The DMCC Bill: New laws set to ban fake reviews and drip pricing from online shopping

The question

What new laws is the UK Government planning to introduce to tackle fake reviews and unfair fees when it comes to online shopping?

The key takeaway

The Government has published its response to the consultation on consumer price transparency and product information. Following the consultation, it has been confirmed that fake reviews and drip pricing, which make shopping more difficult and expensive for consumers, will be legislated under the Digital Markets, Competition and Consumers Bill (the DMCC Bill).

The background

On 4 September 2023, the Department for Business and Trade (DBT) launched the “Smarter Regulation: Improving consumer price transparency and product information for consumers” consultation, which concluded on 15 October 2023. The consultation was centred around five policy areas:

• display of pricing information;
• hidden fees and drip pricing;
• fake and misleading reviews
• online platforms; and
• online interface orders.

Alongside the consultation, the DBT also carried out a nationally representative consumer survey, which encompassed the display of pricing information. The survey’s aim was to deliver quantitative insight into consumer perceptions, behaviour and preferences (see full coverage on the consultation in our Autumn 2023 Snapshots). As a result of the consultation, the DBT received multiple responses, including 214 on pricing information, 203 on hidden fees and drip pricing, and 177 on fake reviews. The majority of the data collected indicated agreement with the Government’s proposals in these areas.

The development

In light of the responses received to the consultation, the DBT has proposed to amend the Price Marking Order and associated guidance relating to unit pricing, price labels, promotions and deposits. As well as this, some of the proposals, namely those concerning fake reviews and drip pricing, will be legislated as part of the DMCC Bill, which is currently progressing through Parliament.

Fake reviews

Fake reviews are utilised by businesses to make products or services appear more favourable. Schedule 19 to the DMCC Bill contains a list of banned unfair commercial practices, and fake reviews will be officially added to this list. This addition to the banned list underscores the significant backing these proposals received in the consultation response. As part of this endeavour, the Government will collaborate with the Office of the Parliamentary Counsel to refine the language of fake reviews as a prohibited practice, making it as comprehensible as possible for businesses to adhere to. Having said this, following a careful review of the feedback received during consultations regarding the potential criminal liability associated with fake reviews, it was decided that fake reviews will entail civil liability only (see more on potential fines below).

Drip pricing

Drip pricing occurs when a customer is shown an initial price for a product or service and subsequently additional fees are revealed (or “dripped”) later on, such as during the checkout process. As with fake reviews, the legislation regarding drip pricing aligns with the views collated in the consultation response. The majority of the individual, consumer body and enforcement respondents considered that the law should be strengthened to address both mandatory and optional dripped fees. In response, the Government will expressly prohibit companies from presenting a headline price which does not include (within that price) any fixed mandatory fees that must be paid by all customers. Additionally, companies must disclose the existence of any variable mandatory fees and how these will be calculated. Optional fees, however, will not be included within these new measures.

Why is this important?

Given the evidence that reviews were used by 90% of consumers, contributing to the £224 billion spent on online retail in 2022, it is crucial that information available about products is fair and accurate. Moreover, the Government has highlighted that unavoidable hidden fees cost consumers £2.2 billion per year. Therefore, the additions to the list of banned unfair commercial practices of fake reviews and drip pricing under the DMCC Bill are welcome in the context of making online shopping more transparent and fairer for consumers, ultimately saving them money.

Any practical tips?

Any company that sells products or services online should follow the progress of the DMCC Bill and any accompanying guidance. Ahead of the DMCC Bill receiving Royal Assent, businesses are advised to familiarise themselves with the legislation and how it applies to their operations. Companies should also review their pricing and marketing strategies to identify any risk areas and ensure compliance with the incoming DMCC Bill, and plan to make changes sooner rather than later to ensure effective implementation by the time the DMCC lands. The penalties for the utilisation of fake reviews and drip pricing (or any of the banned unfair commercial practices, for that matter) are also significant. Fines of up to £300,000 or 10% of global turnover, whichever is higher, may be issued to businesses which fail to comply with the new law.

Spring 2024