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Ephiram iantivirus6/8/2023 This investigation appears to reflect the CMA’s current focus on how, in its view, some digital operators may use site and app design to affect informed consumer choice (ie through the use of ‘nudges’) and/or to make it more difficult for consumers to change their minds or exit a contract (so called ‘sludge’). We would expect the CMA now to continue to apply the principles across the rest of the anti-virus and online gaming sectors and further afield, particularly in markets that use auto-renewal for long-term subscriptions. Consent to auto-renewal: although the CMA has not banned contract auto-renewals, the firms in this case voluntarily agreed to introduce a new ‘tick box’ consent mechanism by which consumers can expressly acknowledge before purchase that they are signing up to an auto-renewing product.However, the CMA has not sought to ban introductory offers per se, whereas the Financial Conduct Authority wants to prohibit the use of introductory offers and so-called ‘price walking’ for general insurance products. Pricing display: with introductory offers, the CMA says that companies must make the basis for any discounts/offers clear.Refunds: the CMA wants consumers to be able to claim a refund, in particular in scenarios where a contract may have ‘rolled over’.This may have ramifications for other subscription companies, particularly those with less sophisticated online account and refund processes. Cancellation mechanism: the CMA wants companies to offer a simple, straightforward and substantially automated online mechanism to turn off (disable) auto-renewal and exit the contract.The CMA wants to ensure key terms are communicated clearly and prominently before the consumer takes a transactional decision. According to the announcement, customers must be ‘made aware, up front, that their contract will auto-renew, the price they will be charged for the product upon automatic renewal and when the money will be taken’. Accessibility and transparency of key terms: the CMA emphasises the accessibility and transparency of key information at multiple points throughout the customer journey.The key points in the announcement relate to: Key emerging points for subscription providers The development has implications for companies offering subscription services in the UK, especially those that automatically renew and/or with annual or longer subscription periods. The move forms part of the CMA’s long-running ‘loyalty penalty’ enforcement investigations into the anti-virus and online video gaming sectors.Īccepting that auto-renewing contracts and introductory offers are legal, the announcement focusses on transparency and the ease with which customers can turn off auto-renewal and request a refund. The UK Competition and Markets Authority (CMA) recently announced that two leading anti-virus software companies have voluntarily offered undertakings in relation to their consumer-facing subscription practices.
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