It’s not fair: The impact of the CMA’s draft DMCC Act guidance on the online customer journey

On 6 April the majority of the unfair commercial practices (“UCP”) provisions in the Digital Markets, Competition and Consumers Act 2024 (the “DMCC Act”) are coming into force. 

We previously reflected on the DMCC Act’s changes to the UK consumer protection regime and, since then, the CMA has published draft guidance illustrating how the UCP provisions apply in practice, with the final version expected sometime in April. 

With time short before the April implementation date, businesses need to ensure their customer journey and related policies and procedures are in line with the CMA’s expectations on drip pricing and customer reviews. 

To avoid drip pricing, clearly display total price

Drip pricing occurs when a customer is shown an initial price for a product or service, but additional fees are added as they proceed through the customer journey. This results in the gradual reveal of mandatory pricing information, preventing the customer from gaining a full understanding of the price upfront.

The new rules 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. 

What does this mean in practice for the customer journey? 

According to the draft guidance, each time a trader’s webpage displays an invitation to purchase, it must clearly display the total price including any mandatory fees, taxes and additional charges, such as:

• delivery fees, which must be included in the headline price where a collection option is either not available or not viable in practice; 
• administration fees, such as booking fees and platform charges;
• ‘new member’ fees for joining a club, gym or other subscription; and
• mandatory cover / service charges, e.g. at a restaurant. 

Where mandatory charges cannot be calculated in advance (e.g. when goods are sold by weight), the trader must display clear information on how the total price will be calculated with as much prominence as the headline price. Where it is genuinely not practicable to set this out within the invitation to purchase containing the headline price, it should be provided in as close proximity as possible, e.g. “no more than one click away”.

The price of goods or services offered in addition to a product which are genuinely optional may be listed separately to the headline price, provided that it is clear that they are optional add-ons and the customer can easily avoid purchasing them. 

Obligation to take steps to prevent and remove fake or misleading reviews

The DMCC Act also introduces a number of new prohibitions relating to fake, misleading and concealed incentivised reviews, as well as a positive obligation on those who publish consumer reviews to take “reasonable and proportionate” steps to prevent and remove from publication such banned reviews.

The draft guidance lists certain general (as well as more specific) steps which will likely need to be taken to comply. For example, organisations should:

• prominently publish and implement a clear policy banning fake and misleading reviews and setting out its approach to incentivised reviews (e.g. clearly setting out that they are banned or requiring that, where permitted, it is made clear to the customer that they are incentivised);
• regularly assess the risk of consumers encountering fake and misleading reviews on their platform; 
• take proactive steps to address the risks identified, including putting in place systems, processes and policies to detect and investigate fake and misleading reviews and the actions to be taken in response (e.g. revoking user privileges); and
• keep sufficient records of all review submissions and actions taken for monitoring and escalation purposes.

Prevention and removal practices should be kept under regular review, taking steps to adjust procedures when inadequacies are identified.  This more rigorous approach chimes with recent undertakings that the CMA has obtained from Google to tackle fake reviews. While these were given under the current law (rather than the DMCC Act), they are likely to set an example for businesses going forward. 

Final guidance expected in April

The draft guidance brings welcome clarity on the scope of those new provisions and, in particular, the need for transparency in the customer journey from the perspective of businesses offering goods and services for purchase online. It remains to be seen what changes will be made to the draft guidelines following the outcome of the recent consultation, but Sarah Cardell (Chief Executive of the CMA) has recently indicated that the CMA will be looking to streamline the guidance to make it as clear and accessible as possible before publishing final guidance in April. 

Further guidance on drip pricing

A further consultation will also be run in the summer on those aspects of the drip pricing guidance that have created uncertainty (including fixed term periodic contracts), with a view to finalising that guidance in the autumn.  

Enforcement outlook

Whilst the CMA has published draft guidance on its more robust enforcement powers and its final procedural guidance on the application of the direct consumer enforcement regime, Sarah Cardell has said that the CMA will focus on supporting businesses with compliance, rather than enforcement, during the first 3 months of the new regime. In particular, pending the additional drip pricing guidance being published, the CMA has said that enforcement action will only be taken against drip pricing activity which “clearly breaches” the new rules.