New regulations ending ‘subscription traps’ are due to come into force in the UK in 2026 as part of the Digital Markets, Competition and Consumers Act 2024 and operators who don’t adapt their membership practices accordingly will risk legal penalties, fines and lasting reputational damage
The fitness and physical activities sector is firmly in the crosshairs of the Competition and Markets Authority (CMA) which is responsible for oversight – in fact, the CMA has already announced it’s investigating a number of businesses, including Gold’s Gym UK, and has said the health and fitness sector is one of its main areas of focus as part of its wider work on unlawful online pricing practices.
What is the DMCC Act 2024?
The DMCC Act is a substantial piece of legislation covering various areas, including the regulation of digital markets, competition law and merger control. It also impacts UK consumer protection law in several important ways and gives the CMA significant new powers. Notably, the CMA now has ‘judge and jury’ enforcement powers that allow it to both investigate and impose fines directly, rather than going through the courts.
As this is such a far-reaching piece of legislation, it isn’t all being implemented at once, however, one part of the act soon to come into force is that relating to subscriptions. This has been designed to avoid ‘subscription traps’ – situations where consumers find it difficult to extricate themselves from contracts, including those they may have involuntarily or accidentally entered into after a free or discounted price period.
Initially expected in April 2026, the new regime is now likely to be brought into force in Q3, however, regardless of this, the best time to act is now.
Why are ‘subscription traps’ a focus?
The CMA is targeting subscription traps to protect consumers from what it sees as unfair business practices that cost them an estimated £1.6 billion annually.
The government has stated that unwanted subscriptions can cost families a significant amount, with many paying for services they’ve forgotten about or were accidentally rolled into after a free trial. It also wants to clamp down on perceived deceptive practices such as ‘dark patterns’ and ‘sludge’ (intentional friction) that mislead consumers into signing up or make it difficult to cancel contracts.
What will operators need to do?
The regulations will require operators to provide additional clear information to consumers online, ensuring that all key data and options are transparent and understandable prior to online sign-up and right across the lifespan of a subscription.
The CMA can impose fines for breaches of up to 10 per cent of global turnover
It’s likely that many current online sign-ups for subscription models employed in the health and fitness sector would fail to meet the thresholds set by the new rules, which stipulate a number of requirements:
▪︎ Pre-contract information
Certain key information must be provided before the consumer enters into any online subscription for a health club membership – particularly contract length, costs, and frequency of payment. This information must be provided directly and transparently by the operator, with no hiding away in the small print to ensure transparency for the consumer.
▪︎ Renewal reminders
These must be sent to the member at the end of any free or discounted period and prior to the auto-renewal of a membership subscription. There are further requirements to send out additional notices as well, the exact details of which depend on the structure of the contract.
▪︎ Cancellation methods
Subscribers must be given a ‘straightforward’ way of cancelling their subscription online. It’s broadly understood that this will mean having an on-platform cancellation button. Subscribers will also be entitled to cancel using any other method they choose, provided they make a ‘clear statement’ to this effect. This forces businesses to set up processes to collect and implement cancellations resulting from these statements.
▪︎ Cooling-off periods
In addition to any contractual rights, subscribers will have a general right to cancel their subscription within an initial 14-day period after their contract commences. They can also cancel within the same timeframe following the end of any free or reduced-price period and upon any auto-renewal which commits the subscriber to a further period of 12 months or more.
Sector-specific challenges
The use of subscriptions in the health and physical activities market mean operators may face some additional specific challenges and considerations. The business model of many clubs assumes that more people have subscriptions than regularly use them and so regular reminders and easier routes to cancellation will threaten this model.
Decision-makers in the sector will also need to be keenly aware of other linked aspects of the DMCC Act that the CMA is currently focusing on, such as its recent investigations into online pricing practices such as drip pricing, use of consumer reviews and pressure selling.
▪︎ Drip pricing concerns
In particular, organisations in the sector will need to be very careful about how they present fees related to subscription-based memberships and at what stage these fees are declared.
Take, for example, a scenario in which a membership is advertised for £29.99 per month but, when the consumer clicks through to join, there’s a mandatory joining fee they weren’t made aware of before. The CMA has made it clear in recently published guidance that additional fees such as this must be included in the price upfront – raising it later in the journey is likely to be deemed a non-compliant ‘drip pricing’ practice.
This is the issue currently under investigation by the CMA in relation to Gold’s Gym UK.
▪︎ Advertising for discounts and special offers
The recent CMA price transparency guidance draws on examples of membership pricing, such as gym memberships, several times. One interesting point concerns scenarios where a discount is offered – for example, on a three-month fixed-term gym membership – but the consumer must pay the full amount up-front, including a joining fee.
In such cases, any promotion of this discount should clearly state the total price up-front.
This is something that could catch out those in the sector offering discounts on memberships but wanting to highlight their reduced monthly price, despite the whole amount being required at the outset.
What are the potential penalties?
The potential penalties for non-compliance are significant. The CMA can impose fines for breaches of up to 10 per cent of global turnover (or £300,000, if higher). There are also very real reputational threats of being named and shamed as a brand that’s trying to apply unfair practices and ‘traps’.
The increased exposure, as well as financial and reputational risk, mean it’s never been more important for decision-makers in the sector to be aware of and understand their obligations in this area.
With the provisions around subscription traps now looking as though they won’t become effective before Q3 2026, operators have additional time to prepare for these changes and consider how they might impact their consumer journey, however, the rules on pricing are in full effect now, so operators should take action to ensure ads and any information about online prices are compliant as a priority.
