UK advertising watchdog to probe ‘free trial’ subscription traps

Businesses using ‘free trial’ ads to engage consumers for their subscription services have been urged to review their online marketing content, as the UK’s Committee of Advertising Practice (CAP) has set out its plan to target non-compliant trials and other promotional subscription offers in upcoming enforcement action.

CAP, the UK’s advertising regulator, has vowed to take action against advertisers that use ‘free trial’ offers online to lure new consumers who do not know they are signing up to an ongoing payment contract. In its latest enforcement notice, the CAP asked advertisers in the subscription services sector to review marketing content on their ditigal platforms and make necessary changes to comply with its guidance by 27 April 2023.

CAP highlighted that the subscription model has seen significant growth in the last five years and these offers can be a highly effective way to engage consumers. However, digital ads for promotional subscription offers can fall foul of the CAP advertising rules when a consumer unknowingly enrols onto an ongoing payment plan.

It described two main ways in which an advertiser can mislead consumers and break its code: when it omits significant conditions in its advertising; and if it fails to make those significant conditions sufficiently clear.

Commercial law expert Sam Hall of Pinsent Masons said that although the enforcement notice is only concerned with the initial process of signing up to a subscription, it is relevant for any business that offers promotional subscriptions or free trials to customers.

“Businesses would be advised to look at their advertising of any free trials and subscriptions and make sure that it is compliant with these latest requirements,” said Hall.

For example, the notice reminded advertisers to make clear whether a paid subscription starts automatically after the trial unless cancelled and the extent of the financial commitment if the subscription is not cancelled during the trial. Advertisers are also asked to ensure that these significant conditions are immediately visible, prominent, and distinct from other information.

The free trial element of subscription contracts, Hall added, is an area that will also be covered by the UK Digital Markets, Competition and Consumer Bill (DMCC), which is expected to be published imminently.

“The CAP enforcement notice will go some way to ensuring subscription providers are providing clearer information in the sign-up process and complying with the CAP code, but it doesn’t apply to other business practices involved in free trials or other promotional models beyond advertising, such as problems cancelling the subscription and use of personal data. The proposals included in the DMCC are still necessary to fully tackle the problems of ‘subscription traps’,” he said.

In addition to the CAP enforcement notice and the upcoming legislation, online retailers and advertisers offering free trials should also be prepared for possible enforcement action by the Competition and Markets Authority (CMA), which has indicated that it is “actively monitoring” the use of misleading online sales tactics targeting UK consumers. In a recent open letter, the CMA urged consumers to report examples of misleading online practices more widely – including hidden charges or taxes added at the point of purchase; fake or misleading reviews; and subscription traps.