Business Latest News Laws Topical

Subscriptions: A Government Consultation

On 20 June 2021 the Government finally published its consumer paper for consultation. It is titled Reforming Competition and Consumer Policy. The closing date for responses is 11.45am on 1 October 2021.

Gov logo with BEIS in full

The document is 147 pages long! So I am producing a summary/opinion piece on areas of the consultation.


See ADR: A Government consultation for details about my responses to the Alternative Dispute Resolution section of the consultation and Reviews: A Government Consultation for the section on fake reviews,

An edited summary of “Chapter 2 Consumer Rights” pages 83 – 91 from the consultation policy is below:

“Maintaining strong consumer rights and business competitiveness

The Government is looking to put consumers and competition at the heart of the economy. The Consumer Rights Act 2015 consolidated and updated consumer law which now includes digital content. Markets are constantly changing and adapting with an increase in online transactions accelerated due to the pandemic. The policy considers opportunities to strengthen and update consumer rights whilst balancing this with proportionate requirements for businesses, who need to continue developing innovative products and services. The increased online collection and use of consumer data has enabled companies to develop both personalised offers to individual consumers and a sophisticated understanding of wider patterns and trends in consumer behaviour.

The Government consultation document says “While these practices can benefit consumers, for example resulting in tailored advertising or an improved online shopping experience, studies show that more than 1 in 10 websites today are using insights into consumer behaviour to influence choice. This can be as simple as exploiting a consumer’s over-confidence that they will remember to cancel a subscription, preselecting certain options to influence consumer behaviour, or commissioning reviews for a product.”

“Vulnerable consumers are particularly sensitive to these potential harmful practices. Strategies such as “One-click” purchasing and subscriptions, where users agree to a monthly or other regular payment have been identified as problematic for consumers trying to regulate their spending.”

“Government has identified particular concerns relating to subscription contracts, the commissioning of fake or misleading reviews and the exploitation of behavioural biases.”

“Modernising consumer rights and subscription contracts.”

“The use of subscription contracts has accelerated across sectors due partly to the digitisation of markets and a desire amongst consumers for greater choice and convenience. The creation of apps and mobile commerce has helped drive the push. Flexibility and ease of signing up has been allowed through mobile commerce.”

Subscriptions have become an increasingly important part of online business models, they drive readership and revenues, and contribute to the sustainability of a sector. Also, as the Government notes, “Consumers switching between products based on initial experiences can also boost competition between businesses and create incentives to lower prices or improve the quality of the services provided.”

“The use of subscription models by business is not always purely beneficial for consumers.” The problems with the “Loyalty penalty” have been well documented and spoken about. For example in this article  FCA stops insurance companies’ loyalty penalty, so  things are changing for the insurance sector. However, automatic renewal, roll over and lock-ins still remain for other sectors. Contracts which are misleading and free trials trapping consumers have frequently caused problems for many consumers. See, for example, How to challenge terms & conditions (even those agreed)

The Government consultation document continues: “Addressing the problems identified by regulators, Citizens Advice, and other stakeholders, Government proposes taking action in three areas. (i) At the pre-contract stage, where important information about the subscription contract should be clear and prominent; (ii) contracts which continue and contain autorenewal features, should not auto-renew or rollover without the consumer’s specific agreement and (iii) the process of exiting a contract should be clear and easy for consumers.”

Figure 8: What is a Subscription contract?

The term “subscription” is used in this consultation to mean a contract between a consumer and trader over a period of time for the supply of goods (magazines, beauty products, food boxes) a service (gym membership, online dating site membership, web hosting) or digital content (digital music, eBooks, computer games).”

“Giving consumers a clear choice on what they are signing up for”

Government wants to strengthen the law and make more explicit the need for certain information and choices to be provided, in a clear and prominent manner and just before the consumer enters into a subscription contract. “Consumers should know up front the key terms and features of a subscription contract that they are signing up to.”

It wants to clarify the following:

1) “The requirement on traders to make the consumer aware, in a clear and prominent manner, of the subscription information at an early stage in the process and immediately before the consumer places their order;”

2) that their order or agreement is for a subscription contract and specific information on explaining or indicating the minimum contract terms and price per billing period;

3) whether contracts will auto-renew or auto-extend at the end of the contract term; and any minimum notice period for cancellation;

4) expressly require any trader offering any subscription contract to consumers, that would contain terms on auto-renewal or rollover, that they offer the consumer the choice, at the pre-contract stage, to take the subscription without auto-renewal or rollover, i.e., for a fixed initial commitment period only. “The consumer must actively choose to take the contract with autorenewal or rollover (i.e., the consumer must not be required to, for example, to de-select a preticked box in order to take the contract without auto-renewal or rollover).”

“Nudging consumers so they are aware of ongoing subscriptions”

“Research from the European Commission showed around two thirds of customers who bought a subscription through an online advert had not seen the length of the subscription in the fine print.” Even people who are aware of the terms and overlook precise times can continue to pay for services they don’t want. Government is looking to strengthen the law with a change to “expressly require traders” to remind consumers before the end of any commitment period that the contract will auto-renew unless it is cancelled.

“Free trials and introductory offers are a helpful means of attracting new customers and allow individuals the chance to test a product or service before committing to a full price purchase.” However, they can fall into a subscription trap. Government is looking to strengthen the law by “expressly requiring traders to issue a reminder to consumers that a free trial or low-cost introductory offers coming to an end, the terms of the autorenewal, and details for how to cancel if they so wish; or as an alternative • requiring traders to obtain the consent of the consumer before extending the contract to a full price term.” Inactive subscriptions can go unnoticed over a long period of time for a variety of reasons. Government is seeking views on whether traders “should be required after a reasonably long period of time where there is evidence of inactivity (for example through electronic records or streaming activity) to give notice of suspension of service and to stop charging money for the consumption or use of goods, services, and digital content under a subscription contract.”

“Current consumer law rules also prohibit unfair commercial practices, including aggressive commercial practices which cause or are likely to cause the average consumer to take a different decision.” But people are finding it hard to cancel subscriptions. Government is looking to make it easier for consumers to cancel in a straightforward, cost-effective, and timely way.

Government’s “intention is that the rules proposed above would apply to subscription contracts for goods, services, and digital content in general across the economy but certain types of contracts and/or sectors would be exempt from the rules. The policy aims to minimise consumer harm and detriment. Government proposes to exclude any contracts for goods, services, and digital content from the proposals, where an interruption in supply could result in serious harm to consumer welfare in principle. For example, it anticipates that this would involve excluding contracts for the supply of medicines or contracts for certain financial services such as insurance.”

Helen Dewdney The Complaining Cow responses to the consultation Download

ADR Ombudsman Business Latest News Laws Topical

ADR: A Government consultation

On 20 June 2021 the Government finally published its consumer paper for consultation titled Reforming Competition and Consumer Policy. The closing date is for responses to the consultation is 11.45am on 1 October 2021.

The document is 147 pages long! So, I am going to do a summary/opinion piece on areas of the consultation.

I will start with Alternative Dispute Resolution (ADR). It can be complicated but over the last 6 years I have been recognised in the consumer world for my expertise and knowledge in the area and often get called upon in the media to talk about ADR due to this.

See ADR – all about it for World Ombudsman Day lists all my work in this area.

See Reviews: A Government Consultation and Subscriptions: A Government Consultation for response on subscription traps.

ADR falls within the section of Consumer Law Enforcement.

Marcus Williamson and I co-wrote two research reports on Alternative Dispute Resolution (ADR).

Report cover CDRL, CTSI, CAA, OA, Dean Dunham,The first was Ombudsman Omnishambles:  Serious unresolved issues affecting the operation of the ombudsman ADR system in the UK. (OO) in June 2016

The second was More Ombudsman Omnishambles: The UK ADR landscape 20 months on… in February 2018 (MOO). These were both highly critical of the Chartered Trading Standards Institution (CTSI) and of Civil Aviation Authority (CAA) in particular for their approval and monitoring of ADR schemes. Many of the issues raised in both these reports remain unresolved.

The Government is looking at examining ways to “mainstream” ADR, so it not seen as an alternative to court but becomes an integral part of the justice system. It currentlu aims to increase the scope of ADR and the rate of consumer disputes being satisfactorily resolved.

The consultation is looking at responses to three areas.

Summary of one section of the Reforming Competition and Consumer Policy consultation:

“Government believes a well-functioning ADR system can make markets work more effectively and drive economic growth, as it increases consumers’ confidence in spending and generates higher trader compliance with the law. However, responses to the Consumer Green Paper suggest that a number of improvements need to be made to improve the quality and scope of ADR so that it delivers for more consumers and businesses in all markets. In this chapter, government is seeking views on three specific improvements that were highlighted by respondents:

Improving consumer awareness and signposting – the current landscape for accessing redress is confusing and the process varies across markets. This is dissuading consumers from seeking private redress and enforcing their consumer rights.

Responses to the Consumer Green Paper said that consumers still find it difficult to understand their redress options, make the right choice for them and navigate the routes to resolving their problem, particularly if they are vulnerable.”

“Speeding up access to ADR  – In regulated markets, the majority of disputes are resolved within four weeks, but most regulators have typically set an upper limit of eight weeks for businesses to resolve complaints before consumers are entitled to take a dispute to ADR.

Government is looking for views on whether regulators should aim to set a significantly lower threshold for consumers to exercise their right to access ADR and if so whether exceptions could or should be made to allow more time to resolve complex cases.

“Improving the take-up of ADR by businesses in non-regulated markets – Business participation in ADR is particularly low in non-regulated sectors with a high number of SMEs and microbusinesses. This is concerning if those sectors are also ones where consumers are experiencing high levels of harm.”

The following is summarised from the policy. Pages 116 – 127 in the section titled “Supporting consumers enforcing their rights independently”

Improving Alternative Dispute Resolution

“Government proposes to require that all providers of consumer ADR are assessed and approved for their ability to provide an ADR service. Currently there are numerous non-accredited and unsupervised providers that offer dispute resolution on an informal basis alongside accredited providers.

Mandatory approval by the Competent Authority would mean that all providers operate to a common set of quality standards and oversight.”

It intends to strengthen the minimum service expectations of all ADR providers, focusing on four key principles to improve the quality of ADR – “neutrality, efficiency, accessibility, and transparency”.

“Government proposes to amend the ADR regulations, building on its existing framework to incorporate additional requirements for ADR providers, both as part of their initial accreditation and as part of their service provision to consumers and businesses. “These would include strengthening the accreditation process through the introduction of a ‘fit and proper persons’ test for key personnel to ensure that businesses owners, officers and senior management are suitable people to undertake those roles.”

It is generally mandatory for traders to participate in ADR schemes in the regulated sectors. For sectors where participation is voluntary, there is little engagement for a number of reasons. In the unregulated sectors, house and garden maintenance services, vehicle maintenance and repair services, and used cars are the sectors where consumers spend the most money so can receive the most harm.

“Government is considering a charge of £10-20 to consumers, with this being recoverable from the business if their case is upheld. There is a precedent for this in the aviation sector. “To address these concerns and deter frivolous or low value complaints, government is seeking views on whether ADR providers should be able to implement a lower limit on the value of claims. This would be balanced to ensure only higher value claims are in scope but not to significantly restrict consumers’ access to ADR.”

“Government is looking at incentivising businesses and consumers to use ADR on a voluntary basis. Responses to the Consumer Green Paper and further stakeholder engagement, showed that mandating ADR in would be significantly more effective than voluntary measures in ensuring access to affordable redress. Government is looking at making participation mandatory in the motor vehicles sector (to include the supply of new and used vehicles and servicing and repair) and in the home improvements market (such as roofing, glazing, plumbing work, or the fitting of flooring, kitchens, or bathrooms).”

“Government is considering requiring businesses in these sectors to pay for ADR on a pay per use basis but recognises that some businesses might find it more cost effective to pay an ADR provider on a subscription basis.”

“The UK has an established regime for addressing collective consumer harm and enabling consumers to gain collective redress when consumer law has been broken. This covers both public collective redress procedures, whereby regulators and the CMA can seek redress on behalf of consumers. Enforcers, such as the CMA, seek compliance with consumer law rather than taking representative legal action on behalf of consumers. The Consumer Rights Act 2015 strengthened routes for public enforcers to seek collective redress and government forsees the changes to make it easier and quicker for bodies to obtain redress on behalf of consumers.”

“Government is considering a range of options that will incentivise compliance and encourage businesses to use ADR. It is also looking at options that will disadvantage businesses that refuse to engage in an ADR process if the consumer eventually needs to take them to court.”

Helen Dewdney The Complaining Cow responses to the consultation Download