Latest UK consumer law developments

In January 2024, the Department for Business and Trade published its response to a 2023 consultation entitled “Smarter Regulation: Improving consumer price transparency and product information for consumers” (“Consultation”). The Government consulted with the ultimate aim of improving the quality and accessibility of information provided to consumers and enabling them to make informed decisions about products they purchase. For more information about the Consultation, please refer to our previous Law-Now: UK Government announces Consultation on consumer protection reforms.

Soon after the Consultation response, on 7 February 2024, an amended version of the Digital Markets, Competition and Consumers (“DMCC”) Bill was published.

In this article, we summarise the Government’s response to the Consultation and the latest status of the DMCC Bill.

How did the Government respond to the Consultation?

1. Display of pricing information

Under the Price Marking Order 2004 (“PMO”), traders must display the unit prices (e.g., the price per kilo or litre) of goods sold to consumers to make it easier for them to compare product prices.

The Government’s response acknowledges ongoing compliance issues in relation to unit pricing. These issues have been on the Competition and Markets Authority’s (“CMA”) radar since at least 2015, and the CMA also published a compliance review in relation to unit pricing in 2023.

Most of the Consultation responses supported the Government’s proposal to amend the PMO, and the Government now intends to amend the PMO and related guidance, including to:

• ensure the use of consistent measures for unit pricing, and explore whether there should be any exceptions;
• set out clearer legibility criteria for instore price labels;
• define what types of promotional or loyalty scheme offers should be subject to unit pricing obligations.

The Government plans to engage with stakeholders to develop the proposed amendments to the PMO, and has said it will provide more information in spring 2024. It is possible that a further consultation in relation to the specific PMO amendments will take place, but this is not clear from the Government’s response.

 2. Hidden fees and drip pricing

Drip pricing is when additional fees are revealed during the course of buying a product. Some dripped fees are optional (e.g., airline seat reservations) whilst others are mandatory (e.g., booking fees).

The Government consulted on whether intervention is required to reduce consumer harm associated with drip pricing. In particular, it looked at optional fees that consumers would understand to be mandatory because of the ways in which they are displayed (e.g., because of pre-checked boxes or because the fees are not optional for many consumers).

The Government now plans to reduce the prevalence of dripped fees and increase price transparency by introducing new requirements in the DMCC Bill to prohibit traders from displaying a headline price that does not:

• include all fixed mandatory fees; or
• disclose the existence and calculation of variable mandatory fees (such as delivery fees).

In relation to optional fees, the Government has no current plans to legislate. However, it will further consider whether it can regulate such fees, and whether doing so is best achieved through legislation and/or guidance.

 3. Fake and misleading reviews

In the Consultation, the Government asked for feedback on whether it should introduce new unfair commercial practices in relation to fake and misleading reviews. The majority of respondents agreed with the wording proposed by the Government for these practices, which will now be added to the banned list in Schedule 19 of the DMCC Bill (although it is currently unclear whether that will be achieved by amending the draft DMCC Bill, or by way of secondary legislation). The new unfair practices are:

• 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;
• misrepresenting reviews, or publishing or providing access to reviews of products and/or traders without taking reasonable and proportionate steps to:
  • remove and prevent consumers from encountering fake reviews; and/or
  • 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.

The banned practices will incur civil liability, rather than criminal liability (which applies to most of the unfair commercial practices listed in Schedule 19, and the existing list in the Consumer Protection from Unfair Trading Regulations 2008, “CPUTs”).

The Government will also work with the CMA to publish guidance on the “reasonable and proportionate” steps that traders will be expected to take in relation to fake reviews. Examples given in the Government’s response include traders having proactive detection processes in place to identify suspicious reviews, and reporting mechanisms to allow people to report the same. The CMA will consult on this guidance before it is finalised.

 4. Online platforms

In the Consultation, the Government raised questions about online platforms’ professional diligence obligations (which currently arise under the CPUTs, and in the future under the DMCC Bill), and how best practice should be communicated.

Many respondents to the Consultation identified specific areas where they considered that online platforms have professional diligence obligations, including:

• conducting due diligence in relation to third party sellers, to ensure that only legally compliant sellers can sell to users and that users can easily obtain redress if needed;
• designing interfaces so that a seller’s status (as a trader or consumer) and location are clearly visible to consumers;
• providing reporting mechanisms for flagging illegal content, swiftly removing that content, and imposing appropriate sanctions;
• implementing monitoring and detection systems for detectable fraud or scam content; and
• designing systems and interfaces in good faith (i.e. avoiding “dark patterns”, which is an area where the CMA is taking enforcement action right now).

In response, the Government has said that it will work with stakeholders, including platforms, to define the scope and content of additional guidance relating to online platforms’ professional diligence obligations. The Government also reported that several platforms have already agreed to work with the Government to share best practice and enhance consumer protection, but no further detail has been provided about this.

 5. Online interface orders (“OIOs”)

OIOs are an enforcement tool that the CMA can apply to court for in order to take certain actions against online interfaces such as websites. For example, OIOs could be used to remove or modify online content or disable a website altogether. Conditions apply to their use, including that there has been a breach of consumer law. Interim OIOs are also possible. So far, these powers have been useful in principle only, as there is no evidence that they have actually been used by the CMA since their introduction in 2020.

Nevertheless, the Government consulted on whether the OIO powers should be extended to additional consumer law enforcers under the DMCC Bill. Based on the responses, the Government now plans to allow all public designated enforcers (including Trading Standards and the Information Commissioner) to apply for OIOs under the same conditions as the CMA. According to the Government, this will help to create a safer online experience for consumers, by deterring and tackling unlawful online practices. We may therefore start to see the OIO powers actually being used in practice, and this change aligns with the general spirit of the DMCC Bill which points towards a greater enforcement risk for businesses that do not comply with UK consumer laws. However, the OIO powers will not be extended to private designated enforcers (which currently comprises only the consumer association Which?).

 6. Banned practices and private redress

Currently, consumers have rights of redress under the CPUTs in relation to certain types of unfair commercial practices only (for example, misleading actions, but not misleading omissions). In the Consultation, the Government sought views on whether these rights should be extended so that they apply to additional unfair commercial practices (such as misleading omissions). However, no change is currently envisaged, but the Government will continue to consider the evidence for extending private redress rights. If necessary, such extension would be achieved in reliance on delegated powers under the DMCC Bill.

The Consultation also sought views on whether the list of unfair commercial practices (as listed at Schedule 1 of the CPUTs and Schedule 19 of the DMCC Bill) should be amended or supplemented with new practices. The Government’s response indicates that there is no plan to do so currently (except in relation to drip pricing and fake reviews – see above), but plans to keep the list under review and add to it if necessary.

Businesses may be interested to note that despite calls from the CMA, Which? and Consumer Scotland to add “greenwashing” to the list of banned practices, the Government declined to do this, on the basis that they think the law already prohibits misleading environmental claims. Instead, the Government will work closely with the CMA to ensure that traders understand the law, and provide guidance on the reasonable and proportionate steps that traders should take to ensure that environmental claims are not misleading. This is an area where UK law will soon be out of kilter with EU law, given that in the future, EU law will include specific rules about green claims (see our update on these EU law developments here).

Latest status of the DMCC Bill

As of 21 February 2024, the DMCC Bill is going through the House of Lords, with a date for the Report Stage and third reading due to be scheduled. CMS has been monitoring the various amendments which have been proposed to the DMCC Bill so far, although not many of these have been included in the amended version of the DMCC Bill which was published on 7 February 2024. No significant changes were made to the consumer law provisions of the DMCC Bill in the latest version.

We previously reported about a proposed amendment, which would have radically expanded the UK’s class action regime if adopted (see our article here), but it has not been adopted so far. Another amendment was proposed that would have allowed certain further limited types of class actions to be pursued in the Competition Appeal Tribunal. The expansion proposed was relevant to very large digital companies with “Strategic Market Status” but only related to claims following intervention by the CMA, i.e., it would have enabled “follow on claims”.  This amendment has ultimately not progressed to a vote in the House of Lords.

Other amendments which have not been adopted include proposals in relation to consumers’ repair rights and the use of AI, and the addition of new unfair commercial practices (for example, relating to the marketing of dangerous and counterfeit goods, greenwashing and misleading online design).

In relation to the subscription contract provisions in the DMCC Bill, it seems that the Government intends to consult later this year on the applicable return and refund rules (which will be set out in secondary legislation). Many businesses (e.g., digital streaming platforms) have expressed concern that consumers will be able to exploit the cooling-off periods under the DMCC Bill, for example by claiming a refund after having accessed digital content which is available as part of a subscription. One proposal that will be included in the consultation will be the requirement for businesses to seek an explicit consumer waiver of refund rights in relation to digital content.

We will provide a separate update on the digital markets and competition law provisions of the DMCC Bill in due course.

Next steps and CMS comment

The Government’s response to the Consultation indicates that businesses selling to UK consumers will have to consider additional compliance requirements in the future, under legislation and/or guidance, in relation to pricing and fake reviews. Platforms operating in the UK should also monitor for draft guidance about their professional diligence obligations and assess what changes are needed once the guidance is finalised.

We continue to monitor the progress of the DMCC Bill, which as explained in our previous update here, will introduce new obligations in relation to subscription contracts and significantly increase the consumer law compliance risk in the UK. The DMCC Bill appears to have broad cross-party support within Parliament, but there are still a few areas where businesses would welcome some amendments or further provisions to ensure the DMCC Bill is workable in practice. At this stage it is difficult to anticipate when the DMCC Bill will become law. The Bill itself refers to the Digital Markets, Competition and Consumers Bill 2024, which suggests an ambition of it being law at some point this year. However, the Government has indicated that the provisions relating to subscription contracts will commence no earlier than October 2025.

If you would like to discuss the DMCC Bill, the Government’s response to the Consultation, or another consumer law issue, please do not hesitate to contact one of our specialists.