Consumer right to withdraw only occurs once with auto-renewing subscription contracts (ECJ)

by | Oct 13, 2023 | Blog, Legal Updates

On 5 October 2023, the ECJ issued a preliminary ruling on consumers’ rights to withdraw from auto-renewing subscription contracts under the Consumer Rights Directive (2011/83/EU) (CRD). The CRD gives consumers 14 days to withdraw from a distance or off-premises contract. The ECJ considered whether a consumer has a new right of withdrawal when a contract converts from free trial to paid-for subscription and each time it auto-renews.

The ECJ concluded that the right to withdraw only arises once, at the start of the free trial, provided that the consumer is given clear pre-contract information that payments are required after the trial.

An online platform contracted with consumers to provide educational services. Its standard terms provided for a 30-day free trial during which the consumer could terminate at any time and after which there was a paid subscription term that automatically renewed unless terminated with enough notice. When the contract was first concluded, the online platform informed the consumer of their right to withdraw.

An Austrian consumer protection association argued that, under Article 9(1) of the CRD, consumers should have rights of withdrawal on booking the free trial, when the paid subscription term starts, and each time it auto-renews.

The ECJ held that the purpose of the right to withdraw is fulfilled if the consumer has received clear pre-contract information on price, whether paid on conclusion of the contract or later on such as after a free trial or auto-renewal. Where the consumer has been informed of future payments after the free period, the contractual terms do not change and the consumer does not have a new right to withdraw when the free trial converts into a paid subscription or when that paid subscription auto-renews.

If the consumer has not been clearly informed, pre-contract, that payments will follow the initial free period, the consumer will have a new right of withdrawal after that period.

In the UK, the CRD right to withdraw was implemented in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013/3134. UK courts may have regard to
ECJ decisions.

While the decision is probably good for those offering free trials, automatically renewing subscriptions etc, it shows the importance of getting your terms and conditions correct and in place when dealing with consumers – particularly in order to give clear pre-contract information. Guess what, I can help you with that.

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