Navigating recent changes to UK consumer protection laws: Part 2

This three-part series on UK consumer protection laws explores the far-reaching reforms introduced by the Digital Markets, Competition and Consumers Act 2024.

In Part 1, we set out the overview of the recent developments under the DMCCA. In this Part 2, we explore in detail the changes to unfair commercial practices and subscription contracts under the DMCCA.

Unfair commercial practices

Designed to ensure consumer rights are fit for the digital economy, part 4 of the DMCCA repeals and restates, with some amendments, the Consumer Protection from Unfair Trading Regulations 2008 (CPUT). This includes the so-called “blacklist” of commercial practices that are automatically considered unfair in all circumstances, now set out in schedule 20 of the DMCCA.

While the majority of these provisions are the same as in CPUT, there have been several key changes including the following:

• Invitations to purchase: as under CPUT, the absence of “material information” from invitations to purchase, such as adverts or product listings, constitutes an unfair commercial practice under the DMCCA. Material information includes, amongst others, the product’s main characteristics, the trader’s identity and contact details, the total price plus additional freight, delivery or postal charges, and cancellation or withdrawal rights. What’s new? There is no longer a requirement to prove that the omission might cause consumers to take a different decision.
• Drip pricing: the existing ban on excluding material information from invitations to purchase has also been expanded to combat the practice of “drip pricing” where a lower price for a product is displayed before additional fees are added during the purchase process. What’s new? The DMCCA requires that invitations to purchase state the final, total price of the product, including any fixed or variable fees, taxes and charges and how they are calculated.
• Reviews: under the DMCCA, several new practices related to reviews are now prohibited. New prohibited practices:

1. Fake reviews: submitting or commissioning fake reviews of products or services or consumer reviews that conceal the fact that the reviewers have been incentivised.

2. Misleading use of reviews: publishing consumer reviews or review information in a misleading way, for example by failing to publish or by removing negative consumer reviews, by giving increased visibility to positive consumer reviews over negative ones, or excluding important context surrounding a review (including if it has been commissioned). The DMCCA Explanatory Notes (DMCCA ENs) indicate that this ban would capture “catalogue abuse”, where a review of one product is swapped to another product.

3. Preventing fake and misleading reviews: allowing for the publication of consumer reviews without taking “reasonable and proportionate steps” to prevent the publication of fake or misleading reviews or reviews that conceal that the reviewers have been incentivised. According to the DMCCA ENs, what is reasonable and proportionate will depend on the circumstances and what is necessary to prevent publication of such information, including an assessment of the risk of publication. Reasonable verification of reviews means that traders must establish internal processes to verify reviews prior to their publication and perform regular audits of reviews.

4. Offering services in connection with banned practices: the DMCCA ENs clarify that traders are prohibited from offering services to submit or commission fake consumer reviews (or conceal review incentives) or to publish consumer reviews or review information in misleading ways (e.g. paid-review farms). The ban also includes services that facilitate these practices, such as offering a service to increase the chances of a fake consumer review being published on a website due to the service provider’s ability to bypass the website’s detection measures.

The CMA is expected to publish formal guidance on the application of the new bans on fake reviews and, in particular, guidance on the “reasonable and proportionate steps” to prevent publication of fake or misleading reviews.

• Vulnerable consumers: the concept of vulnerability has been expanded as has the non-exhaustive list of factors that could determine whether a consumer is vulnerable. What’s new? The concept now includes the consumer’s “circumstances,” in addition to their age, physical or mental health, or credulity. The DMCCA ENs have added going through a divorce, mourning or losing a job as examples of “circumstances” that would make a consumer vulnerable.
• Professional diligence test: the DMCCA reformulates CPUT’s version of the professional diligence test to specify that a commercial practice is unfair if, as a result of it contravening the requirements of professional diligence, it is likely to cause an average consumer to take a transactional decision that it would not otherwise have taken. What’s new? A commercial practice will now contravene the requirements of professional diligence where it falls below the standard of skill and care that a trader may reasonably be expected to exercise according to “honest market practice” or the “general principle of good faith” in the trader’s field of activity. The DMCCA ENs state that widespread poor practice in a specific industry or sector does not equate to an acceptable objective standard (i.e., honest market practice). This provision operates as a safety net in the DMCCA, enabling enforcers to take action against unfair commercial practices that do not fall into the other categories of automatically banned practices. Examples of “professional diligence” given by respondents to a DMCCA government consultation include a business conducting due diligence on sellers using its online platform and implementing detection systems for fraud or scam content.

Following the detailed changes to unfair commercial practices, the CMA has launched a consultation on draft guidance on the protection from unfair trading provisions in the DMCCA. This guidance is intended to assisting traders by offering clarity on the application of the new rules. Stakeholders are encouraged to submit their feedback by 5pm on 22 January 2025.

Subscription contracts

Part 4 of the DMCCA establishes a new standalone regime for subscription contracts involving consumers. These new rules aim to regulate “subscription traps”, where a business lures consumers into a subscription by offering a free trial or discounted fee and then automatically renews the subscription or otherwise makes it difficult for the consumer to cancel it (such as requiring consumers to call a helpline to cancel and undergo differing degrees of pressure selling tactics before they can cancel the subscription).

Under the DMCCA, businesses will have to adhere to several new requirements related to subscription contracts, including:

• Pre-contract information: providing consumers with certain pre-contract information about the subscription, categorised into “key” information and “full” information. Key information, which must be given separately from the “full” pre-contract information, includes, for example, the relevant fee after any free or discounted trial period ends, the frequency of payments and details of how the consumer can terminate the contract. These new rules will replace the pre-contract information requirements under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCRs) for subscription contracts.
• Reminders: sending consumers reminders about renewal payments at specified intervals.
• “Cooling off period”: giving consumers a 14-day “cooling off” period in which they can cancel their subscription and receive a refund following: (i) entry into the contract; (ii) the end of a free or discounted trial period; or (iii) any renewal that commits the consumer to a further period of 12 months or more.
• Termination rights: ensuring consumers can exit the subscription contract in a straightforward way and without having to take any unnecessary steps. Where the subscription contract was entered into online, the consumer must also be able to terminate online and the instructions must be displayed online and easily accessible.
• Cancellation notice: sending consumers an “end of contract notice” on termination, with any overpayments repaid to the consumer.

Importantly, compliance with these new rules – which are not due to take effect before April 2026 – could require businesses to make substantial changes to their subscription terms and conditions and operational processes (such as sending reminder notifications to consumers).