Digital contracts and subscriptions have significantly increased, with the subscription economy tripling since 2017, according to the European Commission’s Digital Fairness Act Fitness Check. However, the Fitness Check points out that the number of issues with digital subscriptions, such as difficult cancellations, automatic renewals without reminders, and unclear subscription terms, have also increased. The Commission proposes to tackle these issues in its proposed Digital Fairness Act (“DFA”), which recently entered its consultation phase (see our blog post here).

This post briefly highlights certain issues with digital subscriptions identified in the Fitness Check, outlines how these issues are currently regulated in the EU, and considers the Fitness Check’s proposals to address these issues. It is the fourth post in our series on the upcoming DFA – previous posts covered influencer marketing, AI chatbots in consumer interactions, and personalised advertising and pricing.

Issue 1: Cancellation difficulties

What is the issue? 69% of consumers consulted as part of the Fitness Check experienced some kind of technical difficulty in cancelling their online contracts. These difficulties took various forms – including deliberate avoidance of cancellations, and websites/apps designed to introduce friction into the cancellation process.

How is it currently regulated in the EU? The EU Consumer Rights Directive (“CRD”) gives consumers a 14-day right of withdrawal—or “cooling-off period”—during which they can cancel online subscription contracts without providing any justification. This period starts when the subscription contract commences, even if it includes a free trial period. Consumers who exercise this right without having used the service may not be charged. If they have used the service, any fees paid should be proportionate to the extent to which they used the service. The CRD requires providers to give clear, unambiguous information on this withdrawal right and the procedure for exercising the right, as well as to acknowledge withdrawal requests promptly. Importantly, the CRD also includes exemptions to the withdrawal right, for example, for digital content subscriptions where the consumer waives their right to withdraw before entering into the contract—common in streaming, gaming, and other digital content services. While the CRD grants only one withdrawal opportunity at the start of the contract—even where a free trial is included—it requires providers to give precise, unambiguous information about contract duration, renewal and termination to consumers upfront.

Additionally, making it unreasonably difficult for consumers to cancel an online subscription may be a prohibited unfair practice under the EU Unfair Commercial Practices Directive (“UCPD”). While the UCPD does not explicitly ban all cancellation barriers, it broadly prohibits misleading and aggressive practices. These include “dark patterns” such as misleading free trials, “confirmshaming” (repeated emotional prompts that unjustifiably pressure consumers to reconsider their choice), and convoluted cancellation processes that hinder consumers’ ability to unsubscribe easily. UCPD guidance emphasises that cancelling should be as easy as subscribing. Separately, the EU Digital Services Act prohibits online platforms, including marketplaces, from using deceptive designs that make cancelling a service more cumbersome than subscribing to it.

In the absence of harmonised EU rules, member states have their own cancellation requirements. For example, Germany mandates a clearly visible, easy-to-use online cancellation button accessible without an account, that enables cancellation within a few clicks. In France and the Netherlands, consumers must be able to cancel their subscriptions using the same channels they used to subscribe.

How might the DFA seek to regulate it? Based on stakeholder feedback from the Fitness Check, the DFA could require clear technical means for cancellation (such as cancellation buttons) in addition to the 14-day right of withdrawal, as well as mandatory confirmations of contract termination. Fitness Check respondents also raised the possibility of an EU-wide rule requiring that online contracts be created and terminated through equivalent means – the DFA could be a vehicle for such a rule.

Issue 2: Automatic renewals

What is the issue? 62% of consumers consulted as part of the Fitness Check experiencedauto-renewals of inactive subscriptions without receiving reminders. The failure to remind consumers of auto-renewals led to 44% of consumers consulted extending their subscription beyond the initial period despite intending to cancel it. 40% of consumers were drawn into “loyalty traps” – situations where, after having initially subscribed for a discounted promotional price, they subsequently experienced high price increases.

How is it currently regulated in the EU? The CRD requires subscription providers to inform consumers whether the contract is automatically renewable and the terms under which it is renewed (e.g., the renewal time periods and the costs per renewal period). Some member states go beyond this in their national laws – for example, in most cases, German law only allows automatic renewal based on a provision in the provider’s general terms and conditions if the contract is renewed for an indefinite period and the consumer is given a notice period of not more than one month within which to cancel.

How might the DFA seek to regulate it? The DFA could draw on suggestions in the Fitness Check to require subscription providers to turn auto-renewals off by default (i.e., only enable auto-renewals where consumers opt-in) and provide reminders prior to auto-renewals.

Issue 3: Free trials

What is the issue? According to the Fitness Check, free trials often convert into paid subscriptions without clear and explicit consumer consent, and consumers are frequently required to provide their payment information upfront. 29% of consumers consulted often had their free trial converted into a paid subscription without realising it. 90% of respondents to the public consultation were required to provide payment details before accessing a free trial.

How is it currently regulated in the EU? Under the CRD, contracts must clearly explain that a payment obligation will follow the free trial period unless the consumer cancels before the trial ends. The Court of Justice of the EU confirmed this in case C‑565/22, stating that traders must clearly inform consumers about when their payment obligations take effect.

How might the DFA seek to regulate it? The DFA could require express consumer consent to convert a free trial into a paid subscription, and enhanced pre-contractual transparency including regarding the total costs and the ongoing nature of the contract. The DFA might also restrict or prohibit providers from obtaining payment details upfront for free trials.

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Covington & Burling regularly advises companies on all aspects of EU consumer protection law, as well as intersections with privacy, cybersecurity, and product safety laws. We are happy to assist you with participating in public consultations and more generally with any inquiries related to compliance with EU consumer protection law.