Australia's Subscription Trap Laws: What Changes on 1 July 2027

Columbia House had one of the best offers in history.

A dozen records for a penny.

People snapped it up. Within a year of launching, the Columbia Record Club had 128,000 members. At its peak in the 1990s it was making about $1.4 billion a year.

So why did it fail?

In The Subscription Playbook I put it in one word: greed. People jumped at the near-free records without realizing they were tying themselves to a subscription they didn't want. The next batch arrived at full price. Columbia made its subscription process less transparent than it should have been, and it angered a lot of people along the way.

In September 2026, Quartz reported, the club stopped taking new orders, after 71 years. (You can read the full story in the Columbia House case study.)

Columbia's model has a modern name now. It's called a subscription trap. And from 1 July 2027, Australia has a specific law against it.

This guide explains that law as at October 2026. It's general information, not legal advice. Where the details are still being written, I'll say so.

Your checklist before 1 July 2027

If you run a membership, maintenance plan, retainer, box or software subscription, work through this list. Most of it takes an afternoon. Tick each item off as you go.

• List every recurring offer. Monthly plans, annual plans that auto-renew, free trials that convert, intro prices that step up. If customers are billed until they say stop, it's in scope.
• Rewrite the sign-up page. Say plainly that it's a subscription, what they'll pay, how often, when it renews and how to cancel, right next to the button they press.
• Show every fee with the price. Booking or transaction fees go beside the base price, not at checkout.
• Add an online cancel button if people can sign up online. It should take only the steps you genuinely need, with no maze and no forced phone call.
• Remove pressure tactics from sign-up and cancellation: countdown timers, guilt pop-ups, pre-ticked add-ons.
• Set up reminder emails before trials or intro prices end, before annual renewals and before price rises. Make the timing easy to change once the regulations are published.
• Check your small business customers. The subscription rules also protect businesses with fewer than 100 staff or under A$10 million turnover on standard contracts.
• Review your terms for renewal, notice periods and cancellation fees with a lawyer.
• Keep records of what each customer saw at sign-up, every notice you sent, and when each cancellation took effect.
• Model the numbers. Easier cancellation can lift churn for a while. Work out what that does to your cash flow before July, not after.
• Brief your team. Anyone who takes a cancellation call needs to know they can't stall it.
• Diarise a check-in for when the regulations setting reminder timing are released.

The printable compliance checklist goes into more detail on each step.

What is the new subscription trap law?

It's the Competition and Consumer Amendment (Unfair Trading Practices) Act 2026 (Act No. 64, 2026), and you can read the Act as made on the Federal Register of Legislation. It amends the Australian Consumer Law, which sits in Schedule 2 of the Competition and Consumer Act 2010.

The timeline:

The government's own description of the problem, in its February 2026 announcement, is that consumers get "locked into subscriptions that are far easier to start than to stop." That's the test I'd apply to your business, too.

Are subscription traps illegal in Australia right now?

Many already are.

Even before 1 July 2027, the Australian Consumer Law bans misleading or deceptive conduct and false or misleading representations, and the ACCC is using those rules against subscription traps today. In December 2025 it took HelloFresh and Youfoodz to the Federal Court, alleging that 62,061 HelloFresh customers and 39,408 Youfoodz customers were charged for a first order despite canceling before the advertised cut-off. The HelloFresh case study walks through what's alleged.

What the new Act adds is a set of specific duties for subscriptions, plus a general ban on unfair trading practices. You no longer have to be misleading to break the law. You can break it by making cancellation hard, or by designing a sign-up that manipulates people into a decision that harms them.

What counts as a subscription contract?

Under the new section 48B, a contract is a subscription contract if it has one of four shapes and isn't excluded:

1. Indefinite period. Recurring or continuing supply, automatic liability to pay, and a right to end it. (Think a monthly plan with no end date.)
2. Fixed period that rolls on. Supply continues after the fixed period unless someone stops it. (Think an annual plan that auto-renews.)
3. Initial free period. A free trial that turns into a paid plan unless the customer ends it first.
4. Initial discount period. An intro price that automatically goes up after the intro period.

Section 48C excludes leases, licences over real property, hire purchase, contracts for payment in instalments, childcare, and school and pre-school tuition. Regulations can exclude more.

Notice what's not excluded: memberships, software, streaming, meal kits, boxes, maintenance plans, retainers with automatic billing. If your customers are billed until they say stop, assume you're in.

What does the law require subscription businesses to do?

Here are the five rules that matter, in plain English.

Section 28B also gives four examples of conduct that may be an unfair trading practice:

• impeding a consumer's ability to exercise legal rights or seek remedies;
• failing to disclose material information;
• disclosing it in a "complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming way";
• using design elements in digital interfaces that put the consumer under unreasonable pressure, or obstruct them from making or carrying out their decision.

Read that last one again if your cancellation page has a countdown timer or a "Are you sure you want to lose everything?" pop-up.

When do reminders have to be sent?

This is the part most people get wrong, because the answer changed between the draft and the final law.

What the Act says: section 48E requires suppliers to give subscribers the information "prescribed" by regulations, at each time "prescribed." The regulations can set different rules for different kinds of subscription. The Parliamentary Library's Bills Digest gives examples of when notices may be needed: before a free trial expires, when a subscription renews, or when prices change.

What the draft proposed: law firm summaries of the February 2026 exposure draft reported reminders every six months for indefinite subscriptions, a notice a reasonable time before a fixed term renews, and a warning before a free trial converts. That detail didn't make it into the final Act. It was moved to regulations.

As at October 2026: I couldn't find published regulations setting the timing.

So what should you do? Build for the likely outcome, and keep it adjustable:

• a reminder before any free trial or intro discount ends, showing the price that will apply;
• a reminder before any fixed-term or annual renewal;
• a notice before any price change takes effect;
• a periodic reminder for open-ended subscriptions (six-monthly was the draft's proposal).

Templates for the first two are in free trial reminder emails and the automatic renewals guide.

Does the law apply to my existing customers?

Section 312 (an application provision) says the subscription contract rules apply to contracts entered into on or after 1 July 2027.

Contracts made before then aren't caught at first. But they come under the rules from the day they are renewed, extended or otherwise continued, or varied, on or after 1 July 2027.

If you sell annual plans, every renewal after July 2027 brings a customer into the new regime. If you change your terms or prices after that date, the variation brings them in. Whether a rolling monthly plan counts as "continued" each month is a question for your lawyer, but I wouldn't build a strategy on two sets of customers. Treat your whole base as covered.

Does it apply to business customers?

Partly. And this is where many B2B software and service companies will be surprised.

The general ban on unfair trading practices (s 28B) and the drip pricing rule (s 48A) are about consumers. But the subscription duties in sections 48E and 48F also protect a small business subscriber if:

• the contract is a standard form contract (and the Act presumes it is, unless you prove otherwise); and
• the business employs fewer than 100 people, or its turnover was under A$10 million in its last income year.

That describes most of the small business market. If you sell accounting software, a practice management tool or a monthly marketing retainer on standard terms, plan on complying.

The disclosure rule in section 48D isn't limited to consumers or small businesses in the way it's drafted. If you only sell negotiated enterprise contracts, get advice on whether it reaches you.

Treasury also consulted in mid-2026 on extending unfair trading protections more broadly to small businesses and franchisees, so watch this space.

What are the penalties?

Big enough to matter to any business.

• Companies: since 28 March 2026, the maximum civil penalty under the ACL is the greatest of A$100 million, three times the benefit obtained, or, if the benefit can't be worked out, 30% of adjusted turnover during the breach period.
• Individuals: up to A$2.5 million for a breach of the general unfair trading practices ban.
• Infringement notices can also be issued for the general ban, so the ACCC doesn't always have to go to court.

Courts can also make orders for compensation, adverse publicity and disqualification from managing companies.

Is a subscription still worth it after 2027?

Yes. More than ever, actually.

The law doesn't stop you charging monthly, offering annual plans, running free trials or making a save offer. It stops you profiting from confusion.

If your churn is low because customers love the product, these rules cost you very little. If your churn is low because customers can't find the cancel button, your churn was never really low. It was hidden, and it was going to show up as chargebacks, complaints and bad reviews anyway.

So be honest with yourself. If a big chunk of your revenue comes from people who haven't used your service in three months, that's the problem to fix before 2027. Run your offer through the churn risk checklist and see where customers are likely to leave once leaving gets easy.

Your 9-month plan to 1 July 2027

1. Map every subscription you sell. Monthly, annual, trial, intro price, add-ons. Note which are sold to consumers and which to small businesses.
2. Screenshot your sign-up flow. Is the subscription statement and every key term next to the button?
3. Show the full price. GST included for consumers, and any per-transaction fees next to the base price.
4. Fix your exit. One clearly labeled place to cancel, online if you sell online, with only the steps you genuinely need.
5. Set up reminders for trials, renewals and price changes, with timing you can change once regulations land.
6. Review your terms for anything that lets you change the deal one-sidedly. See unfair contract terms.
7. Train your team. Phone and chat staff must process cancellations, not argue with them.
8. Keep records of what customers saw and when.
9. Check your numbers. Model what happens if inactive subscribers cancel. Your accountant can help you see the cash flow and profit impact.

The AU subscription compliance checklist turns this into a document you can work through with your team.

What to do next

Start with the flow your customers see. Run it through the free checker below, then fix the biggest gaps first.

Then look at the money side. Tighter cancellation and honest reminders can lift churn in the short term, and that changes cash flow, pricing and even the value of your business.

Free Subscription Profit Review

Australian business owners can book a free 30-minute review with a BPAG Accountants adviser. An honest conversation about:

• whether a subscription model could work for your business
• how recurring revenue could cover your fixed costs each month
• how it could lift what your business is worth

Book my free review Call 1300 272 422

No cost, no obligation. General information only until we understand your situation.

Frequently asked questions

General information only, current as at October 2026. It isn't legal, tax or financial advice and doesn't consider your circumstances. Speak to a qualified adviser before acting.

Robert Coorey, MBA

Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.