New rules on ‘subscription traps’ brought forward to January 2027: What businesses need to know

Prime Minister Andy Burnham has announced that new consumer protection rules designed to tackle so-called ‘subscription traps’ will be brought forward to January 2027. The changes will affect businesses offering consumer subscriptions, including those that automatically renew or move customers from free or discounted trials onto paid contracts. 

Businesses that sell to consumers through subscription models should review their customer journeys, terms and conditions, renewal notifications and cancellation processes before the new rules take effect. 

What's happening?

The new subscription rules are part of the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The legislation introduces new rules for subscriptions that automatically renew unless the customer cancels, including some free or discounted trials that later move onto paid terms. 

It is intended to address practices commonly associated with ‘subscription traps’, including auto-renewal arrangements and free or discounted introductory offers that roll over into paid subscriptions unless the consumer acts to cancel. 

When will the new rules apply?

The Government has recently announced that implementation will be brought forward to January 2027 as part of a wider package of measures aimed at reducing the cost of living. 

Secondary legislation and further guidance are still expected to deal with some of the practical detail, so businesses will need to monitor developments as January approaches.

What will businesses need to change?

The new rules will affect every stage of the customer lifecycle: 

• Before a customer signs up, businesses will need to provide clear information about the subscription. This includes key information about payments, the minimum commitment period, what happens when a free trial or introductory price ends, and how a customer can cancel or terminate a subscription. For many businesses, this will require a review of checkout pages, app journeys, marketing copy and order-confirmation communications, not just the subscription terms.
• During the subscription, businesses will need to send reminder and renewal notices at prescribed points. The Government has indicated that these will include reminders before a free or discounted trial converts into a paid subscription and before a subscription lasting 12 months or more renews automatically. These communications must make the cost of continuing the subscription clear and tell the customer how they can end it. Automated CRM and billing communications will need to be mapped carefully, particularly where a business offers monthly subscriptions, annual renewals, free trials or discounted introductory periods. 
• Cancellation will also need to be straightforward. Businesses should not make it difficult to cancel by requiring consumers to navigate unnecessary steps, contact customer services where this is avoidable, or use a cancellation route that is materially harder than the sign-up process. For example, where the subscription was entered into online, businesses should expect to need an effective online route for termination. 
• Cooling off and cancellation rights. Consumers will also benefit from 14-day cooling-off rights. As well as an initial cooling-off period when a subscription begins, a further 14-day period will apply in certain circumstances, including when a free or discounted trial becomes a paid subscription or when a contract renews for a period of 12 months or more. Businesses should review their refund, billing and customer-service processes so that they can give effect to those rights in practice.

Which businesses will be affected?

If your business relies on recurring consumer revenue, the new subscription rules may require changes to your checkout, billing and cancellation processes as well as your terms and conditions. The rules are aimed at business-to-consumer subscription contracts for goods, services and digital content. 

Businesses likely to be impacted include consumer SaaS and app subscriptions, digital content services, memberships and subscription-box services, recurring deliveries and fitness, beauty and wellness subscriptions. 

Certain types of business (including certain utility, financial services and healthcare businesses) are excluded because they are already regulated elsewhere. Businesses should check whether their subscription arrangements fall within the new rules, as not every recurring payment will be covered. 

Why does it matter for your business?

Businesses may need to redesign parts of the customer journey, including sign-up pages, trial-to-paid conversion journeys, renewal communications, billing processes and cancellation functionality. 

It also sits against a backdrop of significantly stronger consumer enforcement powers under the DMCCA. The Competition and Markets Authority can now directly enforce consumer protection law and, in appropriate cases, impose penalties of up to 10% of a business’s worldwide turnover.

The new rules are likely to require coordination between legal, product, marketing, customer service, finance and technology teams. For businesses with complex subscription models, the greatest challenge may be adapting systems and customer journeys rather than revising the terms alone. 

What should businesses do now?

Businesses should use the period before January 2027 to: 

• map their subscription products and identify which contracts are likely to fall within the new regime 

• review sign-up journeys and the information provided before customers commit 

• check when reminder and renewal communications are currently sent and what information they contain 

• review free trials, introductory discounts and automatic renewal arrangements 

• test cancellation journeys to ensure customers can exit easily, particularly where they signed up online 

• review terms and conditions, refund processes and cooling-off procedures 

• identify any systems or product changes that will require development work before the rules take effect 

• monitor the publication of secondary legislation and final guidance for further detail on the requirements. 

Businesses with more complex subscription models may want to begin this work early. Changing how customers sign up, manage or cancel their subscriptions, as well as to automated emails and messages, can take much more work than updating the contract terms alone. 

Our commercial solicitors can help you assess whether your subscription arrangements fall within the new regime, review your terms and customer journeys and prepare your business for the new requirements ahead of January 2027.