Increasing subscription prices without prior notice before a renewal could be illegal, particularly under the new provisions of the Digital Markets, Competition, and Consumers Act 2024 (DMCC) in the UK. Below is what the act says.
Pre-Contract Information
According to Chapter 2 of Part 4 of the DMCC Act, businesses offering subscription-based services must provide clear pre-contract information, ensuring that consumers understand the nature of their subscription contract. This includes explicit details on how and when prices can be changed during the subscription period. Failing to disclose this information before a consumer agrees to the contract can be deemed illegal, as it violates the consumer’s right to transparency.
If a business increases prices without informing consumers ahead of time, it may breach these provisions, making the practice unlawful under the DMCC.
Renewal Reminders and the Right to Terminate
The DMCC mandates that businesses issue renewal reminders before a subscription is automatically renewed. Section 258 of the Act specifies that businesses must notify consumers of key contract terms, including price changes, before renewing the subscription.
Additionally, Section 260 outlines that consumers have the right to terminate the subscription at any time. Businesses that fail to provide this notice or make it difficult for consumers to cancel are violating the law.
Cooling-Off Period
Under Section 264, the DMCC also introduces a 14-day cooling-off period for subscription contracts, allowing consumers to cancel their subscriptions without any penalty during this period. If a business increases the price within this time without proper notice, the consumer has the legal right to cancel and receive a refund, in accordance with the law.
Penalties for Non-Compliance
Part 5 of the DMCC gives the Competition and Markets Authority (CMA) the power to impose fines for breaches. Businesses that raise prices without informing consumers before renewal could face fines of up to 10% of their global annual turnover or £300,000, whichever is higher. Furthermore, businesses that fail to honor pre-contract information requirements or renewal notice obligations could also be hit with penalties for non-compliance under these provisions.
Read more about DMCC Act 2024 here.
The DMCC bill became an act of parliament (law) in the UK on 24 May 2024.
Consumer Rights in Other Jurisdictions.
Other countries have similar laws protecting consumers against sudden subscription price increases:
European Union: The EU Directive 2011/83/EU on Consumer Rights mandates that businesses provide clear information on subscription terms, including pricing, cancellation rights, and renewal conditions. The Omnibus Directive (Directive 2019/2161) strengthens consumer rights by introducing stricter transparency obligations and penalties for businesses that fail to provide accurate information, particularly on subscription renewals and price increases.
United States: In the US, the Restore Online Shoppers’ Confidence Act (ROSCA) requires that businesses obtain explicit consent from consumers for automatic renewals or recurring charges. It also mandates clear disclosure of all subscription terms, such as renewal policies and price changes, and provides consumers the right to easily cancel their subscriptions.
Australia: Under the Australian Consumer Law (ACL), businesses must provide clear and transparent information about subscription contracts, including pricing, renewal terms, and cancellation rights. The ACL also grants consumers protection against misleading practices and unfair contract terms. The laws are enforced by the Australian Competition and Consumer Commission (ACCC).
Each jurisdiction has its own rules, but the overarching rule is, that you should notify subscribers of any increase of charges before renewal
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