What Can My Subscription Terms and Conditions Legally Say in 2026?

Last updated: 10 June 2026

Your subscription terms and conditions can still require auto-renewal, charge a fair early termination fee, and allow you to update your pricing. What they can no longer safely do is silently renew customers, lock them in with no way out, or let you change the deal whenever you like. The line is simple: every clause needs to give clear notice, tie any fee to a genuine cost, and leave the customer a clean exit.

On 19 February 2026, the ACCC named unfair contract terms a 2026-27 enforcement priority, with a specific focus on harmful cancellation terms, including automatic renewals, early-termination fee clauses and non-cancellation clauses. If you run any kind of recurring billing in Australia, the terms you copied from a template years ago are exactly what the regulator is now looking at.

In our experience helping over 10,200 Australian businesses since 2009, most subscription owners have never reread their terms since the day they launched. This guide walks through what those terms can and cannot legally say in 2026, clause by clause, with a fair version of each one you can model.

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Key Takeaways

• Auto-renewal is legal in Australia, but a silent renewal with no reminder and no easy off-switch is the textbook “subscription trap” the ACCC is targeting in 2026-27.
• You can charge an early-termination fee, but only if it reflects a genuine cost you actually incur. Charging the full remaining term is a classic unfair term.
• A clause that lets you change prices or terms whenever you like, with no notice and no exit for the customer, is one of the statutory examples of an unfair term.
• If a court finds a term unfair, it is void, and since 9 November 2023, using one is illegal and carries penalties of up to the greater of $50 million, three times the benefit, or 30% of turnover.
• The law covers standard form contracts with consumers and small businesses with fewer than 100 employees or $10 million in turnover, which covers most Australian subscription customers.
• The fix is the same across all clauses: give notice, tie fees to genuine costs, and always leave a clean exit.

What is at stake: An unfair term is not just unenforceable; it is now a breach in its own right. If a court decides a term in your standard form contract is unfair, the term is void. Since 9 November 2023, proposing, using or relying on an unfair term is also illegal, and for a company, the maximum penalty is the greater of $50 million, three times the value of the benefit obtained or 30% of adjusted turnover during the period of the breach. Source: ACCC.

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Auto-Renewal: Can You Keep Charging Customers Automatically?

Yes, you can auto-renew. What is now exposed is the default setup that almost every subscription tool ships with: the subscription renews silently, the customer gets no warning before the charge, and there is no easy way to switch it off. That pattern is exactly the “subscription trap” the ACCC named in its 2026-27 priorities.

What the ACCC says is now off-limits:

• Automatic renewals that happen silently, with no reminder before the customer is charged.
• Renewal terms that put the entire burden on the customer to remember and cancel in time.
• Free trials that convert to paid plans with no clear warning of the date or the price.
• Any renewal setup without an easy, accessible way for the customer to turn off auto-renewal.

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Can I automatically renew my customers’ subscriptions?

Yes, auto-renewal itself is legal. The risk is not the renewal, it is renewing in silence. A renewal clause becomes exposed when the customer gets no notice before the charge and has no simple way to opt out.

Why it is exposed: renewal is silent, the customer gets no warning before the charge, and there is no clear way to turn it off. That is the imbalance the ACCC is targeting.

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Do I have to remind customers before I charge them again?

In practice, yes. There is no single section that says “send a reminder”, but a renewal with advance notice is far more likely to be fair, and a renewal with none is exactly what the ACCC has flagged. A reminder is the cheapest compliance step you can take.

Why it is exposed: placing the entire burden on the customer without notice is a significant imbalance, and “no reminders” is the trap pattern by name.

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Can I auto-renew a free trial into a paid plan?

Yes, but this is the highest-risk version of auto-renewal. Converting a free trial to a paid plan without a reminder and with no clear price is one of the “dark patterns” the ACCC has singled out. From what we see across thousands of Australian online businesses, this is the clause most likely to trigger a complaint.

Why it is exposed: converting a free trial to paid with no reminder and no stated price is the dark pattern setup that regulators scrutinise most closely.

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Cancellation and Early-Termination: What Can You Charge When Someone Leaves?

You are allowed to recover a genuine cost. You are not allowed to punish a customer for leaving. The line is whether the fee reflects a real loss you actually suffer, or simply the revenue you hoped to keep. This is the heart of the ACCC’s 2026-27 focus.

What the ACCC says is now off-limits:

• Early-termination fees that charge the full remaining value of the contract rather than a genuine cost.
• Non-cancellation clauses that lock a customer in with no way to exit.
• Blanket “no refunds under any circumstances” terms that overstate your position and understate consumer rights.
• Making cancellation far harder than signing up, for example, phone-only or postal-only cancellation.

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Can I charge a cancellation or early-termination fee?

Yes, but only an amount that reflects a genuine cost you actually incur, such as set-up or onboarding. A fee that charges out the rest of the term bears no relation to your real loss, and penalising a customer for ending a contract is one of the statutory examples of an unfair term.

Why it is exposed: charging 100% of the unused term bears no relation to your actual loss. A fee disproportionate to genuine cost is a classic unfair term.

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Can I lock customers into a minimum term?

Yes, a minimum term is allowed, but a no-exit lock-in is not. The ACCC specifically named non-cancellation clauses as a target for 2026-27. You can have a minimum commitment as long as the customer can still leave by paying a fair, cost-based fee.

Why it is exposed: a no-exit lock-in leaves the customer with no way out, while you carry no equivalent obligation. That is a significant imbalance.

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Do I have to refund unused time when someone cancels?

Not always, but a blanket “no refunds ever” clause is a problem. You can usually keep fees for the current paid period and let access run to the end of it. What you cannot do is use a no-refund clause to override a customer’s rights under the Australian Consumer Law.

Why it is exposed: a blanket “no refunds ever” clause is one of the most commonly challenged terms and can mislead customers about their consumer-law rights.

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Can I make customers jump through hoops to cancel?

No. Making cancellation far harder than sign-up is a recognised subscription trap. If a customer can subscribe in two clicks, they should be able to cancel without having to post a letter or wait on hold.

Why it is exposed: making cancellation far harder than sign-up is a recognised subscription trap and a one-sided obstacle.

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Changing the Deal: Can You Vary Your Terms or Prices?

You can update your terms and your prices; every business needs to. What is exposed is the right to change anything, at any time, for any reason, with no notice and no exit for a customer who is locked in. The ACCC uses this exact scenario as its textbook example of an unfair term.

What the ACCC says is now off-limits:

• A term that lets you (but not the customer) change the price during the contract with no notice and no right to exit.
• A broad, unilateral right to rewrite the terms or the service while the customer stays bound.
• An unlimited right to suspend or terminate a customer’s account at your sole discretion, with no notice and no refund.
• Any term creating a significant imbalance in your favour that is not reasonably necessary to protect your legitimate interests.

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Can I change my prices whenever I want?

Only with notice and a way out. The ACCC’s own example is a broadband contract: a price-change term is likely unfair if the customer is locked in, but likely fair if the customer can cancel without penalty when they do not accept the new price. Notice plus exit is what saves the clause.

Why it is exposed: an unlimited, no-notice price change against a locked-in customer is a significant imbalance in your favour, the exact scenario the ACCC flags.

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Can I change the terms after a customer has signed up?

Yes, but not unilaterally and not by stealth. A term that lets one party change the contract is a statutory example of an unfair term. Give notice of material changes and let customers who do not accept them leave.

Why it is exposed: a broad, unilateral right to rewrite the contract while the customer stays bound is the core example of an unfair term.

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Can I suspend or cancel a customer’s account at my discretion?

Only for a proper reason and, except in serious cases, with notice. An unfettered right to cut a customer off with no reason, no notice and no refund is heavily one-sided. Tie suspension to breach or non-payment, and give a chance to fix the problem first.

Why it is exposed: an unfettered right to cut off the customer with no notice, no reason, and no refund is heavily one-sided.

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How to Make Your Subscription Terms Compliant

Start by rereading your live terms against the three areas above: how you renew, how customers leave, and how you change the deal. If a clause locks the customer in while leaving you free to act on your own, assume it is now in scope.

The fixes are not cosmetic. Whether a cancellation fee is proportionate, whether your notice period is adequate and whether a variation right is balanced all depend on your actual billing model, your margins and your onboarding costs. That is the part that a generic template or an AI-generated clause cannot judge for you.

In our experience, the businesses that get this right treat their terms as a living document, not a one-time download. A short review now is far cheaper than a refund run, a chargeback wave, or an ACCC enquiry later. If you would like a lawyer to check your subscription terms against the 2026-27 rules, the Legal123 Website Legal Review does exactly that, and our Website Legal Package gives you lawyer-drafted Terms and Conditions built for Australian Consumer Law.

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Subscription Terms and Conditions: Common Questions

Are auto-renewal clauses legal in Australia?

Yes, auto-renewal clauses are legal in Australia. They become a problem when the renewal is silent, the customer receives no reminder before being charged, and there is no easy way to turn off auto-renewal. The ACCC named automatic renewals as a 2026-27 enforcement focus, so the safe approach is clear advance notice and a simple opt-out.

What is a subscription trap?

A subscription trap is a setup that makes it easy to sign up but hard to get out, for example, silent renewals, hidden fees, or cancellation that is far more difficult than subscribing. The ACCC and Treasury have both flagged subscription traps and related dark patterns as a priority, with new unfair trading laws expected to commence on 1 July 2027.

Does the unfair contract terms law apply to my small business?

It applies to your standard form contracts with consumers and with small business customers. Since 9 November 2023, a small business is covered if it has fewer than 100 employees or an annual turnover of under $10 million. Most Australian subscription customers fall inside those thresholds, so assume you are covered.

What is the penalty for an unfair contract term?

If a court finds a term unfair, the term is void and cannot be enforced. Since 9 November 2023, using or relying on an unfair term is also illegal, and for a company, the maximum penalty is the greater of $50 million, three times the value of the benefit obtained, or 30% of adjusted turnover during the breach period.

Can a customer just ignore an unfair term in my contract?

Effectively, yes. If a term is unfair, it is void, which means it does not bind either party, and you cannot enforce it. The rest of the contract usually continues to operate, so one bad clause can be struck out while everything else stands.

Do these rules apply to B2B subscriptions too?

Yes. The unfair contract terms regime covers standard-form contracts with small-business customers, not just consumers. If you sell a subscription to small businesses on take-it-or-leave-it terms, the same auto-renewal, cancellation and variation rules apply.

About the Author: Vanessa Emilio

Vanessa Emilio (BA Hons, LLB, ACIS, AGIA) is the Founder and CEO of Legal123.com.au and Practice Director of Legal123 Pty Ltd. Vanessa is a qualified Australian lawyer with 20+ years experience in corporate, banking and trust law. Click for full bio of Vanessa Emilio or follow on LinkedIn.

Need legal documents written specifically for your business? Vanessa and her team draft custom legal documents for Australian online businesses, or you can book a 30-minute call to talk through what you need.

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