• 4 min read

Consumer law changes - The Digital Markets, Competition and Consumers Act (DMCC)

shopping online, buy in online shop by mobile smart phone app

The DMCC received Royal Assent on 24 May 2024 and its provisions are expected to come into force in Autumn 2024 (although transitional provisions may apply to subscription contracts to allow time for businesses to introduce necessary changes to their processes).

In a press release dated 24 May 2024, the Department for Business and Trade and the Department for Science, Innovation and Technology explained the impact of the DMCC as follows:

• “The Act will give the UK’s competition regulator tools to stop technology businesses with strategic power from misusing their position to disadvantage competitors and consumers;

• The law will also create penalties for traders that break consumer protection law and allowing the Competition and Markets Authority to enforce consumer law directly;

• Under the rules, it will be easier for consumers to manage subscriptions by providing clearer pricing, banning fake reviews, and giving consumers greater control over what they are purchasing online.”
In this article, we focus on the DMCC’s key consumer law changes, which the press release explains “paves the way to give consumers rights across the UK, with greater control and clarity over online purchases”.

The DMCC seeks to achieve this by addressing the following issues:

Fake reviews

The DMCC prohibits businesses from submitting or commissioning fake reviews, publishing reviews in misleading ways or concealing that a review has been incentivised. Going forward, businesses will be required to take “reasonable and proportionate steps” (guidance will be published to explain what this entails) to remove and prevent fake reviews. It will also be unlawful to offer or advertise to submit, commission or facilitate a fake review.

Drip pricing and hidden fees

Drip pricing occurs where a consumer is shown an initial price for goods or services which does not accurately reflect the actual price the consumer will need to pay for the goods or services, as further costs are added later. To comply with this aspect of the DMCC businesses must ensure that initial pricing is clear and details all unavoidable fixed charges. For example, if a business is selling tickets online to consumers, it must be upfront about any booking charges or delivery charges, including whether they are payable per transaction or ticket. If there are mandatory charges, but these are variable (e.g. delivery charges depend on the consumer’s delivery location) and so cannot be specified initially, these charges should still be drawn to the consumer’s attention at the outset, with an explanation of how the charges will be calculated later. Discretionary optional fees are currently excluded from these requirements.

Subscription contracts

These are contracts between a UK consumer and a business for the supply of goods, services or digital content which:

  • automatically renew for an indefinite or fixed period, with the consumer automatically incurring liability unless they take a positive action to terminate; and/or
  • involve a free or discounted price period, after which the consumer automatically incurs a higher rate of liability, unless the consumer takes a positive action to terminate.
  • These types of arrangements are common now across a variety of sectors. For example, credit reference agencies may allow a free trial for a month but if the contract is not terminated before the end of the free trial the contract will continue, and charges start to be incurred. The intention of these changes is to make businesses more transparent in relation to these arrangements, making it easier for consumers to terminate these contracts where they do not want them to continue.

The requirements include:

  • Provision of specific, predominately and clearly presented pre-contract information before a consumer enters into a subscription contract, including information about how the business might change its pricing, automatic renewals, how to terminate the subscription contract and how much notice is needed to terminate.
  • Allowing an initial 14-day cooling-off period during which consumers can cancel the subscription contract and receive a full refund. A further 14-day cooling-off period must also be provided after a free or reduced cost period and on any renewal that commits the consumer to a renewal term of a year or more. The Government intends to consult and use secondary legislation to address concerns over refund rules in case a consumer utilises the subscription benefits during the renewal cooling-off period.
  • Providing consumers with reminders that their free or lower cost use period is ending and of their right to terminate before full charges start to be incurred. If the subscription contract does continue, then further reminders are required in relation to subsequent contract renewals – these must be sent at six-month intervals where a ‘relevant renewal payment’ is due, and prior to a renewal payment where the consumer will not become liable for a further payment for 12 months or more. Reminders must be sent in sufficient time to give consumers a reasonable period in order to take action to terminate if they wish.
  • Consumers must be able to easily terminate a subscription contract. Unnecessary steps should not be added to the termination process.
  • The DMCC empowers the Competition and Markets Authority (CMA) to directly investigate suspected infringements and take direct enforcement action (including handing out fines) against businesses that have breached relevant consumer protection legislation without recourse to the courts. The maximum fines for breach of consumer law will be the higher of 10% of the undertaking’s global annual turnover and £300,000. The current court-based regime will also continue, but has been simplified and the courts will be able to impose fines equivalent to the CMA fining powers. The CMA will be publishing guidance and rules to assist businesses in preparing for the new legislative changes.

These are significant changes and businesses which deal with consumers must evaluate their practices and contracts to ensuring they comply with both current consumer protection law and the further reforms within the DMCC. For more detail in relation to the DMCC, you can read the full text here:

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