With subscription regime changes happening more slowly than anticipated, Katrina Anderson, Principal Associate at national law firm Mills & Reeve, explains why retailers should still act now to ensure compliance.
New regulations tackling “subscription traps”, initially expected to take effect from April next year under the comprehensive Digital Markets, Competition and Consumers Act 2024 (DMCC Act 2024), are now more likely to come into force from Autumn 2026.
It’s a short reprieve, but given the depth of the changes required, online retailers will still need to act quickly to assess and adjust their practices to avoid CMA sanctions and potential reputational harm.
The purpose of the DMCC Act and why it targets subscriptions
The DMCC Act is a significant piece of legislation spanning multiple areas, from digital market regulation to competition law. It introduces several key changes to UK consumer protection law while granting the CMA substantial new authority. Particularly noteworthy is the CMA’s enhanced ‘judge and jury’ enforcement capability, which enables it to investigate and directly levy fines on businesses without court involvement.
Implementation of the legislation is being phased in gradually. One area set to come into force in 2026 is new rules aimed at preventing “subscription traps” – scenarios where consumers struggle to exit contracts, particularly those they may have unknowingly or inadvertently signed up for.
The government has highlighted that such unwanted subscriptions can impose a substantial monthly burden on families, with many continuing to pay for services they’ve either forgotten about or were automatically enrolled in following a “free trial.” It’s estimated these collectively drain £1.6 billion from households annually.
What are the implications for online retailers?
Once in place, the regulations will require that businesses deliver clearer information to consumers digitally. All essential details and choices around a subscription must be transparent and understandable at the point of commitment and throughout the contract.
Businesses will also be required to eliminate what regulators view as deceptive techniques, such as “dark patterns” and “sludge” (intentional friction) that mislead consumers into subscribing or obstruct their ability to terminate contracts by making it easier to cancel subscriptions.
Key areas of focus include:
● Pre-contract disclosure: Specific critical information will need to be shared before consumers commit to an online subscription – especially duration, pricing, and payment intervals. This information must be presented clearly and openly, with nothing buried in fine print.
● Renewal notifications: These will have to reach subscribers at the conclusion of any complimentary or reduced-rate period and ahead of automatic subscription renewal. Additional notices will also be required, with precise specifications varying depending on the contract structure.
● Cancellation options: There will have to be a “straightforward” method for individuals to terminate their subscription online. It’s widely anticipated this will necessitate an on-platform “cancellation button.” Subscribers will further be entitled to cancel through any alternative channel of their choosing, so long as they provide a “clear statement” indicating their intent. This will require businesses to establish procedures for capturing and actioning cancellations arising from such statements.
● Cooling-off windows: Beyond any contractual provisions, subscribers will possess a general cancellation right within an initial 14-day window after contract commencement. They may also cancel within the same timeframe after any free or discounted period ends and following any auto-renewal that binds the subscriber to an additional term of 12 months or longer.
Will this create new burdens for online retailers?
There’s no question that reviewing and adjusting current processes will generate short-term expenses and complications for online retailers. Given this reality, the delayed implementation from April to Autumn 2026 offers welcome breathing room. Nevertheless, to reduce the impact, it remains advisable to begin preparations now.
Areas where businesses could see financial impacts include:
● Increased operating expenses: new systems and procedures to achieve DMCC Act compliance, including redesigned websites and apps, improved reminder automation capabilities, and employee training initiatives.
● Loss of “hidden” revenue sources: with the government estimating “subscription traps” cost consumers £1.6bn annually, the reality is that the clampdown will cost a similar amount in lost revenue.
● Prohibition of drip pricing: The DMCC Act also outlaws drip pricing, whereby mandatory charges are introduced late in the purchasing process. All compulsory costs must now be incorporated into the advertised upfront price, preventing retailers from securing customer commitment through artificially low initial pricing.
● Sanctions for non-compliance: The CMA has the authority to levy fines for violations of up to 10% of worldwide turnover (or £300,000, whichever is greater).
However, advantages may emerge from updating processes that online retailers should aim to maximise. These include:
● Fewer disputes and chargebacks: by simplifying cancellation procedures, there will likely be a reduction in chargebacks from customers who might otherwise have contested unwanted charges through their bank. Decreased consumer frustration may also diminish the motivation to initiate time-consuming disputes and pursue a chargeback.
● Enhanced trust and goodwill: increased openness and transparency provide a potential opportunity for brands to build trust and goodwill with consumers and show they value their customer relationship beyond the initial transaction.
Now is the time to act
While the new subscription regime changes are still months from taking effect, provisions such as the drip pricing ban are already in effect, so businesses should act immediately, prioritising ensuring that adverts and online pricing information meet compliance standards.
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