Consumers to enjoy greater protection from ‘impenetrable’ small print

‘Research has shown that 42 per cent of Britons are paying for a subscription they do not use’

EVERY consumer in the UK will see their rights boosted under a government crackdown that will be unveiled in next week’s Budget.

A wide-reaching Green Paper will force mobile phone providers, rail firms, online shops, travel agents and video streaming services to stop using a range of dubious tactics to bamboozle customers. On Wednesday the Chancellor will announce that competition regulators will be handed the power to fine companies that use dubious tactics to make millions of customers hundreds, or even thousands, of pounds worse off. Under the rules the following problem areas could become a thing of the past.

No more card details when signing up to free trials

Companies such as Amazon and Netflix could be forced to stop taking people’s card details when they sign up to a free trial. The Treasury has concerns that this tactic is unfair to consumers as many are ending up with paid subscriptions which they meant to cancel after the free period, but have not done so because of inertia.

Research last year revealed that more than two-fifths (42 per cent) of Britons are paying for at least one subscription they do not use, such as gym memberships, credit reports, TV streaming services and music streaming plans.

Subscriptions that ‘trap’ customers will be banned

Difficulty in cancelling subscriptions is a problem faced by millions of people.

According to Citizens Advice around two million people a year struggle to cancel so-called “continuous payment subscriptions”, which are commonly used for buying products online.

These are automatic payments which work in a similar way to a direct debit, with consumers giving a supplier or retailer permission to take payments on their card. They are easy to set up but can be hard to cancel, causing problems for consumers trying to manage their finances.

Consumers who fell into these subscription traps lost £50 to £100 on average, Citizens Advice said.

The crackdown on subscriptions could also involve introducing a limit to how long a subscription can go on without coming back to the consumer to renew it. For example this would help millions of people with mobile phone contracts who do not realise they could get a better deal.

No more box ticking to show you have read T&Cs

The Government has decided that it is no longer acceptable for companies to hide behind unreasonably long and complex terms and conditions when customers complain.

It is common for websites to provide a box which customers must tick, agreeing they have read the Ts and Cs before proceeding. They do this to protect themselves against having to pay refunds or compensation if people complain. Small print can be tens of thousands of words long, containing confusing acronyms and legal and financial jargon. Research has shown that many T&Cs are too impenetrable to expect an ordinary person to read.

Small print to become shorter and simpler

The small print problem is especially acute for financial products, such as insurance. According to one study by Fairer Finance, a third of all insurance policy documents are written in a language that is only understandable to people with university-level qualifications. The Government will examine a range of options to force companies to provide clearer small print for consumers. This will including making the key points more prominent to save consumers hours of reading.

It could also publicly rank companies on their small print, as well as identify the terms that cause the most confusion and possibly ban them.

Shops will be punished for fake deals and discounts

The move will also discourage companies from offering misleading deals.

This includes using deceptive information on websites to entice customers before charging them more at the checkout. Shops that hold “sales” of products that have never been sold for more than the discounted rate will face harsher punishment.

Retailers found to be breaking consumer law with misleading deals could face hefty fines under the plans.