Last week, the United Kingdom’s Competition and Markets Authority mandated changes to Microsoft’s Xbox Live Gold and Xbox Game Pass gaming subscriptions. Specifically, the CMA focused on Microsoft’s automatic renewal policies. Unless subscribers take proactive action to cancel their Xbox Live Gold or Xbox Game Pass gaming subscriptions, the subscriptions automatically renew for another term.
The mandate followed the CMA’s 2019 consumer law investigation into the auto-renewal practices of Nintendo Switch, PlayStation and Xbox. The investigation’s intent was to determine if the companies’ business practices were legal, including their auto-renewal, cancellation and refund policies, and their terms and conditions.
On January 26, 2022, the CMA provided an update on their investigation regarding their concerns about Microsoft’s auto-renewal policies, including:
- Whether it was clear to subscribers upfront that the gaming subscriptions were automatically renewable
- How easy it was to turn off the auto-renewal default
- Whether subscribers may have been paying for gaming subscriptions they no longer used
Four subscription improvements
According to a CMA news release, Microsoft will make four subscription improvements to address the CMA’s key areas of concern.
- Clear information upfront: Microsoft will provide subscribers with more transparent information upfront to help them understand the auto-renewal terms of their gaming subscriptions. Microsoft will clearly state (1) that the subscription will renew automatically unless the auto-renew feature is turned off, (2) when the subscription auto-renews, (3) how much the gaming subscriptions cost, and (4) how a subscriber can get a refund after an “accidental renewal.”
- Offering refunds: Microsoft will contact current subscribers who have recurring 12-month contracts and offer them the option to cancel their contract and receive a pro-rated refund.
- Inactive subscriptions: Microsoft will reach out to existing subscribers who have not used their online gaming subscriptions “for a long time” but who are still paying their subscription fees. These subscribers will also be told how to discontinue their subscriptions. If these subscribers continue not to use their subscriptions, Microsoft will stop accepting payments.
- Information about price increases: Microsoft agreed to provide clearer notifications of future price increases and will advise subscribers how to turn off the auto-renew feature if they don’t want to renew their online gaming subscriptions at the higher rate.
“Gamers need to be given clear and timely information to make informed choices when signing up for auto-renewing memberships and subscriptions. We are therefore pleased that Microsoft has given the CMA these formal undertakings to improve the fairness of their practices and protect consumers, and will be offering refunds to certain customers,” said Michael Grenfell, the CMA’s executive director of enforcement. “Other companies offering memberships and subscriptions that auto-renew should take note, and review their practices to ensure they comply with consumer protection law.”
The CMA did not comment on their findings regarding Nintendo’s or Sony’s business practices. It is not clear if those companies are still under investigation.
Insider Take
Auto-renewal policies for subscription companies are under scrutiny by regulators around the globe, so this news does not come as a surprise. At some point, virtually all jurisdictions will impose standardized auto-renewal policies. Until they do, we recommend that subscription companies follow industry best practices which include clear and conspicuous posting of a subscription’s terms and conditions, including its auto-renewal, cancellation and refund policies. Subscription companies should err on the side of caution to ensure their subscribers understand exactly what they are subscribing to.
