Protecting your business from unwanted auto-renewal contracts

In March 2021, the Competition and Markets Authority (CMA) launched an investigation into a number of anti-virus software companies and auto-renewing contracts. One of these companies was Norton which was identified as a culprit in automatically renewing contracts for their customers, making them pay for services that they no longer wanted or needed.

Norton initially refused to provide the CMA with certain information to assist in their investigations but later provided the necessary information.  Norton subsequently conceded in making the necessary changes to the policies to address the CMA’s concerns, most notably:

• Customers whose contracts auto renewed for another 12 months are now able to end the contracts and seek refunds for the remaining months. This refund is now available to customers who were previously refused a refund during 2020.
• Norton will now contact customers who have not used their products for over 12 months to inform them of the procedure to disable automatic renewal and/or terminate the contract and obtain a refund.
• Norton have agreed to be more transparent on their pricing particularly when the auto-renewal price is higher that the initial contract price.

This marks a welcome step forward for private consumers however, the protection for businesses is not so accommodating. Business to consumer auto renewal contracts are well regulated but business to business auto renewal contracts are less so in that businesses are viewed to be free to enter the contracts that they agree between themselves.

It is important to ask, how can you protect your business from these harsh auto-renewal contracts and increased fees?

On one hand, an auto-renewal contract for anti-virus software or similar is useful to maintain the continuation of your website and avoid any down time. But this is not always the case, and you can find yourself stuck paying the costs which are attributable to an oversight. 

It is vital to fully understand what it is you are signing up for. When entering a new contract, read the fine print. Business owners must be vigilant as to the contracts they sign with third parties as they are not afforded the same protections as private consumers.

The auto renewal clause may not be so obvious on first glance but it is good practice to make a note of when contracts end and when the impending auto renewal may occur. Once you have made note of the contract end date, it is crucial to allow time to contact the third party company to either cancel the contract if you no longer wish to avail of their service or negotiate the price of the contract when renewed. This will allow you to avoid potential price increase upon renewal.

If you have any further queries or would like any further information on how we can help you and your business in relation to protection from auto-renewal contracts, please contact our office on 028 9043 4015 or email [email protected].