Dark Patterns, Drip Pricing and Dodgy Subscriptions: Australia’s New Unfair Trading Practices Act Explained

Risk Management Tool

To help businesses navigate the new regime, Clayton Utz has developed a risk management tool that enables businesses to assess whether their conduct could potentially fall short of the requirements imposed by the regime.

What’s changing?

We are monitoring a number of cases, both in Australia and overseas, involving conduct that would likely engage the provisions of the new regime. Enforcement activity has concentrated on issues such as dark patterns and subscription traps, with action taken under existing consumer law provisions. With the commencement of the Act’s new unfair trading practices regime, enforcement risk in this area is heightened further.

We have set out below an overview of what the Act entails.

General prohibition on unfair trading practices

For the first time, the ACL will include a broad prohibition on unfair trading practices in trade or commerce, including emerging forms of misconduct by businesses, particularly in an online context. This new law is designed to capture conduct that falls short of existing ACL provisions, including misleading or deceptive conduct, unconscionable conduct, and unfair contract terms, but which is nevertheless harmful to consumers.

Key elements:

• The prohibition applies to conduct in connection with the supply (or offer to supply) of goods or services to a consumer.

• Conduct is prohibited if it manipulates the consumer or unreasonably distorts the environment in which the consumer makes, or is likely to make, a decision, and causes (or is likely to cause) detriment (financial or otherwise) to the consumer.¹

• The law is intended to address both online and offline conduct, but particularly the use of ‘dark patterns’ in digital interfaces, such as confusing or complex menus, pre-selected business-favoured choices, false urgency cues, or obstructive cancellation processes.

• The Act provides a non-exhaustive list of examples that are unfair trading practices:

  • Impeding a consumer’s ability to exercise legal rights or seek legal remedies;

  • Failing to disclose material information, or disclosing it in a complex, ineffective, unclear, unintelligible, ambiguous, untimely or overwhelming way; and

  • Creating environments that place unreasonable pressure on consumers, or obstruct them from making or fulfilling their decisions.

Drip pricing: mandatory disclosure of transaction-based charges

The Act introduces new requirements to address ‘drip pricing’ – the practice of gradually adding fees during the transaction process, obscuring the total amount payable. This practice can mislead consumers, making it difficult to compare prices and undermining trust in the marketplace.

Key elements:

• Businesses must display any mandatory transaction-based charges (such as booking, processing or service fees) at the same time as the base price. This information must be presented in a legible, prominent, and unambiguous manner, and in close proximity to the base price, so that consumers are fully aware of the total cost from the outset.

• The requirement applies only to goods or services ordinarily acquired for personal, domestic, or household use.

• The obligation does not extend to optional charges (which the consumer can choose to add or not), payment surcharges (such as credit card surcharges), or any tax (such as GST), duty, fee, levy or charge imposed on the supplier.

• The display requirements apply at every stage where a base price is shown, including when goods or services are offered for supply – such as on websites or apps, advertisements, and promotional materials. If the amount of a transaction-based charge cannot be calculated upfront, the method for calculating the charge must be clearly disclosed.

Subscription contracts: new rules for sign-up, reminders, and cancellation

The Act introduces a comprehensive regime for consumer and small business subscription contracts, targeting practices that trap consumers in unwanted or difficult-to-cancel subscriptions.

A contract is a subscription contract if it falls into any of the following categories:

• Indefinite period: Eg, a gym membership that charges a monthly fee until the person cancels

• Fixed period: Eg, a contract for the supply of one toy per month for 12 months at an upfront cost, which automatically renews at the end of the 12-month period unless cancelled.

• Initial free period: Eg, a 30-day free trial for a meal subscription, which automatically renews for a fee unless the subscriber cancels before the end of the 30-day trial.

• Initial discount period: Eg, a contract that offers the first month at a discounted rate for a monthly subscription, which then automatically renews at the standard (higher) rate each month unless the subscriber cancels.

The new requirements are not intended to capture contracts that require positive steps to be taken by the consumer for the subscription to continue.

Disclosure requirements:

• Pre-contract disclosure: Businesses must clearly disclose that a contract is for a subscription, the price and period of the subscription, the renewal, extension and cancellation processes, and any notice period required before cancelling.

• Ongoing notifications: Regulations will require businesses to send timely reminders to subscribers at key points of the subscription cycle (eg, before a free trial ends or before renewal).

• Easy cancellation: Businesses must provide a straightforward, easy-to-find method for subscribers to end their contract, with only reasonably necessary steps. If the subscription was entered online, an online cancellation option must be available.

The regime applies to both consumers and small businesses (for standard form contracts), with certain contracts (eg, leases, childcare, school tuition) excluded.

What should businesses do now?

• Review sales, marketing, and digital interface practices to ensure they do not manipulate or unreasonably pressure consumers, particularly online.

• Audit all pricing displays to ensure mandatory transaction-based charges are disclosed upfront and clearly.

• Assess subscription processes (from sign-up to cancellation) to ensure compliance with new disclosure, notification, and exit requirements.

• Prepare for compliance: The new laws commence on 1 July 2027, but businesses should begin reviewing and updating their practices now, given the scale of the changes and potential penalties.

See our previous guidance for businesses here.

Clayton Utz can assist you in understanding the impact of these reforms on your business and preparing for compliance. Please contact us for tailored advice.