Anti-virus software firms – are you compliant with the CMA’s new principles for auto-renewing consumer contracts?
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Partner
UK
As a Partner in our Commercial Group, I advise clients on complex, cross-border commercial transactions, with particular expertise advising sports and consumer brand clients.
Senior Associate
UK
I am a senior associate in Bird & Bird's Retail & Consumer Group (London), the founding member of the firm's International Cosmetics, Beauty & Fragrance Group, and a member of the firm's International Luxury, Fashion and Retail Leadership Team.
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On 19th October 2021, the UK’s Competition and Markets Authority (“CMA”) published 9 Compliance Principles that anti-virus software businesses using auto-renewing consumer contracts should adhere to. The Principles (which can be viewed in full here) are based on the CMA’s interpretation of consumer protection laws, and predominantly seek to prevent situations in which consumers become locked into contracts that they no longer want or need, or are charged unexpected and/or high renewal fees.
Businesses are encouraged to review their practices with a view to ensuring compliance with consumer protection laws, in order to avoid enforcement actions and any associated reputational damage. To assist you in your own compliance assessment, we include below an overarching summary of the 9 Principles. If you have any questions or if you’d like further information on the issues covered, please feel free to reach out to the authors or your usual Bird & Bird contact.
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Before the consumer contract is concluded, you should ensure that: 1. The consumer is in a position to make a fully informed choice on whether to opt-in to an auto-renewal contract. They should understand key information, such as: (a) how much they will be charged on renewal; (b) the length of each renewal period; and (c) how the auto-renewal process will work in practice (including how to switch off auto-renewals and how refunds will work). 2. Price claims are accurate and will not mislead consumers, and that any claimed price advantage or saving is genuine. 3. The key points of the auto-renewing contract are confirmed with the consumer immediately before they conclude the purchase, to ensure that they fully understand what they are agreeing to. You should also follow-up with a confirmation email that contains the same information. |
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During the term of the consumer contract, you should ensure that: 4. Consumers are able to easily switch off auto-renewal. 5. Consumers are sent a reminder in good time before a new renewal period commences, so that they can consider their options for continuing or exiting. In the reminder, they should receive key information about the renewal such as: (a) the amount of the renewal fee; (b) the date on which the renewal payment will be taken and the date on which the contract will renew (if different); (c) when auto-renewal would need to be switched off with sufficient time to stop the renewal payment being taken; (d) how the consumer can turn off auto-renewal; (e) the length of the renewed contract period; and (f) rights of refund on cancellation. 6. When a consumer has switched off the auto-renewal mechanism, it should not be reactivated without the consumer’s consent. |
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After the auto-renewal of the consumer contract, you should ensure that: 7. Consumers have the opportunity to change their mind and exit (and, where appropriate, receive a refund). This might look like a ‘cooling-off’ period following renewal confirmation. 8. It is quick and easy for consumers to obtain a refund when they are entitled to one. 9. Steps are taken to engage with consumers who are not using their renewed product. It may not be appropriate to continue to take payments if there is neither use nor response. |
