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ECJ Clarifies Consumer Rights in Online Subscription Renewals

The laws in the United Kingdom (UK) and the European Union (EU) provide consumers with the right to change their minds and cancel online purchases within a 14-day period. However, questions have emerged about the applicability of this right when subscriptions automatically renew, especially post a free trial. The European Court of Justice (ECJ) recently provided clarity on this issue through a case involving a dispute between a consumer protection association and an online learning platform in Austria.

Background facts

The case brought before the ECJ involved a dispute between a consumer protection association and an online learning platform operating in Austria. The platform’s terms and conditions stated that users are entitled to a 30-day free trial period when they first sign up for a subscription, during which they can terminate the subscription at any time. Following the conclusion of the 30-day trial, the subscription automatically renewed for a specified term and became subject to charges. Consumers were informed of their withdrawal rights during the initial trial period at the time of subscribing.

The core of the dispute centered on whether customers could exercise their right to withdraw twice: first, at the time of subscription (during the free trial), and secondly, when a subscription automatically renewed, transitioning into a paid subscription. The consumer protection association argued that consumers should retain the right to withdraw not only during the initial booking of a 30-day free trial subscription but also when that subscription transformed into a standard subscription and subsequently renewed.

The ECJ  decision

 The CJEU concluded that the consumer’s right of withdrawal from online contract arises only once, at the beginning of the free trial period. This right exists to tackle the challenges posed by distance sales, allowing consumers to evaluate the product or service within the initial 14 days. Consequently, there is no additional right to withdraw after the conclusion of the free subscription period or when the paid subscription auto-renews.

This ruling is contingent upon the provider informing the consumer in a “clear, comprehensible, and explicit manner” that, following the initial free period, the contract will incur charges. If the customer has not been adequately informed, they still retain the right to cancel when the subscription transitions into a paid one, even after the conclusion of the free trial period.

Next steps for online service providers

This ruling sets a guideline for how providers should inform consumers. The responsibility extends beyond providing them with information about withdrawal rights and the associated steps. It underscores the importance of clearly communicating that the contract will automatically renew after the trial, with applicable charges, and what those charges are. If consumers are not adequately informed about these details, the provider should offer them another opportunity to withdraw from the contract at the end of the trial period.

Considering that UK courts may consider decisions from the ECJ, this ruling holds significance for businesses involved in subscription contracts with both UK and EU consumers. Businesses operating in this context should be aware of and comply with these standards to ensure clarity and adherence to consumer protection regulations in both the UK and the EU.

How can Logan & Partners help?

If you have any inquiries or seek further insights into your business practices, don’t hesitate to reach out and book a free initial consultation.

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blank Isadora Werneck

Partner

isadora.werneck@loganpartners.com

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