UK Law and Practice Contributed by: Huw Morris, Dominic Bray, Nick Swimer and Rebecca Coleman, Lee & Thompson LLP
7.5 Automatic Renewal/Continuous Service Offers Contract renewal practices must comply with the DMCCA and the CAP Code, and are subject to spe - cific laws under the CCR. Businesses must clearly present “key” information to consumers prior to entry into a contract, including the frequency of any payments via auto-renewal mecha - nisms and the cancellation process. Timely reminders prior to any renewal date clearly stating the amount due upon renewal, any difference from the previous payment and how to cancel are also required. When marketing subscription contracts, businesses must state whether a subscription auto-renews and, if so, under what terms, clarify any post-trial period price increases and articulate how easy the cancellation process is. There are currently no specific rules or guidance regarding the use of AI in the development of adver - tising content. Creative concerns relate to inputs (AI models being trained on confidential or IP-protected input data and personal information) and outputs (potential infringement issues). Getty Images’ legal action against Stability AI for use of its images in train - ing its AI model continues. CAP has stressed that existing advertising rules apply regardless of whether the content was created by humans or machines, and the ASA has issued guid - ance on the responsible use of AI in advertising, focus - ing on transparency and the potential for AI-generated content to mislead consumers. 8.2 AI-Related Claims There are no specific regulations regarding claims that a product is developed through the use of AI, powered by AI or has AI-related capabilities. EU legislation (the EU AI Act) has established a broad regulatory frame - work for the development, deployment and use of AI systems to ensure that AI is used safely, in accord - ance with ethical principles, and in ways that protect fundamental rights and freedoms. A key obligation is 8. Artificial Intelligence 8.1 AI and Advertising Content
ment for prior approval or registration. Lotteries in the UK must be run for good causes, such as charity, sports or cultural purposes. 7.4 Free and Reduced-Price Offers Price promotions are an important part of the market - ing mix, and this is often a contentious area. Such promotions are regulated under the DMCCA and are subject to the CAP Code. Additional guidance is pro - vided by the Guidance for Traders on Pricing Practices issued by the Chartered Trading Standards Institute. Free Offers If a product or service is offered as “free”, there should not be any hidden charges or any reduction in the usual quality of the product or service. If consumers must pay for anything above the unavoidable cost of responding and collection/delivery, then it should not be offered as “free”. The DMCCA also regulates “sub - scription traps”, including those offering free trial peri - ods (see 7.5 Automatic Renewal/Continuous Service Offers ). Reduced Price Offers Reference pricing (eg, “50% off” or “25% bigger for the same price”) must be accurate and not mislead - ing. The product must have been sold at the higher price for a significant period before the promotion. CMA guidance published in August 2024 states that the higher price needs to have applied for at least as long as the promotion period, and that there must have been a sufficient number of sales at that higher price before the discount period. This guidance relates to particular products but may have more general application. The CMA has also issued guidance on time-limited (“act now”) and other offers that instil a sense of urgency (“only five left at this price”). Again, generally, all such offers must be genuine and not misleading (and should also not fall foul of rules on social respon - sibility by, for example, rushing people into making serious decisions with undue haste – eg, laser eye surgery). Pricing promotions have been the subject of consid - erable scrutiny by the CMA and action by consumer rights groups such as Which?
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