The Digital Markets, Competition and Consumers Act is approved: four things to know about the changes to UK consumer law

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The Digital Markets, Competition and Consumers Act is approved: four things to know about the changes to UK consumer law

On 24 May 2024, the Digital Markets, Competition and Consumers (DMCC) Act became law after receiving Royal Assent. The DMCC seeks to strengthen consumer protection rules and enhance consumer protection rights. It also covers digital markets and competition law but this article focuses on key consumer law changes.

1. New enforcement powers for the Competition and Markets Authority (CMA)

Prior to the DMCC, the CMA had to apply to court for enforcement orders against businesses that breached consumer law. Even if the CMA was successful in court, the court had no power to impose fines, which left the CMA heavily reliant on voluntary undertakings from non-compliant businesses (even though the CMA had no power to fine a company for breach of those undertakings).

With the DMCC, the CMA no longer needs to go through the court system; instead, it can make its own decision as to whether a business has infringed the rules and decide the appropriate sanction. For example, the CMA could:

  • issue an infringement notice;
  • fine businesses up to £300,000 or to 10% of their global annual turnover (whichever is higher) for breaches of consumer law;
  • fine businesses up to £150,000 or 5% of a business’s global annual turnover (whichever is higher) for failing to comply with an undertaking or direction;
  • fine businesses up to £30,000 or 1% of a business’s global annual turnover (whichever is higher) for providing materially false or misleading information to the CMA in the course of an investigation or failing to respond to an information notice;
  • award compensation to consumers.

2. New regime for subscription contracts

The DMCC introduces strict requirements for paid subscription contracts, which automatically renew for an indefinite or fixed period. Changes include a new stand-alone pre and post-contract information and cancellation regime, as follows:

  • Businesses must provide specific and detailed pre-contract information to consumers. Examples include how the consumer can cancel the subscription (including who to contact) or how the business can change its prices.
  • Businesses must issue renewal reminders in respect of (i) the end of a free/lower cost initial trial (ii) at six-month intervals where a relevant renewal payment is due and (iii) prior to a renewal payment where the consumer will not become liable for another payment until after 12 months.
  • Consumers have a non-waivable right to cancel a subscription and obtain a refund during (i) an initial 14 day period and (ii) subsequent 14 day renewal periods after a free/lower initial trial period expires or after a renewal where the consumer will not be liable for another payment until after 12 months. Once the renewal cooling-off period begins, the business will also need to send renewal cooling-off reminder notices.
  • Consumers can cancel a subscription by giving a “clear statement” of their intention to terminate and without having to take any steps which are not reasonably necessary for ending subscription. Examples of unreasonable steps include having to phone the business to cancel where the consumer signed up online.

This regime, which merely brings into law what lots of businesses have already been doing as a matter of best practice, will not come into force until spring 2026 or later to allow businesses to get to grips with their new obligations.

3. New provisions to address drip pricing

The DMCC has migrated certain commercial practices that are considered unfair in all circumstances (the “black list”) from the Unfair Trading Regulations to the DMCC . Notable changes include drip pricing and hidden fees and fake reviews.

Drip pricing is the addition of non-optional fees to the price during the purchase process (for example, a booking fee or a service fee).

To tackle drip pricing, the DMCC requires specific pricing information to be set out in an “invitation to purchase,” which is ultimately an advert mentioning the total price (including all additional fees, taxes and other charges). If certain fees cannot be calculated in advance and mentioned in the price, then the invitation must explain how those additional fees will be calculated. Additionally, consumers no longer have to show that the omission impacted their decision to purchase.

4. New provisions to address fake reviews

The DMCC introduces new prohibited practices relating to fake and misleading reviews such as:

  • submitting / commissioning a fake review or concealing that a review has been incentivised;
  • publishing consumer reviews in a misleading way;
  • publishing consumer reviews without taking reasonable and proportionate steps to prevent publication of fake reviews/information;
  • offering services to businesses for doing or facilitating the practices set out in the bullet points above.

These provisions were added at a later stage, so the government has indicated that they will be fleshed out by guidance, which the CMA is currently consulting on. This will be particularly useful to platforms that disseminate third party seller reviews as they will need to determine what “reasonable and proportionate steps” are.

The DMCC introduces wide-ranging changes to consumer law (some of which have already been adopted by businesses as a matter of best practice) and we await further guidance on certain points. Businesses should familiarise themselves with the provisions of the DMCC to assess if / how the DMCC applies to their business and identify potential areas of non-compliance.

Talk to us

Please get in touch with one of our commercial solicitors if you want to discuss how the DMCC impacts your business and the changes your business needs to make. You can contact our team by calling 0345 872 6666 or by completing our online enquiry form.

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