I often talk about cancelling subscriptions to save money. This is still the number one best way to save some cash during the cost-of-living crisis. But what do you do if you need to cancel something mid-contract?

The rules and laws around cancelling contracts early and getting refunds are complicated. So in the spirit of giving you value for money, I’ve teamed up with my top TV expert mate and king of the lawyers, Gary Rycroft, so you get ‘two for the price of one’ expert advice!

Here are your rights from both a legal and consumer rights perspective.

Exit stage left or right?

There are two options to consider when cancelling contracts. Firstly, are you trying to leave your contact early without a penalty or are you trying to get your money back for a service you paid up for in advance?

These might seem like separate things on paper. However the principles are more or less the same. If you want to leave a contract or get a refund mid-term, you’ll need to establish why the firm isn’t meeting it’s part of the deal.

So what does the law say?

There are lots of laws, regulations and rules that relate to the sale of goods and services, how they’re advertised, what both parties have ‘contracted’ to and whether you can get a refund or compensation. These haven’t really changed. However, over the pandemic, the demand for refunds was so high that many businesses have introduced all sorts of bizarre or unusual clauses in contracts for not refunding or letting you escape their clutches without penalty. But just because it’s in the contract doesn’t mean it’s fair or reasonable.

The answers aren’t black and white – but the good news is those existing laws we have are more or less on your side.

What are your rights when cancelling an annual subscription?

In recent years, the laws governing how we shop have improved dramatically. If you have taken out a new subscription or annual contract online then by law you have the right to cancel the order 14 days after placing it. This comes from the Consumer Contract Regulations. But as with any law there are always caveats, and some things aren’t covered.

The most noticeable exception sadly is ‘accommodation, transport and leisure services purchased for a specific timeframe’. Annoyingly, this includes most holidays and travel, which can still result in significant charges for cancelling even a day after booking. MoneySavingExpert have the full list of the exemptions here: https://www.moneysavingexpert.com/reclaim/consumer-rights-refunds-exchange/

We get most of our shopping rights – online or on the high street from the much more wide-ranging Consumer Rights Act. This law is full of wonderful and useful clauses too, like since June 2014 all new subscriptions and contracts have to be ‘actively’ signed up to. This means they can’t opt you into a contract – you have to choose to sign up and the contract needs to be fair and clear.

What if you contracted by accident?

If you’ve followed our tips in the Mirror, then you may have checked your bank accounts, credit cards and e-payments like PayPal or Apple Pay over the last year and found out you are being debited for contracts you neither wanted or agreed to. This sometimes happens when you sign up to a free trial and forget to cancel it. But often you may not recognise the contract at all – or you told the business to cancel it some time ago.

There is no definitive legal right to a refund on past payments, but in the absence of proof you can always ask and try to negotiate one. Remember if you were misled in to taking out contract or you didn’t authorise it, you can indeed ask for a full or partial refund. The firm must be able to prove you agreed to the contract.

Before you cancel a subscription check the T&C’s on any notice period required. As a general rule, it’s trickier to get out of a contact that runds for a defined period – say 12 months.  But this must have been made clear to you when you signed up. If the contract is a ‘rolling’ one, that just continues till you cancel it, contact the provider and ask them to cancel with immediate effect. If they aren’t playing ball, you can also ask your bank or credit card company to stop future payments as well.

What if what I paid for isn’t what I got?

If you have signed up for goods and services that have not been provided for a variety of reasons, from the pandemic to unexpected service problems, you could break the contract early or seek a refund if you’ve paid up front.

The legal principal of ‘Frustration of Contract’ is the basis for seeking a full refund. In short, this applies where goods or services cannot be delivered for reasons not anticipated when the contract was agreed. This applies to both a single event – like hiring a venue for a wedding – or ongoing contracts like a gym membership.

So for example if you have paid £600 for gym membership for a year (£50 a month) and the gym is closed for two months, you could be able to claim a £100.00 refund under Frustration of Contact. This also means you could pause or stop a regular subscription even if you are still within an initial agreed tie-in period, though you would have to start up again once the goods and services were available to use.

What if the business makes deductions for ‘costs’?

If you decide to go down the Frustration of Contract line for a refund, the business may be entitled to ask for a small contribution to its costs, but only if the original contract says this is permitted, so again check the T&C’s you were given when you signed up.

For example, over lockdown we heard of a number of holiday or caravan parks deducting hundreds of pounds for maintenance and security despite the fact you couldn’t go there. The firm can charge you for things like security and basic maintenance so the facilities are maintained. But charging you for things like pool cleaning once a month when the pool is closed isn’t fair. And you should be able to ask for a breakdown of anything you’re being charged by default for.

The business says it doesn’t have to refund me

One of the unfortunate impacts of the pandemic is many businesses – and sectors, annoyingly – have taken a much more hardline approach to refunds. This has led to an increasing number of problems when it comes to interpreting existing law. Gary and I are both constantly fielding questions about firms changing T&Cs, ignoring rules or quoting non-existent or wrongly interpreted legislation.

Don’t get bogged down in the legal nitty gritty – that’s our job! We’d recommend that you have a think about what you might be willing to compromise on when making a complaint – but get the firm to put its response in writing if it says no. And even if you’ve moved to another service provider, you can still complain.

What do the regulators say?

The Competition and Markets Authority (CMA) has previously made it clear that businesses should treat their customers fairly and that means recognising the legal rights explained above.

The CMA have published guidance on their website covering when they expect businesses to refund you. This guidance does not have the same clout a legal judgment in a Court of Law, but in our view it would be a brave business which went against the spirit and intention of it. The CMA have also issued fines and threats of legal action to the firms they’ve heard the most complaints about – so watch the news.

Featured in Mirror – Martyn James and Gary Rycroft

https://www.mirror.co.uk/money/little-known-ways-help-you-28584981

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