DMCCA 2024: Key changes to subscription contracts

Is your subscription business ready for the new consumer protection laws? The Digital Markets, Competition and Consumers Act 2024 (DMCCA) will bring significant changes to how subscription contracts with consumers are regulated. If you're running an e-commerce, tech, or SaaS business offering subscription services to consumer customers, you'll want to take a fresh look at your practices.

Our experienced commercial law team is here to help you navigate these requirements and update your processes effectively.

Key requirements

The government’s consultation guidance defines a subscription contract as an agreement where a consumer pays for goods, services, or digital content under terms that include:

• Auto-renewal, requiring the consumer to actively cancel beyond a mandatory period to prevent renewal.
• A free trial or discounted period, after which the contract continues at full cost unless the consumer takes action.

This definition covers subscription arrangements for a wide range of goods and services, but various contracts are excluded (e.g. insurance contracts, energy contracts and financial services contracts) so it’s important to check whether the contracts you offer are within scope. 

For those contracts within scope, your business must prioritise:

• Pre-contract information: Present 'key' and 'full' pre-contract information about subscriptions in a durable medium.
• Renewal reminders: Send clear, timely and regular reminder notices about upcoming renewals.
• Cooling-off rights: Provide 14-day cooling-off periods with no penalties for both initial and subsequent terms.
• Easy cancellation: Offer straightforward cancellation options.

For example, if you run a SaaS platform offering monthly consumer subscriptions caught by the DMCCA’s rules, you'll need systems in place to automatically notify customers before renewal and provide an easily accessible cancellation process, e.g., through your website or app.

Non-compliance can lead to consumers cancelling contracts, criminal offences and enforcement by the Competition and Markets Authority, with serious breaches risking penalties of up to 10% of global turnover.

Julia Ellis, our Senior Commercial Solicitor, comments:

As a subscription-based business, there's plenty of time to prepare. The key is to start reviewing your subscription processes now, particularly around renewal notifications and cancellation procedures. This isn't just about compliance – it's an opportunity to strengthen customer relationships through increased transparency.

Planning ahead

The Digital Markets, Competition and Consumers Act 2024 will be implemented in stages through secondary legislation. The consumer law enforcement provisions are expected to take effect in April 2025, according to government statements. The government very recently launched a consultation on the implementation of regulations for the new regime (open until 10 February 2025) so we encourage you to watch this space for further detail.

Making the necessary changes is likely to need time and careful planning, so taking proactive steps now to assess and prepare for these new rules can help avoid a last-minute rush and serious non-compliance consequences. This includes reviewing your business-to-consumer (B2C) contracts, assessing practical changes to your customer transaction process and training your business on the new compliance requirements.

For legal advice on these changes and what you need to do, contact our commercial law solicitors.