Guide
Subscription and auto-renewal compliance
Understand the new DMCC Act 2024 rules on subscription contracts. Covers pre-contract information, renewal reminders, easy cancellation requirements, and cooling-off periods on auto-renewal.
What this is and why it matters
The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) introduces significant new rules for any business that charges customers on a recurring basis. Part 4 of the Act covers subscription contracts and will affect subscription boxes, auto-renewing memberships, digital services, recurring product orders, and magazine or media subscriptions.
Important: The Part 4 subscription provisions are not yet in force. They are expected to commence in 2025/2026 with CMA guidance forthcoming. However, because compliance will require changes to systems, customer communications, and cancellation processes, preparing now is strongly advisable.
What counts as a subscription contract
The DMCC Act's subscription provisions apply to contracts involving recurring payments for goods, services, or digital content. This includes:
- Subscription boxes: Regular deliveries of curated products (food, beauty, clothing)
- Digital services: Streaming, software-as-a-service, cloud storage, online tools
- Memberships: Gym memberships, loyalty programmes with recurring fees, professional subscriptions
- Auto-renewing orders: Repeat orders that renew automatically unless cancelled
- Free trials converting to paid: Any trial that automatically becomes a paid subscription
If your customers make recurring payments or their contracts renew automatically, these rules are likely to apply to you.
How the new rules change things
Currently, subscription businesses must comply with the Consumer Contracts Regulations 2013 (for distance sales) and general consumer protection law. The DMCC Act adds specific obligations that go further:
Pre-contract transparency
Before customers commit, you must clearly state:
- The subscription price and billing frequency
- Any minimum commitment period
- What happens at the end of the initial term (automatic renewal, price changes)
- How to cancel and any consequences of cancelling early
Burying these details in lengthy terms and conditions will not satisfy the requirement. The information must be prominent and easy to understand.
Renewal reminders
You must send customers a reminder before their subscription renews or before any price increase takes effect. The reminder must give enough notice for the customer to cancel if they wish. This applies each time the subscription enters a new period, not just the first renewal.
Easy cancellation
This is the most significant change for many businesses. Cancellation must be as easy as signing up. If a customer can subscribe online with a few clicks, you cannot require them to telephone a call centre, navigate complex menu systems, or complete multiple steps to cancel. Common practices that will likely breach this requirement include:
- Requiring customers to phone during limited hours to cancel
- Using multiple confirmation screens designed to discourage cancellation
- Hiding the cancellation option behind layers of menus
- Offering alternative deals or pauses before allowing cancellation (unless the customer can easily skip these)
Cooling-off on auto-renewal
When a subscription auto-renews, customers have a cooling-off period during which they can cancel and receive a proportionate refund for the unused portion. This is distinct from the general 14-day cooling-off period for distance sales and applies specifically at the point of renewal.
What to do now
Although the subscription provisions are not yet in force, businesses should start preparing. When commencement regulations are made, there may be limited lead time before the rules take effect.
Audit your subscription flows
Map every step of your customer journey from sign-up to cancellation. Identify where your current process falls short of the new requirements. Pay particular attention to:
- How clearly subscription terms are presented before purchase
- Whether and when you send renewal reminders
- How many steps cancellation requires compared to sign-up
- Whether free trials auto-convert without clear warning
Plan system changes
You may need to update payment systems, customer communication templates, and website or app interfaces. Build these changes into your development roadmap so they are ready before commencement.
Monitor CMA guidance
The CMA is expected to publish detailed guidance before the provisions commence. This will clarify exactly what constitutes compliant pre-contract information, adequate renewal reminders, and sufficiently easy cancellation mechanisms.