The Digital Markets, Competition and Consumers Act 2024: Article 3 – automatically unfair commercial practices

Including, reformed professional diligence offence, invitations to purchase and banned practices (including fake reviews)

Introduction

In our two previous articles, we provided an overview of the changes in consumer law arising from The Digital Markets, Competition and Consumers Act 2024 (DMCCA/the Act), the scope of the Act, looking at what misleading actions and omissions are as well as aggressive practices.

In this article, we will be focusing on two major changes under the Act. Firstly, it will now be easier for the Competition Market Authority (CMA) to demonstrate that a trader did not exercise appropriate care, and secondly, the failure to provide material information in relation to an invitation to purchase; both of which may be offences under the Act. There are also some further changes to practices which are specifically banned.

Professional Diligence

Under the DMCCA, it will be easier to prove that a trader did not exercise appropriate care – this is a regular area of scrutiny in consumer law, it was the basis on which the CMA required fashion retailers to implement supplier due diligence measures in the undertakings that followed its misleading environmental claims investigation in the retail fashion sector. From April 2025, these type of offences will be much easier to prove and traders will be at risk of significant fines (up to 10% of global turnover) from the CMA.

From April 2025, a trader may commit an offence where it engages in commercial practice which:

• falls short of the standard of skill and care reasonably expected, and
• is likely to cause the average consumer to take a different transactional decision.

Traders are much more likely to fall foul of this given that:

• the standard of skill and care is no longer defined as ‘special’ skill and care. Professional diligence refers to the standard of skill and care which a trader may reasonably be expected to exercise in line with honest market practice and good faith. It is therefore an objective standard in relation to skill and care; and
• it is no longer a requirement to show the behaviour materially distorts or is likely to materially distort the economic behaviour of the average consumer.

Key areas of risk may include:

1. Online platforms carrying out insufficient due diligence on:
   • third party seller’s identities
   • third party sellers’ credentials
   • the safety/quality of third-party sellers’ items
   • the veracity of claims (e.g. quality, green claims) made by third parties’ products

It is clear that across product, food and consumer law, through new legislation and stated objectives, that there is an ever-increasing focus on the accountability of online marketplaces.

2. The provision of a poor complaints procedures and inadequate management of customer service which does not allow for consumers to receive advice and redress in a timely and effective manner; and

3. Poor workmanship and work not carried out with the skill and care one would expect from a specialist contractor.

Invitation to purchase

One of the major changes under the DMCCA is that failure to provide material information to consumers will become a strict liability offence (e.g. providing a headline price only and not other fees / potential fees).

The omission of material information from an invitation to purchase is now unfair regardless of whether it is likely to impact a consumer’s transactional decision.  The offence is now effectively strict liability in nature.

An ‘invitation to purchase’ (ITP) occurs where it ‘purports to enable’ the consumer ‘to decide whether to purchase the product or take another transactional decision in relation to the product.’ The key factor determining whether a practice is an ITP is price, if a behaviour does not reference ‘price’, it will not be an ITP.

Where price is included, this would include a broad category of behaviour:

• a price on a product in a shop;
• an item listing on the website of an online marketplace;
• a menu (including a physical menu card or a digital menu that can be accessed through the scanning of a QR code) in a restaurant;
• an advertisement of a product on TV or in a social media post;
• a text message promotion;
• an advertisement in a newspaper displaying a car with a ‘drive away from’ price;
• a banner that appears within a mobile application advertising an ad-free version of the app or in-app purchases.

An ITP does not need to include an actual opportunity to enable the consumer to purchase the product. For example, a poster advertising a broadband package at or starting from a particular price will still be an ITP even if the poster does not specify the mechanism for order.

In all ITPs, a trader must:

• provide the total price of the product (including any fees, taxes, charges or other payments which will be necessarily incurred).
• provide all mandatory charges which include:
• administration fees such as booking or processing fees, quality assurance charges, platform charges, routine cleaning fees and venue restoration fees;
• delivery charges;
• mandatory cover or service charges at a restaurant;
• local taxes and other fees that become payable on arrival at hotels or on departure at an airport;
• pick-up fees or mandatory insurance cover required for renting a car;
• joining fees that new members pay on top of their first regular payment when joining gyms or getting other subscriptions.

Where the nature of the product means that there are mandatory charges that cannot be reasonably calculated in advance, information about how these charges will be calculated must be provided to the consumer and allow the consumer to calculate the total price of the product:

• provide all pricing information must be set out with equal prominence;
• provide the details about the including:
  • the identity of any other person (not just a trader) the trader is acting for;
  • the address for service (but not necessarily geographical address) of the trader and any other person the trader is acting for;
  • the email address (if they have one) of the trader and any other person the trader is acting for;
• specify where arrangements for payment, delivery, performance or complaints handling are different from what the trader has published.

An invitation to purchase must include any information which the trader is required under other consumer law. This would include:

• displaying information on pre-packed food (such as ingredients, allergens and weight etc) (Food Information to Consumers Regulation 1169/2011);
• displaying information on sports/concern tickets (Consumer Rights Act 2015), displaying the 14-day cancellation right for distance/online consumer contracts (The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013); and
• other sector-specific legislation such as The Package Travel and Linked Travel Arrangements Regulations 2018.

Banned practices – main changes

The DMCCA also introduces some changes to specific, listed banned practices. Such practices are prohibited regardless of the impact on consumers’ transactional decisions. This includes situations where a trader omits material information from an invitation to purchase.

Most of the changes to the banned practices are relatively minor but may be seen as an indication of the CMA’s likely priority for investigation and enforcement from April 2025.

Scarcity and urgency claims

One of the changes relates to scarcity claims. From April 2025, it is prohibited to falsely state that a product will only be available for a limited time (previously “very limited”), or that it will only be available on particular terms for a limited time (previously “very limited”), in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice. Although if a trader truthfully states a product will only be available for a limited time, this is permitted.

This is clearly designed to help the CMA challenge misleading scarcity or urgency claims which has been a feature in its recent action against large bed manufacturers. This reflects wider concerns about online choice architecture and dark patterns.

Fake reviews

A further change relates to fake reviews. Under the DMCCA it is now specifically prohibited to submit or commission fake reviews or concealed incentivised reviews.

This prohibition includes e.g. stating in a review that a product or trader met expectation when it did not, and submitting a review about a product without disclosure that the reviewer has a commercial relationship with the trader, where they e.g. receive products for free.

It also restricts offering an existing customer a free or discounted product in exchange for a five-star review (which is not reflective of their actual experience) thereby incentivising them to create a misleading review.

Furthermore, traders are prevented from:

• publishing consumer reviews in a misleading way. This would include:
  • presenting reviews of a different product as relating to the product a consumer is considering (review hijacking, review merging or catalogue abuse);
  • suppressing negative reviews, including by editing, withholding or removing negative reviews;
  • cherry picking positive reviews for publication;
  • highlighting certain reviews over others because they are especially positive; and
  • missing, obscure or hidden disclosure of the fact that reviews have been incentivised.
• offering services to procure banned reviews and information for traders and offering services to traders for facilitating of the procurement of banned reviews and information. This would include:
  • running an online platform while being aware of and allowing services to be sold by traders using the platform to offer to post or otherwise arrange for fake reviews or concealed incentivised to be posted on other sites; and
  • offering a search engine optimisation service that promises to improve a trader’s rating, when one of the means that will be used is generating fake reviews.

This revised banned practice imposes a positive obligation on anyone who publishes or provides access to consumer reviews or consumer review information to take reasonable and proportionate steps to prevent and remove from publication banned reviews and false or misleading consumer review information. This covers retailer websites, specialist review sites, online marketplaces, search services, social media and trader recommendation platforms.

In order to meet this obligation, publishers should:

• Publish and implement a policy banning fake reviews and setting out the approach to incentivised reviews and consumer review information.
• Carry out regular risk assessments and identify appropriate measures to address the risks of fake reviews.  These measures should include:
  • detection,
  • investigation and
  • responses to such reviews appearing, including penalties, e.g.:
    • removing reviews;
    • suspending user accounts;
    • providing warnings on those who found to have benefitted from banned reviews-related activities).
• Review and monitor the effectiveness of the policies.

The next and last article in our mini-series about the DMCCA will focus on how the Act will tackle retailers’ green claims.

If you have any questions about how the DMCCA applies to you, please contact a member of our Regulatory Team today.