The tech giant will also refund customers whose XBox subscriptions were automatically renewed without their agreeing.

Microsoft’s Xbox Live Gold and Game Pass products allow people to access a library of games and play together online. They are offered as memberships which are often entered into on an auto-renewal basis. This means that membership is automatically rolled over at the end of each contract period and the customer charged unless they actively take steps to stop the subscription.

A CMA probe identified concerns about certain features of Microsoft’s auto-renewal practices. In particular, it had concerns about whether it was clear upfront that contracts would automatically renew. Other issues included how easy it was to turn off automatic renewal and whether people may not have realised they were still paying for services they no longer used.

The CMA has secured undertakings with Microsoft which are designed to address these concerns. The improvements include action regarding better upfront information, refunds and inactive memberships.

Microsoft has pledged to provide more transparent, upfront information to help customers understand their Xbox membership. It will make it clear, for example, that the subscription will auto-renew unless the customer turns off auto-renewal. It will also explain when the subscription will auto-renew, how much it will cost, and how the customer can receive a refund after an accidental renewal.

Microsoft will also contact existing customers on recurring 12-month contracts and give them the option to end their contract and claim a pro-rata refund. Existing customers who haven’t used their memberships for a long time, but are still paying, will also be contacted and reminded how to stop payments. If they continue not to use their memberships, Microsoft will stop taking further payments.

Microsoft will also give clearer notifications of any future price rises and ensure people know how to turn off auto-renewal if they don’t want to pay the higher price.

Michael Grenfell, executive director of enforcement at the CMA, said: “Gamers need to be given clear and timely information to make informed choices when signing up for auto-renewing memberships and subscriptions. We are therefore pleased that Microsoft has given the CMA these formal undertakings to improve the fairness of their practices and protect consumers, and will be offering refunds to certain customers.

“Other companies offering memberships and subscriptions that auto-renew should take note, and review their practices to ensure they comply with consumer protection law.”