The UK government has proposed various consumer law changes in order to regulate consumer-facing businesses. These proposed reforms include stricter regulations along with enforcing powers allowing regulatory bodies to impose fines for up to 10% of global turnover for the breach of the consumer regulation. With the rapid increase in digital products and subscription services as a result of COVID–19, these reforms have been long overdue. Let’s look at what these proposed changes are and what companies need to be doing to ensure compliance.
Subscription Services and Auto-renewal Contracts
Among the new proposed consumer reforms are those cracking down on subscription services and auto-renewal contracts. This reform deals with ‘loyalty penalties’ and the various issues consumers face when trying to cancel these auto-renewal contracts. The government proposes various changes to ensure that the consumer knows what they are signing up for and is reassured that cancelling the subscription service is easy and convenient. Once implemented, companies will be required to ask consumers to agree to auto-renewal contracts by specifically opting-in for the service. They will not be allowed to have the auto-renewal feature as a default setting.
Additionally, businesses offering subscription services will also be required to provide the consumer with all the details regarding the auto-renewal feature and the contracts associated with it and to send out a reminder to the consumer immediately before the renewal or before a free trial or introductory offer ends.
In addition, the proposed reforms could require businesses to review their customers’ activities and suspend inactive accounts. There will be various requirements for businesses to ensure that customers have easy access to cancellation of these contracts at any point of time.
These proposed changes would apply for the majority of subscription models with the only exceptions being those whose interruption could cause serious harm as in the case of medical or insurance subscriptions. Other subscription services these changes would affect include beauty subscriptions, gym memberships, magazine subscriptions, food boxes, dating services, music services, web-hosting providers, computer game sellers and video subscription services.
How Can Companies Change Their Marketing to Get Customers to opt in For Auto-Renewal?
The best way to ensure that your customers opt in for the auto-renewal feature on your subscription service is by being transparent and showing them exactly how your service will benefit them. Point out how your service can add value to their life and make it easy for them. It is also a good idea to explicitly ask your loyal customers to select the auto-renewal feature for their subscription by reminding them they will be required to opt in for the feature. Many users will be accustomed to being automatically signed up for auto-renewal and may not realise that they will actually have to give their permission in future. So, make sure your strategy includes informing them about this change.