Government consults on improving price transparency and product information for consumers

The question

What does the UK Government’s consultation on Improving Price Transparency and Product Information for Consumers (the Consultation) signal about online choice architecture, and what businesses should be doing now to avoid the risk of fines next year?

The key takeaway

The Consultation highlights the Government’s fixation on protecting consumers from manipulative practices, in particular from the harms of being misled into making purchasing decisions. Businesses should be mindful of this focus, especially as the Competition and Markets Authority (the CMA) will be gaining new fining powers under the Digital, Markets Competition and Consumer Bill (DMCC) early next year. They should start reviewing their own selling practices right now to see whether any significant updates are required to their consumers’ online experiences, especially those that directly or indirectly influence their transactions.

The background

The draft Digital Markets, Competitions and Consumer Bill (the Bill), published in April 2023 (see our Summer 2023 Snapshot) marked a seismic shift in UK consumer law with a significant enhancement of the UKs consumer protection regime. Whilst the Bill seeks to address inadequacies in the current consumer protection regime, a primary focus is the enhancement of consumer information transparency.

The development

The Consultation was launched on 4 September 2023 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, and
• online interface orders.

The aim is to ensure that consumers are provided with timely and relevant information when making purchasing decisions, which in turn will give them greater visibility of the options available to them.
 
Fake reviews

A key facet of the consultation is to seek industry opinions on how the Government’s policy to add practices relating to fake reviews to the “blacklist” of automatically unfair commercial practices at schedule 18 of the Bill should work in practice. The Government currently proposes adding the following to the “blacklist”:

• submitting a fake review or commissioning or incentivising any person to write and/or submit a fake review of products or traders
• offering or advertising to submit, commission or facilitate a fake review, and
• misrepresenting reviews or publishing or providing access to reviews of products and/or traders without: (i) taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews; and (ii) taking reasonable and proportionate steps to prevent any other information presented on the platform that is determined or influenced by reviews from being false or in any way capable of misleading consumers.

Businesses that utilise customer reviews will have an obligation to ensure that consumers are not misled and will be required to take reasonable and proportionate steps to prevent customers from encountering fake reviews. It is not yet clear what “reasonable and proportionate” steps will mean in practice and the Consultation also seeks input on definitions that will underpin any updates to the legislation. It is likely that the Government will not seek to place overly onerous obligations on businesses but will also keep consumers front of mind when enacting any legislation regarding fake reviews.

Drip pricing

Drip pricing, which is the practice of stating a base price and then gradually introducing additional fees as consumers work their way through the transaction process, is also front of mind for the Government in this current overhaul of UK consumer law. Research suggests that this practice is problematic when used to entice a customer to what appears to be a low price, which is in fact misleading when the additional fee/costs are added. The Consultation seeks views on how this practice should be managed and which specific practices should be outlawed.

Display of pricing information

Finally, following Brexit, the regulations governing the display of pricing information (Price Marking Order (PMO) 2004) are being considered under the Consultation to ensure that they remain fit for purpose. In particular, the Government wants to ensure that consumers are provided with all the information that is required to understand the pricing of products so that they can make informed choices. The Government aims to tweak the PMO so that it better suits the needs of consumers as well as helping ensure clarity for businesses. The key proposals the Government is consulting on are:

• mandating the consistent use of unit pricing measures for products so businesses can more easily comply, and consumers can compare similar items more easily
• improving the legibility of pricing information through adopting consistent standards that businesses can easily comply with rather than having to invent their own
• whether the current small shop exemption should be revised for clarity in any way
• strengthening and clarifying the requirement to provide promotional unit pricing for promotional offers, such as loyalty schemes or multibuys of similar items, and
• how the “deposit return scheme” (eg for redeeming empty drinks containers) should be displayed on pricing labels.

Why is this important?

The Consultation underlines the Government’s goals of ensuring that UK consumer law is fit for purpose and is effective in practice. Importantly, it highlights that whilst the consumer is front of mind, the Government does not seek to be restrictive, instead attempting to curate an ecosystem in which consumers and businesses are able to thrive.

Any practical tips?

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 aspects relating to transparency. Businesses should keep track of the Bill’s progress through Parliament as well as the output of the Consultation. Come what may, it’s clear that the CMA has a keen eye on this topic. With the CMA finding itself with new fining powers early next year under the DMCC, businesses would be wise to review their online choice architecture to ensure that consumers are presented with clear information and can make purchasing decisions without being subtly manoeuvred towards a purchase.

Autumn 2023