January 26, 2022
The undertakings announced today come out of the CMA’s ongoing investigation, launched in 2019, into the supply of online gaming memberships for Nintendo Switch, Sony Playstation and Microsoft Xbox.
Microsoft’s Xbox Live Gold and Game Pass products allow customers to access a library of games and play together online. Access is provided via memberships which are typically entered into on an auto-renewal basis, meaning that they automatically renew at the end of each contract period and the customer is charged unless they actively take steps to stop the membership.
The CMA’s key concerns
As part of its investigation, the CMA identified concerns about certain features of Microsoft’s auto-renewing memberships. In particular:
- whether it was clear upfront that contracts would automatically renew;
- how easy it was to turn off automatic renewal; and
- whether subscribers may not have realised they were still paying for services they no longer used.
Summary of the undertakings
The undertakings secured from Microsoft are designed to address these concerns, and include the following:
- Better upfront information: Microsoft will provide more transparent, upfront information to help customers understand their membership – for example by making clear that the membership will auto-renew unless the customer turns off auto-renewal, when the membership will auto-renew, how much it will cost, and how the customer can receive a refund after an accidental renewal.
- Stopping automatic renewal/cancellation: Microsoft will maintain a system which allows customers to stop the automatic renewal of a contract either by turning off recurring billing or by cancelling the contract itself, in either case in a simple and straightforward fashion.
- Refunds: Microsoft will contact existing customers on recurring 12-month contracts and give them the option to end their contract and claim a pro-rata refund.
- Inactive memberships: Microsoft will also contact existing customers who haven’t used their memberships for a long time but are still paying for their membership. These customers will be reminded how to stop payments and, if they continue not to use their memberships, Microsoft will ultimately stop taking further payments.
- Better information about price increases: Microsoft will give clearer notifications of any future price rises, and will ensure customers know how to turn off auto-renewal if they don’t want to pay the higher price
Full details of the undertakings can be found here.
It is clear from these undertakings and from the CMA’s recent activity more generally (see our commentary here) that the CMA expects businesses to take a significantly more proactive and transparent approach to the use of auto-renewing consumer contracts than has historically been the case. Activities that businesses have traditionally been reluctant to undertake for fear of subscriber ‘churn’ and revenue loss are now going to be considered essential for consumer fairness and, therefore, compliance with the law.
All businesses offering automatically renewing memberships and subscriptions (not only those in the video gaming industry) should take note and should be reviewing and updating their practices to ensure they comply with consumer protection law.
If you would like to discuss these issues or any other consumer law matters, please do get in touch.