Proposed UK consumer legislation now clamps down on drip pricing and fake reviews

United Kingdom

The draft Digital Markets, Competition and Consumers Bill (the “DMCC Bill”) has recently been amended (on 13 March 2024) following the Report stage in the House of Lords to include measures that prohibit drip pricing and address fake and misleading reviews. The 3rd reading in the House of Lords will take place from 26 March 2024.

 The updated DMCC Bill now includes prohibitions on drip pricing, a practice that involves adding unavoidable hidden fees to the advertised price of a product or service. As the Government notes, drip pricing can mean consumers are ‘baited’ into choosing a product based on a lower price and ultimately paying more once further mandatory fees are added.  The DMCC Bill has been updated by broadening the existing offence of omitting material information from an invitation to purchase, which is a prohibited unfair commercial practice. The updated DMCC Bill now includes (at sections 228(2)(b), (c), (g) and (4)) a requirement that the material information includes:

  • the total price of a product, including any fees, taxes, charges, or other payments that the consumer will necessarily incur if the consumer purchases the product. If, owing to the nature of the product, the whole or part of the total price cannot be calculated in advance, how the price (or that part of it) will be calculated must be disclosed; and
  • any freight, delivery, or postal charges, including (which is the new part in the latest DMCC Bill amendment) any taxes, not included in the total price of the product but which the consumer may choose to incur (or where those additional charges or taxes cannot reasonably be calculated in advance, the fact that they may be payable).

 The latest update to the DMCC Bill also amends the list of banned unfair commercial practices at Schedule 19 to include new prohibitions in relation to fake and misleading reviews. Specifically, these prohibitions include:

  • submitting, or commissioning, a fake review or concealing the fact that another person has been incentivised to submit or write a consumer review (or offering services to traders for doing or facilitating this);
  • publishing consumer reviews, or consumer review information, in a misleading way (or offering services to traders for doing or facilitating this); and
  • publishing consumer reviews, or consumer review information, without taking reasonable and proportionate steps as are necessary to (a) prevent the publication of fake reviews, consumer reviews that conceal the fact that they have been incentivised or consumer review information that is false or misleading; and (b) remove any such reviews or information from publication.

Consumer reviews for these purposes are a review of a product, a trader or any other matter relevant to a transactional decision. It is not clear from the draft DMCC Bill what any other matter relevant to a transactional decision might entail.

These updates to the latest version of the DMCC Bill align with, and were expected given, the UK Government’s response to the consultation on ‘Smarter regulation: Improving consumer price transparency and product information for consumers’, which we reported on in more detail here. They aim to increase transparency in pricing and protect consumers from hidden fees and fake or misleading reviews. These updates should prompt all consumer-facing businesses to conduct a “test journey” through their customer journey and approaches to reviews. The new legislation has not only introduced these and other new rules on businesses, the new legislation also empowers the CMA to levy 10% of global turnover fines on businesses that breach the law.

The latest version of the DMCC Bill includes other amendments from a consumer protection perspective. These include, for example, that traders must enable consumers to cancel their subscription contracts “in a way which is straightforward” (rather than “in a single communication”) and without having to take any steps which are not reasonably necessary to end the subscription contract. There are also new requirements for secondary ticketing facilities. For example, secondary ticketing facilities must not allow traders or businesses to list tickets for resale without them providing proof of purchase or title to the tickets, and resellers must not be permitted to sell more event tickets than they can legally purchase from the primary market. The face value of the resale ticket (and the trader or business’s name and trading address) must also be clearly visible, in full, on the ticket’s first page.

Please get in touch with one of our specialists for more information about this or any other consumer protection law query.