Key Takeaways

The unfair trading practices, drip‑pricing and subscription contract reforms introduce substantial compliance obligations requiring operational, technological and contractual changes. The reforms introduce legal and compliance risks and strategic considerations that will affect:

• The content of legal documents including contracts and terms and conditions
• Marketing and advertising practices
• Design and execution of user experiences
• Sales staff, and
• Consumer engagement strategies.

A New General Prohibition on Unfair Trading Practices

For the first time, the ACL is proposed to include a principles‑based ban on unfair trading practices. This is designed to capture conduct that current misleading and unconscionable conduct laws do not adequately address. Whilst these provisions aren’t limited to online contexts, consumer experiences in e-commerce transactions and practices will be under considerable scrutiny.

What conduct will be prohibited?

Under the proposed law, a person must not, in trade or commerce, engage in conduct that does (or is likely to) manipulate the consumer or unreasonably distort the environment in which the consumer makes, or is likely to make, a decision, and causes (or is likely to cause) consumer detriment, whether financial or otherwise.

The threshold is deliberately broad and does not require actual loss, nor is there any defence for conduct pursued to protect ‘legitimate business interests’.

Examples of conduct that may breach the prohibition

The draft provisions include examples of conduct which would be caught by the new prohibition, such as:

• Impeding a consumer’s ability to exercise legal rights and remedies
• Failing to disclose material information
• Providing information in a complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming way
• Creating environments that place unreasonable pressure on consumers or obstruct their ability to make decisions.

The provisions are also concerned with ‘dark patterns’ used to exert pressure on consumers during a transaction process. Dark patterns include the display of countdown timers or low stock notifications, or other indicators suggesting elevated demand or supply constraints. Such tactics may be used to create a heightened or artificial sense of urgency and scarcity, for the purpose of provoking more impulsive consumer action.

Who is covered?

Consumers will be protected by the unfair trading practices provisions. However, the provisions exclude the supply to a consumer carrying on a business or if a consumer is a body corporate.

Why this matters

The proposed ban on unfair trading practices is a significant reform to Australia’s consumer protection laws. It imposes further standards of conduct on those supplying goods and services to consumers, over and above existing laws relating to misleading or deceptive conduct, consumer guarantees, unconscionable conduct, and unfair terms in standard form contracts.

The concepts of ‘manipulation’ and ‘unreasonable distortion’ are new to Australian consumer protection law. Until Court guidance emerges, businesses should take a conservative approach in assessment and design of customer interactions, particularly in digital environments.

New Provisions Targeting Drip Pricing

The draft laws also introduce specific, prescriptive disclosure obligations directed at drip pricing, if mandatory fees are added progressively throughout a transaction.

Key requirements

If a base price is shown and transaction‑based charges apply, entities must clearly and prominently disclose:

• The amount of the transaction-based charge or the method of calculation (if not known upfront) of the transaction-based charge
• Whether the charge applies per transaction
• Whether the transaction-based charge is or may be payable
• Whether or not the base price displayed includes the transaction-based charge.

This information must appear proximate to the base price, and whilst the base price is displayed, in a legible, prominent and unambiguous way. It should not be hidden in fine print or revealed late in the transaction flow.

Charges that are payable at the option of the purchaser, payment surcharges, taxes, duties, fees, and levies are all not considered to be transaction-based charges for the purpose of the proposed changes.

Who is covered?

These provisions apply to goods and services supplied in trade or commerce that are ordinarily acquired for personal, domestic, household use or consumption.

Unlike unfair trading practices, corporate entities acquiring goods or services have the benefit of protection under the proposed drip pricing laws if the goods or services being acquired are of a personal / domestic nature.

Major Overhaul of Subscription Practices

The reforms further propose to impose detailed obligations across the full lifecycle of subscription contracts, including consumer and small business subscriptions.

Subscription contracts are contracts containing terms providing for recurring or continuing supply of goods or services for an indefinite period, for that person or entity to automatically incur liability to pay for the supplies or continuing supply and a right for that person to end the contract.

Key obligations include:

(a) Upfront disclosure

An entity must provide clear, prominent information about:

• The nature of the contract as a subscription contract
• Liabilities to pay that a party to the contract (other than the supplier) would or may incur under the contract (including pricing)
• The duration of the contract (whether fixed‑term, indefinite, or if it includes a free trial/promotion)
• The renewal, extension or other continuation of the contract
• Any notice required before a party to the contract (other than the supplier) can end the contract
• How a party to the contract (other than the supplier) can end the contract.

Generally, the information must be provided in a manner that is either:

• Comprehensible, audible and unambiguous within a reasonable time before a person could agree to enter the contract; or
• Legible, prominent and unambiguous in close proximity to where a person (other than the supplier) can agree to enter the contract.

(b) Ongoing notices

Under the proposed changes, different types of subscriptions will attract different notification requirements during the life of the contract, for example:

• Indefinite contracts: notices every six months
• Fixed‑term contracts: renewal warnings within a ‘reasonable time’ before the last chance to prevent renewal
• Free trials/promotions: reminders before the consumer begins incurring charges.

The information must be provided with a similar level of clarity to information provided upfront, in a comprehensible, audible and unambiguous manner or in a legible, prominent and unambiguous manner.

(c) Easy cancellation – Subscription Contract Exit

Entities must provide a way for subscribers to exit the subscription contract, which is easy to find, straightforward and requires the subscriber to take only steps that are reasonably necessary to end the contract and protect the subscriber’s interests.

Excluded contracts

Subscription rules will not apply to the following contracts:

• Public utilities (except telecommunications and transport)
• Real estate leases / licences
• Hire‑purchase and instalment payment contracts
• Supply of prescription healthcare products
• Supply of school or pre-school tuition or childcare
• Certain bespoke subscription arrangements.

Who is covered?

The proposed provisions apply to protect subscribers – either:

• An individual that acquires the goods or services wholly or predominantly for personal, domestic or household use or consumption; or
• A small business (as already defined under the ACL), under a standard form contract for supply of goods or services.

Enforcement and Penalties

Penalties under all these reforms are proposed to be aligned with the ACL’s updated top‑tier regime:

• Corporations: the greater of $100 million, 3 times the benefit obtained, or 30% of adjusted turnover
• Individuals: up to $2.5 million.

The ACCC has already signalled that digital markets, subscription models and manipulative online design will be early enforcement priorities once the new laws are passed and commence.

In addition, a Court could also impose other remedies available in other consumer protection matters, including adverse publicity orders or orders disqualifying a person from managing corporations for a period.

Practical Implications for Businesses

Whilst unfair trading reforms are yet to be passed, it is anticipated that they will be passed without significant opposition or amendment. If passed, the reforms are unlikely to commence before 1 July 2027. In anticipation, businesses should:

• Review customer experience and interface design
  • Map customer journeys (signup, checkout, renewal, cancellation)
  • Identify places where navigation may be confusing, pressured or poorly disclosed.
• Review and amend contracts and terms and conditions to ensure compliance
  • Material information should disclosed
  • A consumer’s ability to exercise legal rights and remedies should not be impeded
  • Amend subscription contracts and terms and ensure disclosures occur at appropriate times.
• Audit pricing displays and marketing strategies
  • Ensure all mandatory transaction‑based charges are clearly disclosed whenever a base price is shown
  • Reassess use of countdown timers, low‑stock messages and default checkboxes
  • Review advertising and marketing practices to ensure material information is disclosed, information is provided in a simple and clear manner and sales staff are trained appropriately.
• Overhaul subscription frameworks
  • Rework free trials and promotional periods to ensure compliance with the new disclosure and notice rules
  • Redesign cancellation flows to be straightforward and accessible.
• Updating internal governance
  • Establish sign‑off processes for marketing, product design and pricing strategies to identify behavioural‑risk areas early
  • Prepare for increased ACCC scrutiny, including mystery shopping and digital audits.

Should you wish to discuss this update or if you’d like assistance amending your contracts, auditing your advertising strategies, digital interfaces, subscription models or pricing practices, Bill Fragos, Special Counsel, and Christina Segaan, Senior Associate, can help you navigate these upcoming changes. We also deliver presentations and training to our clients on competition law and consumer law and the implications of recent reforms.