New laws that change the way subscriptions or memberships are provided have come into force. Felicity Forward and Joel Murphie from Shoosmiths take a look at what the Digital Markets, Competition and Consumers Act 2024 means for charities.
What’s changing?
The Digital Markets, Competition and Consumers Bill finally completed the legislative process and received Royal Assent on 24 May 2024 and is now law.
The changes introduced by the Digital Markets, Competition and Consumers Act 2024 (the 'Act') include (amongst other things) enhanced protection for consumers in relation to subscription contracts, regulation of fake reviews, the display of pricing information online (to avoid "drip pricing") and enhanced enforcement measures (including GDPR style fines) against non-compliant businesses.
How do the subscription rules apply to charities?
The new rules apply to businesses who supply goods, services or digital content that renew or continue automatically, whether for a further fixed period or indefinitely, and commit a consumer to recurring payments.
This broad definition therefore captures charities who provide membership schemes, or similar subscription services, to consumers where a consumer may pay a regular amount and receive benefits in return.
What does this mean for charities?
Any charity which is providing a membership or subscription scheme will have several new practical requirements that it must comply with.
- Key information: key pre-contract information will need to be presented to consumers before they sign up (e.g. if online, directly on screen at the check-out). This includes information such as how often a subscription renews and the payment terms applying to it.
- Full information: a wider set of full pre-contract information will also need to be provided before they sign up. This information can sit within sales terms but will also need to be provided post sale in writing on a durable medium (e.g. within the confirmation email).
- Clear obligation to pay: The consumers’ express acknowledgement that the contract imposes an obligation to make payments will need to be obtained e.g. a 'pay now' button.
- Initial cancellation: The consumer will have an initial 14-day cooling-off right where they can cancel the subscription contract. This right needs to be presented to the consumer before they sign up to the contract e.g. in sales terms.
- Renewal cancellation: The consumer will have a renewal 14-day cooling-off right to cancel the contract after they become liable under the contract for a first renewal payment and following the end of a concessionary period (such as a discount period), or after each renewal where the contract auto renews for a year or more.
- Reminder notices: Reminder notices must be sent to consumers where a concessionary period is ending, or before a renewal payment is due. Contracts that renew for a period of 12 months or more will require two notices.
- How to cancel: Where a contract is formed online a consumer must be able to bring the contract to an end online and instructions to do so must be easily accessible. Alternatively, consumers can cancel by making a clear statement to the charity which sets out their decision to end the contract.
- End of contract notice: An end of contract notice will need to be provided confirming the cancellation and refund of any overpayments.
Next steps:
Whilst the Act is now law, the provisions relating to subscription contracts will come into force no earlier than spring 2026.
Our expectation is that there will be no implementation period following spring 2026 as the government have stated the delay is to ensure that 'businesses have sufficient time to make changes to their operational processes and practices.
It is therefore important that charities start to take action now to ensure compliance by spring 2026.
Key steps to take:
- Explore with your digital team how easily these changes can be incorporated into your online sales journey
- Begin training key stakeholders (e.g. customer care/sales teams) so they are aware of the rules
- Consider making any required system upgrades to meet the notification requirements
- Make changes to your legal documentation and written notices
The authors:
Felicity Forward, Principal Associate, Shoosmiths.
Read Felicity's biography
Joel Murphie, Senior Associate, Shoosmiths.
Read Joel's biography.