Everyone loves a well-thought-out surprise. And many consumers feel overwhelmed by the sheer number of products available in the cosmetics industry. In steps the beauty box: a personalised, monthly assortment of skincare, makeup, haircare and beauty products, often in sample sizes, delivered right to a consumer’s door.
But, at least for some, the appeal of these subscription boxes can start to fade, particularly where the initial enticement of a discounted or free box subsides. Some companies make unsubscribing simple. For others, consumers face a laborious, pain-staking process. New provisions in the Digital Markets, Competition and Consumers Bill (the “Bill”) seek to ensure that consumers are protected and understand what they’re signing up for.
What subscriptions fall within the Bill?
The new Bill, which could come into force as early as 2024, includes provisions which apply to subscription contracts, which (as defined) include any auto-renewing contract for the supply of goods (such as cosmetics), including where there is a free trial or initial discounted period.
The Bill excludes subscription contracts in certain sectors from the scope of the new provisions, such as those for the supply of utilities, financial services, childcare and medical prescriptions. As will be apparent, the reason for these exclusions is because more stringent obligations are applicable for these types of products under other regulations: adding a medical prescription product to a beauty box is not a clever loophole around the Bill.
What are the requirements?
The Bill proposes to impose numerous obligations on traders in relation to subscription contracts, including:
- giving the consumer key pre-contractual information before they enter the subscription, such as the main characteristics of the goods, any recurring charges, the length of the contract and the right to cancel (and how to exercise it);
- obtaining an explicit acknowledgement from the consumer that the contract imposes payment obligations on them;
- providing a reminder notice to the consumer between 3 to 5 working days prior to the first renewal payment (further reminder notices are also required for longer contracts) and prior to some subsequent renewal payments;
- allowing and arranging for consumers to cancel the subscription in a single communication without having to take any steps which are not reasonably necessary for bringing the subscription to an end (and, where the contract is concluded online, enabling consumers to cancel online);
- where the subscription is cancelled, sending the consumer an end-of-contract notice; and
- giving consumers a right to cancel during any initial cooling-off period (for all subscription contracts) or renewal cooling-off period (for certain renewals only), as well as providing consumers with cooling-off notices.
What does this mean for cosmetics companies?
There is a growing recognition that transparency and ease of management with regards to subscription packages can boost brand satisfaction and customer trust. Many of the Bill’s obligations will support this. Widespread adoption of the new requirements may even encourage greater custom in the long term, with consumers willing to try out new brands with knowledge that they won’t become trapped into a subscription they do not want or cannot afford.
However, the Bill is out of step with existing compliance requirements in many respects, and so we anticipate many subscription businesses will need to allow themselves time to make significant compliance changes when the Bill comes into force. These changes will likely include updates to sign-up and cancellation processes; putting in place new processes (for example, with regards to renewal reminders and cooling-off rights); and updating terms and conditions and other customer-facing information (such as help pages, cancellation policies and customer services scripts) to ensure alignment with the new requirements.
Get in touch if you need further advice on the changes proposed above.