Proposed changes to the digital content waiver for subscription contracts under the DMCCA

The Department for Business and Trade has launched a consultation on the implementation of the new subscription contracts regime introduced by the Digital Markets, Competition and Consumers Act 2024 (the DMCCA). The consultation aims to gather views from key stakeholders, including businesses affected by this new regime, which will inform secondary legislation and guidance on how the new subscription contracts regime will work in practice.

This briefing focuses on the government’s proposed changes to the position for digital content subscriptions, and in particular those relating to the “digital content waiver”. 

Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the CCRs), consumers are currently required to waive their right to a 14-day cooling-off period before they can be supplied with digital content. This waiver consists of both an express request from the consumer that the content be supplied during the cooling-off period, and an acknowledgment from the consumer that by receiving such content in this window, their statutory cancellation rights will be lost. 

Proposed changes to the digital content waiver

Taking into account the concerns previously raised by various stakeholders about the importance of the digital content waiver being maintained for subscription contracts, and in particular the concern that without this waiver consumers could take advantage by enjoying up to 14 days’ worth of content before cancelling their contract and still being entitled to receive a full refund (the so-called practice of “binge and cancel”), the government put forward three potential options for how and when a consumer would be entitled to a full or partial refund when exercising their cancellation rights under a contract for digital content during a cooling-off period:

Option 1 - a proportionate refund for both initial and renewal cooling-off periods

Under this option, the digital content waiver in its current form under the CCRs would cease to exist, and the consumer would always have a right to exercise their cancellation right during the initial or a renewal cooling-off period (the latter being a new right introduced under the DMCCA). However, their right to a refund would depend on whether the digital content:

• has not been supplied during a cooling-off period – the consumer’s liability for further payments under the contract ends and they receive a full refund of their initial/renewal payment, or
• has been supplied within the cooling-off period - the consumer’s liability for further payments under the contract ends, but they remain liable for the part of the contract performed in the relevant cooling-off period on a pro-rata basis, which would be deducted from any refund payment. However, the trader’s right to payment in these circumstances would also be dependent on:
  • having provided the consumer with the relevant information about the consumer’s cooling-off rights (either as part of the requisite pre-contract information or within the cooling-off notice, as applicable), and 
  • for the initial supply of content only, the consumer having expressly requested that the digital content be supplied in the cooling-off period before the trader supplied it (specifically in the form of a durable medium for off-premises contracts). 

By applying similar rules for digital content as those proposed for refunds for services and non-returnable goods (where no such waiver exists), the government believes this approach would: 

• simplify the rules and bring consistency across these different contract types 
• help with the challenges that can arise in distinguishing between digital content and services, making it easier for traders consumers and enforcers to understand and implement, and
• bring fairness and consistency to the treatment of different product types

On the other hand, this option could have serious implications on the subscription revenue of companies selling digital content subscriptions, as consumers could sign up for a subscription, watch the premium content on offer and then cancel immediately afterward with almost the entire cost of the subscription being refunded to them. Therefore, this option is likely to meet opposition from these stakeholders. 

Option 2 – waiver for initial cooling-off period and proportionate refund for renewal cooling-off period

This option would operate as follows:

• for the initial cooling-off right – before the supply of digital content starts, the trader would have to secure the digital content waiver as set out in the CCRs from the consumer. If this is not done, the consumer would not have to pay for the digital content supplied.
• for the renewal cooling-off right – where the trader provides the required cooling-off notice in accordance with the DMCCA, the consumer would receive a proportionate refund based on the content supplied to them prior to cancellation if they cancel during a renewal cooling-off period. 

This option would preserve the current arrangements under the CCRs relating to the initial cooling-off period, which businesses are familiar with. The proposal for the renewal cooling-off right mirrors and provides similar benefits to option 1 above, but as the pro-rata refund only applies in relation to the renewal cooling-off period, according to the consultation, the “binge and cancel” risks mentioned above are lower.

Option 3 – waiver for both the initial and renewal cooling-off periods

Under this option, a consumer would be required to waive their initial cooling-off rights on entering the contract, and their renewal cooling-off rights at the point of renewal. In each case the consumer would not be entitled to receive content until this waiver had been provided.

However, this does not appear to be the government’s preferred option, not least because it is likely to be impractical to require traders to seek consumer waivers on renewal, given the potential interruptions to the subscription service if the consumer does not respond straightaway. Having different rules for subscription contracts relating to services and digital content when it is not always clear which rules apply to certain products, could also make it harder for traders, consumers and enforcers to comply with them.

What next?

For businesses that are likely to be impacted by any proposed changes to the existing position for digital content waivers, the deadline is 10 February 2025 to respond and provide your views on this and any other issues relating to subscription contracts raised by this consultation. However, it is worth noting that any changes in this area will not be introduced until Spring 2026 – unlike the other changes to consumer protection laws, which will take effect from April 2025.

More information about other changes to be introduced by the DMCCA can also be found in our previous briefing.

If you have any questions about this briefing, or if we can assist you in your preparations for compliance with the DMCCA, please get in touch.

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