A Small Business Guide to Subscription Contracts Under the DMCC Act

The UK's Digital Markets, Competition and Consumers Act (DMCC Act) became law on 24 May 2024, although many of its provisions are yet to be brought into force. The DMCC Act brings with it the most significant changes to subscription contracts in a generation. The new rules protect consumers by eliminating 'subscription traps' and create an opportunity for traders to drive transparency, trust, and customer experience.

The core subscription provisions were expected to come into full force in Spring 2026, but the UK government has recently announced that these provisions will come into force in Autumn 2026 instead. However, the time to audit your systems, update your T&Cs, and prepare for compliance is now. Here is a practical breakdown of the key compliance requirements and the actionable steps your business should be taking.

The DMCC Act brings with it the most significant changes to subscription contracts in a generation

1. The Transparency Mandate: Overhauling Pre-Contract Information

The days of burying crucial auto-renewal terms in page 12 of your T&Cs are over. The DMCC Act requires a two-tiered approach to upfront disclosure.

Requirement	What Your Business Must Do	Actionable Compliance Step
"Key Pre-Contract Information"	You must present a separate, concise summary of the most critical terms before the contract is formed.	Audit Checkout Flow: Create a dedicated, non-scrollable pop-up or clear section in your checkout that displays the auto-renewal details, total price, payment frequency, and summary of cancellation rights.
"Full Pre-Contract Information"	All other required contractual information must be provided or easily accessible.	Explicit Consent: Ensure the final step in the digital checkout requires the consumer to expressly acknowledge that the contract imposes a payment obligation (even if starting with a free trial). If this isn't done, the contract may be unenforceable.

2. Eliminating the 'Forgetting Tax': Mandatory Reminder Notices

To tackle 'zombie subscriptions' (contracts running long after the consumer has forgotten about them), the DMCC Act requires you to send timely, prominent reminders.

• Free or Discounted Trials: You must send a clear reminder before the first full payment is taken, notifying the customer of the date and amount of the forthcoming charge, and how to cancel.

  
  

• Rolling/Short-Term Subscriptions: For contracts that renew every six months or less, you must issue a reminder notice at least once every six months.

  
  

• Long-Term Renewals (12 Months+): You must send two notices before the renewal payment is due. These reminders must clearly state the renewal payment date, the amount, and how to cancel to avoid the charge.

Actionable Compliance Step

Automate Communication Workflows: Implement or configure your CRM/billing system to automatically generate and send these prescribed notices in a durable medium (e.g., email or SMS, not just a notification within the app). Ensure the notices are clear and more prominent than any accompanying marketing information.

3. The Easy Exit Rule: Frictionless Cancellation

This is perhaps the biggest technical and procedural change. Consumers must be able to cancel a subscription as easily as they signed up. The DMCC Act mandates a straightforward and timely cancellation process.

• Online Sign-up, Online Cancellation: If the contract was entered into online, the consumer must be able to end it online. You cannot force them to phone, send an email, or use post.

  
  

• No Unnecessary Steps: The cancellation process must be streamlined. Avoid so-called 'dark patterns' (e.g., multiple screens asking the customer to reconsider, re-entering passwords unnecessarily, or being diverted to a help chat).

  
  

• A Clear Statement: The consumer is entitled to terminate by simply making a clear statement (e.g., by clicking a single 'Cancel Subscription' button or sending an unambiguous email).

Actionable Compliance Step

Simplify Your UI/UX: Review your subscription management page. Can a user cancel in one or two clicks from the main account page? Test your cancellation process to ensure it is demonstrably as simple and quick as the sign-up process.

Confirmation Notice: Ensure your system automatically issues an "End-of-Contract Notice" to the consumer within three working days after the consumer gives notice of cancellation or within 24 hours of receiving an online cancellation request.

4. New Cooling-Off Periods: Accounting for Cancellation Rights

The DMCC Act introduces new 14-day cancellation rights beyond the initial sign-up period, which must be managed proactively in your systems.

• Trial Conversion: A 14-day cooling-off period starts when a free or discounted trial automatically converts to a full-price paid subscription.

  
  

• Long-Term Renewal: A 14-day cooling-off period starts upon the auto-renewal of a contract for a period of 12 months or more.

  
  

If a customer exercises this right, they are entitled to a full refund.

Actionable Compliance Step

Revenue Recognition: Consult with your finance team. The new 14-day post-renewal cooling-off right for relevant renewals may impact how and when you recognise subscription revenue.

Cooling-Off Notices: You must send a "Cooling-Off Notice" on the first day of each new cooling-off period (e.g., on the first day the trial converts to full price), clearly explaining the right to cancel and get a refund.

The Consequence of Non-Compliance: A Significant Risk

The Competition and Markets Authority will gain new, enhanced powers to directly enforce these rules without needing to go through the courts first. The penalties for non-compliance are severe: up to 10% of your business's global annual turnover or £300,000 (whichever is higher). Beyond fines, the reputational damage from being publicly named for using 'subscription traps' could be far more costly to your brand loyalty and customer lifetime value.

The DMCC Act is not just a compliance hurdle; it’s an evolution in digital commerce. Businesses that embrace these changes early by prioritising clear communication and simple processes will not only ensure compliance, but also foster the trust necessary for long-term customer relationships which is the foundation of every successful recurring revenue business model.

If you or your business require any support meeting obligations under the DMCC Act, get in touch for a no-obligation, fixed price quote.