DMCC Act seeks to make consumer protection fit for the digital age

The UK Digital Markets, Competition and Consumers Act 2024 (DMCC Act) received Royal Assent on 24 May 2024, bringing in long-anticipated reforms to UK competition and consumer protection laws which are aimed at forging a UK regulatory framework fit for the digital age. 

The DMCC Act’s new digital markets regime has received much attention over recent months. But what have received less attention are the separate consumer protection reforms within the DMCC Act. These changes modernise the current protections to reflect, in particular, the boom in online shopping and significant shifts in consumer purchasing behaviour since the existing UK consumer legislation was enacted, and specifically address certain unfair practices that have become more prevalent in recent years.

Fake reviews

Reviews can play a central role in consumers’ purchasing decisions, especially for online shopping, and therefore it can be tempting for businesses to adopt fake positive reviews. To address their growing prevalence, new practices have been added to the existing banned practices, including a ban on publishing consumer reviews in a misleading way e.g. giving greater prominence to positive reviews over negative reviews or swapping reviews of one product to another.

Subscription contracts

Subscription services have increased in availability and popularity across sectors. Whilst many of those services are welcome to many of us, there has also been an increase in so-called “subscription traps”, that is subscription models that entice consumers to sign up using free or low-cost trial periods, and then either don’t alert them to the end of the trial period, auto-renew, or otherwise make it difficult for the consumer to cancel their subscription. The DMCC Act introduces significant reforms to deal with this, including by requiring businesses operating a subscription model to provide simple and clear methods for terminating the subscription, including online if the subscription was taken out that way, and notifying consumers of their ability to do so.

Drip pricing

Drip pricing occurs when a consumer is shown an initial price for a product, but additional fees are added as they proceed with the transaction. To address this, new rules will prohibit presenting a headline price which doesn’t incorporate any fixed mandatory fees and/or which doesn’t disclose how variable mandatory fees will be calculated.

The CMA’s new consumer law enforcement powers

The CMA is being given new, direct, consumer law enforcement powers, including the power to directly impose fines for UK consumer law breaches of up to the higher of 10% of global turnover or £300,000.

The magnitude of the fines that will be issued by the CMA in practice remains to be seen, but the introduction of the potentially large fines will likely be a significant deterrent for non-compliance and require engagement by senior stakeholders on potential mitigations.

Timing

The provisions on fake reviews and drip pricing, together with the CMA’s new powers, are expected to come into force in April 2025.  The reforms relating to subscription contracts will come in at a later date, which the Government has said will not be before Spring 2026.

Whilst the CMA’s new powers will not have retroactive effect, any continuing infringement occurring when the DMCC Act is in force may well be investigated under those powers. It is therefore crucial for companies to be proactive and take stock of their preparedness at an early stage, with a view to mitigating the risk of potential issues in relation to their customer journey and/or business models arising in the future.

We delve into more detail on the consumer law changes and provide practical guidance on how to prepare for these changes in our latest briefing, which was first published in the November 2024 edition of the Privacy Laws & Business UK report.