Competitive markets and squeezed margins are forcing retailers to be more innovative in their advertising efforts. More frequently, we are seeing advertisements for "free trial" periods for goods and services, often leading automatically into fee-incurring subscription plans unless the customer has actively 'cancelled' during the trial period in accordance with applicable terms and conditions.
The European Commission has confirmed that this trial-to-subscription model is not inherently harmful, thus enabling retailers to implement such promotions. However, difficulties arise when a consumer unknowingly enters into a paid subscription plan following the expiry of a free trial period — commonly referred to as a "subscription trap".
To better protect consumers from subscription traps, the UK's Committee of Advertising Practice ("CAP") has issued non-mandatory but persuasive guidance to retailers to ensure that they do not fall foul of applicable advertising rules.
In summary, an advertisement will fall foul of the rules if it is likely to mislead or deceive consumers. Advertisements offering free trials should prominently state in clear and plain language (i) if a paid subscription starts automatically at the conclusion of the trial; (ii) the extent of any financial commitment if the subscription is not cancelled during the trial; (iii) how a customer can cancel during and post-trial; and (iv) any other significant conditions. Retailers are warned that merely stating "T&Cs apply" may not be satisfactory.