Finding a fair balance for subscribers

22nd June 2023

Yesterday, I spotted two articles on the BBC about subscription contracts. Subscription models (or importantly regular repeat revenue models) are highly prized by financiers and have thus become the preferred business model for consumer contracts.

Following an investigation by the UK Competition and Markets Authority (CMA) focussed on anti-virus software and a broader review of consumer protections; the Digital Markets, Competition and Consumer Bill  (the Bill) published earlier this year includes proposals on how subscription contracts need to be presented to consumers and how automatic renewals must be processed in order to be fair. The Bill includes proscriptive documentation and cooling-off periods as well as the need for multiple reminders about auto-renewal. The Bill also requires cancellation to be possible in one-click. The streaming service, Disney + isn’t happy with the proposals on the basis they will create email-fatigue for consumers who are likely then to ignore every email. They state that Disney+ (at least) already makes it very easy for consumers to cancel, and that their pricing model doesn’t sit well with the requirements set-out in the Bill.

Contrast Disney+’s argument with that of the US Government in its consumer regulator guise the Federal Trade Commission (FTC.) The FTC state that Amazon Prime (also a subscription service) is unfair to consumers because it “tricks” consumers into subscribing for the service and then makes it difficult to cancel, costing consumers money for a service they do not want. The FTC has taken a very aggressive stance and is suing Amazon on behalf of the public. Amazon is fighting back.

“The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership.”

Whatever your view, it seems that subscription models are coming under much harsher scrutiny and regulation and  unfair or misleading business practices around subscription and renewal will lead to regulatory intervention.

In the UK, the Bill is working its way through the parliamentary process and is expected to become law later this year. We’ll have to see if Disney+ and others do manage to water-down the requirements.