Museum leaders warn new consumer legislation could hit income

New consumer legislation could enable visitors to gain free entry to charging sites and potentially “cripple” income generation, museum leaders have warned.

The UK-wide Digital Markets, Competition and Consumers Act, which received royal assent last year under the previous Conservative government, allows consumers a two-week “cooling-off” period in which they can cancel memberships and receive a full refund.

In a letter to the UK Government, reported by The Times, the heads of the National Trust, Victoria & Albert Museum and Tate, among other charities, said this loophole would enable people to purchase an annual membership and use it to access charging exhibitions and sites for free before seeking a refund. It could also put at risk the ability of charities to claim Gift Aid, the letter warned.

The legislation is designed to crack down on rip-off services that offer consumers free or discounted trials before automatically converting them into full-price subscriptions.

The letter, led by National Trust director-general Hilary McGrady, said the government and HMRC had long differentiated between charitable memberships and subscriptions for commercial services such as gyms. Up to now, charity membership charges have been treated as a charitable donation by law.

The letter stated: “Not only has [the legislation] put at risk our ability to claim Gift Aid on memberships, but it creates onerous new burdens.

“The proposed cooling-off period would create a loophole that could allow people to join charities as members and enjoy benefits, such as free entry to sites, for a two-week period before claiming substantial refunds for the rest of the year.

“This threatens to cripple the very future value of membership itself as a functional model of income generation for charities with visitor models – currently worth hundreds of millions [of pounds] to charities across the UK every year.”

The letter added: “The public benefit we deliver as a result of the relationship between us as charities and our members has long been reflected in law and by HMRC, differentiating between charitable memberships and subscriptions for commercial services such as gym memberships, and acknowledging their status as charitable donations, not subscriptions to goods or services.”

A government spokesperson told The Times: “We are engaging with charities on this issue. The Digital Markets, Competition and Consumers Act does not change the definition of what constitutes a consumer contract.

“Our plans to protect consumers from rip-off subscriptions will not unfairly affect charities, and we continue to engage closely with them to understand their concerns.”