Commercial - Consumer Protection: CMA emphasises heightened enforcement powers
Consumers are the key beneficiaries of a renewed regulatory drive to tighten up unfair business practices. In addition to the framework set out in the Digital Markets, Competition and Consumers Act (DMCC) Act 2024, the competition regulator has issued updated guidance on unfair consumer contract terms and notices (under the Consumer Rights Act 2015). The 2015 Act governs the rights of consumers when purchasing goods, digital content and services.
Notably, the DMCC gives the Competition and Markets Authority (CMA) new powers of enforcement in respect of a “relevant infringement” (an infringement harming the collective interests of consumers and breaches an enactment, obligation or rule under Sch 15 DMCCA). This means the CMA can enforce directly breaches of consumer law by commercial organisations, without have to do it via the courts.
Its powers are already beginning to bite. In April this year, the CMA issued a final infringement notice to Automobile Association Developments Ltd; and imposed a £4.2m penalty for unlawful drip pricing practices on its online lesson booking platforms.
In simple terms, businesses are required under the 2015 Act to ensure that terms and conditions in their business-to-consumer contracts and notices are fair and transparent.
The new guidance sets out the CMA’s understanding of the provisions relating to unfair contract terms (Part 2 of the Act), noting that both the enforcement context and the relevant case law have developed since the guidance was last updated.
Unsurprisingly, the guidance specifically reflects the CMA’s new enforcement powers, though it also simplifies and updates the original guidance. The ‘refresh’ follows a 2024 consultation on a draft revision of the guidance.
It aims to make it easier for businesses to understand unfair contract terms law and to help them to comply. The new guidance:
· Provides clearer navigation, along with a useful flowchart demonstrating how the Act works
· Separates the legal principles from practical considerations in key areas
· Includes a non-exhaustive range of examples
· Cites relevant judicial authorities
· Clarifies several issues, including how the guidance interacts with the Act and cross-border matters
Alongside the revised guidance, the CMA has also published a short guide to unfair contract terms law for businesses, which many may find useful.
Enforcement
Anyone wondering how the CMA will prioritise and execute its enforcement powers will be reassured that the updated guidance provides clarification (referring to its Consumer protection: enforcement guidance).
Where a relevant infringement is identified CMA can open an investigation and take further action. This could involve a fine
Consumer-facing businesses are urged to read the guidance and review any risk areas and processes that could lead to a potential breach of the 2015 Act and potential CMA enforcement action.
The CMA guidance can be found here
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