Drip pricing, fake reviews and other digital dark arts
What is happening?
The Digital Markets, Competition and Consumers Bill (the Bill) is currently at Report Stage in its journey through Parliament. When it comes into force, we will see a significant enhancement of the UK’s consumer protection regime – with a particular focus on maximising transparency to consumers, to help them find better deals and avoid being ripped off.
Right now, a government consultation by the Department of Business & Trade is underway, seeking input on a number of elements covered by the Bill.
Why does it matter?
The Consultation on Improving Price Transparency and Product Information for Consumers (the Consultation) was launched on 4 September and seeks input on some of the key consumer protection elements of the Bill. These include:
- display of pricing information
- hidden fees and drip pricing
- fake and misleading reviews
- online platforms
- online interface orders.
The Consultation closed on 15 October, and we are expecting a response to be published before the year is out.
Whilst the Consultation focuses on some specific elements of the proposed updates to the UK’s consumer protection regime, the Bill as a whole will have a wider impact, codifying a more robust legislative backdrop that will safeguard UK consumers in the modern day and the increasingly digital lives that we lead.
The consumer protection aspects of the Bill grant the CMA direct enforcement powers, which will allow the CMA to impose meaningful sanctions and streamline the process currently required for the CMA to take enforcement action.
This should level the playing field and provide a deterrent for businesses who may have previously come close to (or crossed) the line when it comes to unfair commercial practices. In addition, the
Bill grants the CMA the power to impose monetary penalties where breaches of consumer law have occurred.
The level of fines is tiered, with the most serious offences incurring penalties of up to £300k or 10% of global annual turnover (if higher).
The Bill also makes substantive additions to the UK consumer protection rules, including in relation to subscription traps, consumer saving schemes and dispute resolution.
Finally, the Bill revokes and restates the Consumer Protection from Unfair Trading Regulations (CPRs) with some additions. Perhaps most notably, there is a newly created “omission of material information from an invitation to purchase” offence. This offence will bite without the need to be likely to affect the transactional decision of a consumer, and may prove to be a powerful new addition to the CMA’s toolkit when it comes to tackling unfair commercial practices online.
As part of the Consultation, views are being sought on proposed additions to the Schedule 18 “blacklisted” practices in the Bill in order to reduce the prevalence of fake reviews so that consumers can have greater confidence in reviews from other consumers.
But it’s not just the Bill that may be amended as part of the Consultation. Reforms to the Price Market Order 2004 are being proposed, in order to clarify and update the pricing information provided to consumers – so that consumers are able to ascertain more quickly and easily whether a particular price represents a “good deal” or not.
What action should you consider?
The upcoming strengthening of the consumer protection regime will have a significant impact on the way in which businesses engage with consumers. Following the Consultation and in
readiness for the Bill coming into force, businesses will need to address their practices – and particularly their online choice architecture – to ensure that consumers are presented with clear and transparent information and are able to make purchasing decisions without being nudged towards a particular purchasing decision using unfair practices.
Whilst the Bill is not yet formally law, the core elements are unlikely to undergo any significant amendments. However, there may well be some refinements to some of the more specific elements of the consumer protection regime – particularly following the response to the Consultation.
To hear more on these issues, sign up to RPC's biggest retail and consumer event of the year, Retail Compass Live! on 1 November 2023 at our London office where our leading voices will explore these themes and much more besides.