New legislation would force companies to simplify the cancellation process and offer cooling off periods.
But the proposed laws have been strongly criticised by some media organisations.
The draft Digital Markets, Competition and Consumers Bill proposes that companies send customers frequent reminders before a contract automatically renews. And it also lays down measures to make it simpler to stop a subscription. Additionally, there’s proposed new rules on cooling off periods, allowing new customers to change their mind and exit for free.
The new laws would force companies to allow subscriptions to be cancelled via a variety of communication channels:
- It would put to an end the practice of allowing customers to easily sign up online but forcing them through hoops to cancel.
- For example, some organisations may allow you to sign up online in minutes. But if you want to cancel, you may have to call them, or navigate through a maze of online options, where the cancellation option is designed to be unclear.
What has Sky said?
Sky said it had serious concerns about the proposed new laws.
Sky, which fought and lost a long-running battle with Ofcom over end of contract notifications, has said it objects to proposals to force it to send 6-montly reminders to customers.
In its response to policymakers, Sky said the wording of the draft bill implies that its customers “do not have an awareness of which services they are subscribed to and are indeed not actively using those services on a daily or weekly basis.”
Sky also objected to plans to allow customers can by “any means”, as it fears it would open the gates to customers trying to cancel via social media.
For example, as Sky doesn’t hold a record of each of its customer’s social media accounts, Sky would struggle to link a request from a social media user to their Sky account and verify if the request was genuine.
- This concern is also shared by other subscription providers, including small businesses.
Sky argued that the new rules will require companies “to build significant new technical solutions to be able to comply with these rigid and inflexible requirements, which the Government’s own figures in its Impact Assessment suggest will cost UK business £400 million to set up and £1.2 billion in the first year alone.”
Why is Paramount concerned about dishonest binge-watchers?
The US media company, owner of Channel 5 and the Paramount+ streaming service is concerned the proposed legislation will open up a loophole.
The proposed laws call for streaming providers to offer a cooling off period, allowing customers to cancel without a financial penalty. Cooling off periods are already commonplace for some other types of contract.
Paramount said this could allow dishonest consumers to binge-watch a hit series or film and then cancel without ever making a payment.
Providing an example, Paramount told MPs:
“in the Bill’s current form, someone could sign up to Paramount+ to watch iconic movies such as Top Gun Maverick and then immediately cancel with no financial payment.”
Streaming companies traditionally offered free trial periods. But as they’ve wised up on customers abusing them, many have stopped offering free trials, or shortened them. Indeed, Paramount+ launched in the UK last year offering a seven day free trial. It’s currently offering new customers the first three months half price.
What have others said?
Disney has objected to the ‘one size fits all’ approach it says the planned new laws will take. It claimed cancelling Disney+ was easier than subscribing to the service.
Meanwhile, COBA, the Association for Commercial Broadcasters and On-Demand Services, says it is concerned that a requirement to introduce a separate page to house lengthy legal copy, providing detailed explanations about any clauses of the subscription contract that deal with price changes will pose problems.
It said this would “disrupt the customer experience and will not be appropriate for being viewed on mobile or on connected TVs.”
The Digital Markets, Competition and Consumers Bill is currently at committee stage, so there is plenty of scope for changes before it completes its parliamentary process.
Marc Thornham