Avoiding a subscription trap: CAP issues enforcement notice on online ads for subscription services

What do traders need to do to ensure online ads for free trials or promotions to subscription services comply with the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the CAP Code)?

The question

What do traders need to do to ensure online ads for free trials or promotions to subscription services comply with the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (the CAP Code)?

The key takeaway

Online ads promoting free trials or promotional offers for subscription services must ensure that the significant conditions of the free trial or promotion which are likely to influence the consumer’s decision to subscribe are displayed with “sufficient prominence” and that the information is clearly visible, legible and identifiable from other information. Since 27 April 2023, CAP is actively targeting enforcement in this regard.

The background

CAP published its “Guidance on ‘free trial’ or other promotional offer subscription models” in 2017 (the Guidance) in support of the CAP Code which sets out the rules that subscription ads must comply with. For online ads relating to free trials and promotions of subscription services, CAP states that traders must ensure:

• the ad does not (or is unlikely to) mislead the consumer (Rule 3.1)
• qualifications to the service or promotion are clearly presented (Rule 3.10)
• the ad is clear about the length of commitment the consumer must make to benefit from the promotion (Rule 3.23)
• the ad clearly communicates all “significant conditions or information”, where omission of said information would likely mislead the consumer (Rule 8.17), and
• where the ad is limited in time or space, as much information about the significant conditions is provided as possible and the consumer is clearly directed to another page or source where all significant conditions and information are available (Rule 8.18).

The Digital Markets, Competition and Consumers Bill (the Bill) will replace the existing rules in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 for subscription services and will establish a separate set of rules for pre-contract information and cancellation that must be presented to consumers. For more information on the Bill see this Summer 2023 Snapshot.

The development

In response to the growth of the subscriptions market and the apparent non-compliance with the Guidance by advertisers, CAP has issued an enforcement notice (the Notice) providing further support to advertisers.

The Notice is targeted at online ads for subscription services which use free trials or promotional offers which require consumers to enrol onto an “ongoing payment arrangement” which continues, unless cancelled, after the free trial or promotion ends. Such ads must:

• ensure all significant conditions or information which are likely to influence the consumer’s decision to enter into the subscription are clearly communicated and displayed with “sufficient prominence”. It must be clear to the consumer if the subscription automatically continues after the end of the free trial or promotion, or if they need to cancel, the financial commitment if the subscription is continued, and
• ensure that all significant conditions follow directly from the free trial or promotion and are “immediately visible, prominent and distinct” from the rest of the information in the ad. This requires the wording to be in legible font.

For ads which are restricted in time or space, the Notice reminds advertisers that they must include as much information about the significant conditions to the free trial or promotion as is practicable. The ad must then clearly direct consumers to a secondary source where they can find all the information, which again complies with the CAP Code and the Notice.

The Notice states that CAP will be targeting enforcement from 27 April 2023.

Why is this important?

The Notice is a clear signal to advertisers that the ASA will specifically target advertisers of subscriptions services which do not comply with the CAP Code. Advertisers need to be aware of the advertising rules, especially as the Bill progresses through to implementation.

Any practical tips?

Online advertisers of subscription services should review their current marketing assets as well as any planned future campaigns against the Notice and the CAP Code to ensure any subscription ads are fully compliant. This is a clearly an area of focus for the ASA, and with the CMA about to obtain its direct enforcement powers under the Bill, now is the time to check and double-check that there are no gaps in the required information.

Summer 2023