Auditing your business against Australia’s unfair trading law now means checking whether cancelling a subscription is genuinely as easy as signing up for one, and whether your auto-renewal terms would survive scrutiny under the existing unfair contract terms regime.
For SaaS founders, app developers and e-commerce platforms, these are no longer separate compliance questions. They sit inside the same customer journey, from checkout to churn, and both carry real financial exposure.
Two Regimes, Not One
There is a tendency to treat subscription trap reform as a single new law. In practice, Australian businesses need to think about two distinct regimes side by side.
The first is the unfair contract terms regime under the Australian Consumer Law, which has applied to small business standard form contracts since 9 November 2023. This is already in force. According to the Australian Competition and Consumer Commission, small businesses are covered by these protections for any new or varied standard form contract where at least one party employs fewer than one hundred people or has an annual turnover under ten million dollars. A subscription tier sold to a small business customer on a take it or leave it basis, which most SaaS pricing pages are, falls squarely within this definition.
The second is the new unfair trading practices prohibition, introduced by the Competition and Consumer Amendment (Unfair Trading Practices) Bill 2026. The Treasury has confirmed this reform requires businesses to disclose key subscription information before sign up, notify customers before a free trial or promotional period ends, and remove unreasonable barriers to cancellation. This regime commences from 1 July 2027 and applies to conduct directed at consumers rather than to every commercial contract, which matters more than most founders realise.
The Frictionless Cancellation Requirement
The specific rule founders should plan around now is straightforward to state and harder to implement. If a customer can subscribe with a single click or a short online form, the cancellation path needs to match that level of ease.
A cancellation flow that requires a phone call, a support ticket, a retention offer screen, or a multi-step account settings maze designed to slow the customer down is exactly the kind of practice the new prohibition targets.
For SaaS platforms, this has practical implications for product design as much as legal drafting. Terms of service can say cancellation is available at any time, but if the actual user interface buries that option behind account deletion warnings or forces a support conversation, the gap between the written term and the lived experience becomes the compliance risk.
A useful internal test is to time how long it takes a new user to subscribe, then time how long it takes an existing user to cancel using only the interface. A material difference is a warning sign worth acting on well before the 2027 commencement date.
Why Consumer Versus Business Customers Matters
One nuance that catches SaaS businesses out is that the new unfair trading practices prohibition applies to conduct in connection with consumers, and does not extend to a body corporate acquiring goods or services in the course of carrying on a business. This means a platform selling exclusively to corporate customers may sit outside the specific cancellation rule once it commences.
That is not the same as being free of exposure. Where a SaaS subscription is offered to a small business on a standard form contract, the existing unfair contract terms regime still applies, and auto-renewal clauses are a recurring problem area. The ACCC has previously taken action over automatic renewal terms that locked customers into further terms unless they cancelled within a narrow window, alongside excessive exit fees and unilateral price increases.
A SaaS tier that auto-renews annually, charges a lump sum penalty for early cancellation, or gives the vendor sole discretion to vary pricing without a genuine right of exit for the customer, carries the same unfair contract terms risk regardless of whether the new subscription specific rules apply.
Auditing Your Subscription Tiers
A practical audit for founders and product teams should cover the following.
- Map the sign up and cancellation journeys side by side. Count clicks, required fields and mandatory contact steps for each, and compare the two.
- Review auto-renewal clauses in every tier. Check notice periods, whether the customer can decline renewal through the same channel used to subscribe, and whether any penalty applies for early exit.
- Classify your customer base. Work out which subscribers are consumers, which are small businesses under the Australian Consumer Law thresholds, and which are larger corporate customers, since the applicable protections differ across each group.
- Check disclosure at the point of sale. Total price, renewal terms and cancellation steps should be clear before payment is taken, not buried in a linked terms document.
- Document the reasoning behind any friction. Where a step exists for a legitimate reason, such as preventing accidental deletion of customer data, keep a record of why it is there and why it is proportionate.
Governance Sits Above the Product Team
This is also a governance issue rather than purely a product or legal one. Boards and senior executives of businesses relying on subscription revenue should have visibility over how cancellation flows are designed and tested, in the same way we have previously discussed board level oversight of compliance risk in our article on what a director’s statutory duties actually require.
Waiting until the 2027 commencement date to review subscription design is not a defensible strategy given the size of the penalties involved and the lead time businesses now have to prepare.
How Warlows Legal Can Help
Warlows Legal advises SaaS founders, app developers and e-commerce platforms through our start-up law and corporate and commercial law teams, reviewing subscription terms, auto-renewal clauses and cancellation design against both the unfair contract terms regime and the incoming unfair trading practices reforms.
If your subscription tiers have not been reviewed against these requirements, now is the time to act. Speak to our legal team to arrange a confidential review of your subscription terms and cancellation flows.
This article is general information only and does not constitute legal advice. You should obtain specific advice tailored to your business before acting on anything in this article.
