Clamping Down On Fake Reviews And Further Unfair Commercial Practices
The issue of unfair commercial practices hit the headlines recently following Ticketmaster’s application of dynamic pricing to tickets for the Oasis reunion. The Competition and Markets Authority (CMA) promptly announced it will look into whether the practice was indeed unfair.
Whether or not the regulator concludes unfair commercial practices were applied to the sale of Oasis tickets, new rules on unfair commercial practices are imminent which consumer-facing businesses need to be preparing for.
The Digital Markets, Competition and Consumers (DMCC) Act 2024 will repeal and incorporate the 2008 Consumer Protection from Unfair Trading Regulations. Most of the changes are expected to come into force in April 2025 and the CMA will be issuing guidance ahead of implementation.
What’s new?
An unfair commercial practice is widely defined in the Act. It is a practice that is “likely to cause the average consumer to take a transactional decision they would not otherwise have taken”.
Several examples are cited in the Act (more than 30 practices which expand on those under the 2008 regulations), including: wrongly claiming to be a signatory to a code of conduct; displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation; and making false claims about the goods or service.
Three key changes will have a major impact on businesses and will benefit consumers significantly:
· Banning fake reviews – this prohibition will be wide-ranging. The Act bans not only the writing and or publishing of fake or misleading reviews, but also penalises failing to take reasonable steps to verify reviews as genuine - or removing fake reviews. Concealing the fact that a consumer review has been incentivised will also be banned.
· Ban on 'drip pricing' ie hidden fees – Adding fees on top of the initial price shown to consumers before they complete the transaction. Businesses must also be more transparent with pricing and providing other material information for consumers.
· New rules on subscription contracts – Businesses will no longer be able to trap a consumer in a subscription by, eg misleading consumers into signing up or making a subscription difficult to cancel. Traders will be required to give consumers key pre-contract information before the contract is entered into.
Reminder notices must also be sent to consumers ahead of automatic renewals and associated renewals payments, in accordance with detailed requirements set out in the legislation – and renewals cooling off periods must be provided. These changes to subscription contracts are expected to come into force in Spring 2026
What should we do?
Now is a good time to review your business practices and identify elements that could potentially fall foul of the DMCC. It would be prudent to make appropriate changes now to ensure compliance, rather than waiting until implementation.
While making the necessary changes to any subscription procedures is likely to be relatively straightforward, dealing with fake reviews as required under the new rules could prove more time consuming. Do you have the resources in place to comply with the new rules?
Crucially, the CMA’s existing enforcement powers will be stepped up considerably under the DMCC. It will, for example, be able to impose substantial financial penalties for breaches of the rules. The CMA has already issued draft guidance, Getting ready for the consumer protection changes in the Digital Markets, Competition and Consumers Act 2024 (focusing on its new enforcement powers). Further draft guidance on the new consumer protection rules is expected later this year.
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