In our earlier article, Nudges, Nags and ‘Only 3 Left’: Understanding the proposed Unfair Trading Practices regime, we outlined the Government’s proposed unfair trading practices (UTP) laws and the rationale behind introducing a new prohibition under the Australian Consumer Law (ACL). The article also highlighted that the Exposure Draft includes targeted and prescriptive rules aimed at two recurring areas of concern: subscription pricing and drip pricing.

In this follow up article, we look more closely at those specific reforms, how they are intended to operate, and the practical implications for businesses that use subscriptions, free trials, automatic renewals or staged price disclosures.

Why subscriptions and pricing practices are a focus

Subscription based business models have become embedded across a wide range of sectors, from streaming services and software platforms to gym memberships, meal delivery and beauty treatment subscriptions. While subscriptions can offer convenience and predictability, regulators have expressed concern that some models rely on design choices that make it easy to sign up but harder to exit.

Similarly, concerns around pricing transparency have persisted despite existing ACL provisions that require disclosure of the single price and prohibit misleading representations about price. A Treasury Consultation Paper¹ identified ongoing use of drip pricing (where mandatory fees are only revealed late in the purchasing process), as an area where greater clarity and consistency is required.

The proposed UTP reforms seek to respond to these issues by moving beyond broad concepts of misleading conduct and, if enacted, would introduce more robust obligations around how subscriptions are offered, renewed and cancelled, and how prices are presented to the market.

Subscription contracts and scope of application

As noted in our earlier article, the subscription specific UTP provisions would apply where a subscription contract meets either:

• the ‘consumer’ requirement; or
• the ‘small business’ requirement.

This means the rules would extend beyond consumer subscriptions to cover standard form subscription contracts with small businesses that employ fewer than 100 people or have annual turnover below $10 million. This reflects a policy view that subscription traps can have similar impacts in small business contexts, particularly where digital platforms or essential services are involved.

For businesses that supply subscriptions to both consumers and small businesses, the practical effect would be that subscription design and management would need to be assessed across both customer categories.

Key obligations for subscription pricing

The Exposure Draft proposes a suite of obligations that operate across the life of a subscription, from sign-up through to renewal and cancellation, each of which is discussed separately below.

Sign-up disclosures

Under the Exposure Draft, before a consumer or small business enters into a subscription, the supplier would be required to clearly disclose key subscription terms at the point of offer. This includes:

• the minimum or initial price payable;
• the frequency of charges;
• whether the subscription will automatically renew and on what basis; and
• any price increases or changes that may apply after a free or discounted period.

The policy objective is to ensure that customers understand the longer term financial commitment they are making at the point they decide to sign up, rather than discovering those details only after a free trial ends or a renewal occurs.

Key reminder for businesses: A careful review of sign-up interfaces, onboarding communications and embedded assumptions within ordering systems is critical to ensure that these disclosures are both prominent and presented before the customer commits.

Renewals and reminder notices

The Exposure Draft also proposes reminder notices to be provided ahead of subscription renewals and before a free trial converts into a paid subscription. These reminders must include prescribed information and be given within specified timeframes.

This is designed to address common “contract creep” scenarios, where customers forget they signed up or do not appreciate that a free or low-cost introductory period will roll into a higher priced ongoing arrangement.

From a compliance perspective, reminder notices involve more than updating terms and conditions.

Key reminder for businesses: Systems must be capable of tracking subscription milestones and reliably triggering reminders for different subscription structures, including rolling monthly subscriptions, annual renewals and variable pricing models.

Cancellation processes

One of the most significant aspects of the proposed subscription reforms is the requirement that cancellation pathways would need to be at least as easy to use as sign up pathways.

In practical terms, this means that where a subscription can be entered into online, cancellation cannot require a customer to telephone, attend a physical location or navigate unnecessary hurdles.

Key reminder for businesses: Ensure cancellation mechanisms are readily accessible, straightforward and not deliberately time consuming.

Drip pricing and enhanced pricing transparency

While the ACL already regulates misleading pricing conduct and representations, Treasury has identified ongoing consumer harm arising from the sequencing and presentation of prices. In response, the proposed UTP reforms include prescriptive standards aimed at addressing drip pricing practices.

These provisions are intended to ensure that the total price, including mandatory fees, is disclosed clearly and early enough in the decision-making process to allow meaningful comparison between offers.

Key features of the proposed UTP laws include requirements around:

• where and when the full price must be displayed;
• how additional mandatory charges are described; and
• consistency of pricing information across advertising, product pages and checkout.

Key reminder for businesses: Ensure coordination and transparency between legal, marketing, product and IT teams, particularly where pricing is dynamic or changes based on user choices such as in airline travel, accommodation and online booking platforms.

Interaction with the general UTP prohibition

Importantly, the subscription and drip pricing rules do not operate in isolation. They sit alongside the general prohibition on unfair trading practices, which captures conduct that unreasonably manipulates or distorts the consumer’s decision making environment.

This means that if the proposed reforms are enacted, even where a business complies with the technical requirements of the subscription or pricing rules, broader design choices could still be scrutinised if they place consumers under unreasonable pressure or obscure material information through complexity, timing or presentation.

Key reminder for businesses: If enacted, the proposed drip pricing and subscription rules are intended to set minimum standards only, with broader UTP obligations continuing to apply.

Preparing for commencement – Steps that can be taken now

The proposed commencement date of 1 July 2027 provides time for businesses to prepare, but experience with previous ACL reforms suggests that remediation is rarely limited to legal drafting alone.

Practical preparation steps may include:

• reviewing your subscription flows from beginning to end, including how customers sign-up, renew, upgrade and cancel their subscriptions;
• reviewing pricing disclosures across marketing, sales and checkout pages and ensuring communication lines across the business are open;
• testing whether reminder notices and cancellation processes operate as designed in practice; and
• considering whether broader behavioural design choices could attract scrutiny under the general UTP prohibition (see our earlier article for more information).

How can we help?

Our Consumer and Contracting Law team regularly advises on subscription models, pricing transparency and ACL compliance. We can assist with reviewing subscription frameworks, drafting compliant disclosures, and assessing system and process changes required to meet the proposed UTP obligations.

This article was written by Teresa Torcasio, Partner, and Caitlyn White, Special Counsel.

¹ Commonwealth Treasury, Unfair trading practices – supplementary consultation paper (Consultation Paper, 15 November 2024).