Online Service Contracts: Cancellations & Compliance for UK Retailers
What do UK retailers need to keep in mind when it comes to service contracts? Special rules for compliance and cancellations should be followed.
As an online retailer offering services to UK consumers, it’s essential to understand your legal obligations around cancellations. From cooling-off periods to new rules on subscription transparency, staying compliant is not only a legal necessity but also helps build trust with consumers.
Table of contents:
According to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, a service contract is:
'A contract (other than a sales contract) under which a trader supplies or agrees to supply a service to a consumer and the consumer pays or agrees to pay the price.'
Examples include:
Why it matters: These contracts trigger specific consumer rights, especially regarding cancellations.
Consumers have the right to cancel a service contract within 14 days of conclusion, with no obligation to provide a reason. This applies to all online, phone, or off-premises contracts – unless an exemption applies (see below).
Best practice for retailers:
Yes – but only if the consumer gives explicit consent to do so. Ideally, this should be obtained during the checkout process via a checkbox.
You must also inform the consumer that:
Include clear wording during checkout, such as:
'I request the immediate start of the service and understand that I will lose my right to cancel once the contract has been fully performed.'
If a consumer cancels after the service has started (within the 14-day period), you are entitled to reasonable compensation, calculated in proportion to the services already delivered. This right exists only if the customer gave informed consent to begin early.
Important: If you didn’t obtain this consent before starting, you risk losing the right to any compensation.
Under Regulation 28, the right to cancel service contracts does not apply to:
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Since 2024, the Digital Markets, Competition and Consumers Act (DMCC) has introduced stronger consumer protection rules for subscription-based services:
Penalties: Non-compliance can lead to fines up to 10% of global turnover.
For digital content that is not supplied on a tangible medium (e.g. downloads, streaming services), the right to cancel also applies.
However, the right to cancel expires immediately once:
Best practice: Before the download or streaming starts, obtain the consumer’s explicit consent (e.g. via a checkbox during checkout).
Navigating service contract cancellations in the UK can be complex, but with transparent communication and compliant processes, you not only avoid legal pitfalls but also build lasting customer trust. The new DMCCA 2024 raises the bar – proactive action is essential for every serious online retailer.
For tailored legal advice for the UK and numerous other European markets, we recommend reaching out to our partner law firm, FÖHLISCH Rechtsanwälte. If your online shop is based in Germany or Poland, you can explore the Trusted Shops Legal Products site, where you can get further guidance on e-commerce legal topics.
04/06/25What do UK retailers need to keep in mind when it comes to service contracts? Special rules for compliance and cancellations should be followed.