subscription models have a limited window in which to assess their current arrangements and make any necessary operational changes.
Speak to a specialist
For further information, please contact Amy Peacey or a member of our corporate and commercial team.
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