Subscription Contracts Reform

The UK government is consulting on the detail of the new subscription contracts regime that is due to take effect in April  2026. The long lead time is a warning signal that there is plenty of devil in the detail... If you would like any legal advice on the potential impact of the new regulations and guidance, please get in touch.

Primarily, it's of course important to understand what is meant by "subscription contract". However: 

• Just because a contract does not meet the definition does not mean that it's unregulated, just that it likely remains regulated under the existing Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs).
• There is also a very long list of exemptions for contracts that meet the definition, but are regulated under existing regulatory instruments other than the CCRs.

Key obligations include: 

• consumer reminder notices at key points, including before a free or introductory trial comes to an end.  
• easy-to-use ways to cancel/terminate: 
• within an initial cooling-off period; 
• on expiry of any initial free or discounted period; and 
• if the contract renews for a period of 12 months or more. 
• implied contract terms imposing DMCCA compliance obligations on traders, breach of which gives the consumer a further statutory right to cancel the contract.

The latest consultation covers: 

• The consequences of cooling-off cancellation right, including consumer rights to a refund, the trader’s right to recover goods supplied; 
• Consumer rights to a refund after 'cancellation' for a trader’s breach of duty; 
• Timing of refunds; 
• Restrictions on contractual terms that might affect a consumer’s contractual right to terminate; 
• Information notices to be given by traders. 
• proposed guidance for traders on presenting pre-contract information and enabling consumers to easily exit subscription contracts.

If you would like any legal advice on the potential impact of the new regulations and guidance, please get in touch.

The EU Boosts Consumer Protection For The Digital Age

Next week, the European Parliament will significantly boost consumer protection in the EU by approving changes to 4 directives on consumer rights. Member states will have 2 years from publication in the Official Journal to implement the changes. The Enforcement and Modernisation Directive amends:

• The Unfair Commercial Practices Directive (implemented in the UK by the Consumer Protection from Unfair Trading Regulations 2008);
• The Consumer Rights Directive (implemented in the UK by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013);
• The Unfair Contract Terms Directive (implemented in the UK by the Consumer Rights Act 2015);
• The Price Indications Directive (implemented in the UK by the Price Marking Order 2004). 

Online traders and marketplaces. 

There are new information obligations for online traders and marketplaces. These include pre-contract disclosure obligations for online marketplaces; and failure to include the information in an invitation to purchase is both a misleading omission and a blacklisted commercial practice (in some cases for all traders and in some cases just for online marketplaces). 

Traders must provide the criteria used to rank search results (a misleading omission for all traders offering search facilities, and required pre-contract information for online marketplaces). Failure to clearly indicate that search results have been paid for is a blacklisted commercial practice. 

The trader must state whether it verifies reviews (and, if so, how). Submitting fake reviews is a blacklisted commercial practice. 

The status of the seller must be disclosed (a misleading omission and pre-contract information requirement for online marketplaces). 

Whether the consumer will benefit from consumer protection law and how contractual obligations are divided between the seller and the online platform are pre-contract information requirements for online marketplaces. 

All traders must state whether there is any personalisation of the price on the basis of automated decision-making.

Dual Quality Products

The practice of selling dual quality products can be deemed misleading, i.e. where the product is marketed in one member state as being identical to the goods marketed in other member states, while the composition or characteristics are significantly different (unless justified by legitimate and objective factors). Dual quality has been identified as an issue in fish fingers, instant soup, coffee, soft drinks, detergents, cosmetics and baby products.

 

Ticket bots

There is a ban on the use of ticket bots to bulk buy tickets for resale (a practice already dealt with in UK legislation).

Digital services and good with digital elements

To align the Consumer Rights Directive with the draft Digital Content Directive there are new definitions of “digital services” and “goods with digital elements”. These are caught even where they are provided only in exchange for personal information; and there are provisions dealing with the use of personal data and user generated/contributed content after cancellation.

Communicating with traders

 

Traders must provide pre-contract information about online means of communication including use of chat bots or other technology (but reference to fax numbers is deleted) and the technology must enable the consumer to store any written correspondence, including the date and time, on a durable medium. But where the trader is contracting via means with limited time or space to communicate (e.g. text) the trader need not provide the model withdrawal form.

Reference prices for discounts

Any reference price used to indicate a discount must have been in use for at least a month (subject to  exceptions/derogations.

Complaints/redress

The European Commission must use the single digital gateway to inform consumers of their rights and enable them to submit cases to the Commission’s Online Dispute Resolution Platform. Consumers will also have new rights to seek redress directly from traders

Penalties for breach

Member states must impose penalties for breaches of the national consumer protection law implementing the amendments, including the ability to fine businesses up to 4 % of the trader’s annual turnover in the member state or member states concerned, or, if turnover information is not available, up to at least €2 million. 

Where national law may differ 

The Unfair Commercial Practices Directive and the Consumer Rights Directive are 'maximum harmonisation' directives, meaning member states cannot depart from them except in ways that are expressly permitted ('derogations').  New permitted derogations (provided they are proportionate, non-discriminatory and justified by consumer protection) relate to:

• Online marketplaces: member states can impose further information obligations on these; 

• Contracts concluded as a result of unsolicited home visits or excursions organised by a trader: a longer cancellation period for contracts agreed in these situations, from 14 to 30 days; and/or removing exceptions to the right to cancel where the services begin early with the consumer’s consent, the price depends on fluctuations in the financial market, the goods are made to the consumer’s specification or clearly personalised or the goods are sealed for health or hygiene reasons have been unsealed;

• Solicited visits for home repairs:  the consumer's right to cancel can be removed for contracts involving repairs carried out on a solicited home visit where certain conditions are met.

Brexit Spells End To Cross-Border Interchange Fee Caps

UK consumers will lose another layer of protection after Brexit when dealing with EEA-based suppliers, as the government will no longer cap interchange fees where either the merchant's acquirer or the payment card issuer is based outside the UK.  This follows the erosion of other consumer protection measures for UK consumers buying from suppliers in the remaining EEA countries.

The proposed changes to the UK Interchange Fee Regulations for Brexit purposes would take effect on 30 March or end December 2020 (depending on whether there is a Withdrawal Agreement and related transition period). Among other things, the proposed Regulations:

• Limit the scope of the Regs from the EEA to the UK to transactions that take place only within the UK (both the acquirer and the card issuer are located in the UK), so cross-border card payments between the UK and the EEA will no longer be within scope of either the UK or EU interchange fee regs (i.e. payments made within the UK will continue to have caps on interchange fees, while payments where either the acquirer or the card issuer is based outside the UK (including in the EEA) will no longer be subject to the caps); and

• Allow for regulations setting lower caps on UK debit and credit card transactions, and a maximum cap for UK debit card transactions.

EC Boils Consumer Law Ocean On Eve of #Brexit Referendum

Perfectly timed to coincide with a peak in frustration with EU red tape, the European Commission has just published its plan to ruin everyone's summer consultation on the 'fitness' of six consumer directives, and is also busy reviewing a seventh (the Consumer Rights Directive):

• Unfair Contract Terms Directive 93/13/EEC;
• Consumer Sales and Guarantees Directive 1999/44/EC;
• Unfair Commercial Practices Directive 2005/29/EC;
• Price Indication Directive 98/6/EC;
• Misleading and Comparative Advertising Directive 2006/114/EC;
• Injunctions Directive 2009/22/EC.

Try to avoid falling asleep in the sun!

Will this result in less red tape? I could hazard a guess, but we won't really know until it's too late. The Commission reports its findings in mid-2017.