Parliament passes watershed consumer legislation following surprise election news 

As part of the surprise election announcement and parliamentary ‘wash up’ process, on 23 May 2024, the UK Parliament passed the Digital Markets, Competition and Consumer Bill (DMCC), likely to be the most significant shake-up of consumer law in decades. The DMCC should radically shift businesses’ approach to consumer law compliance, historically influenced by the low risk of being penalised given the infrequency of enforcement action.  

Under the new regime, the Competition and Markets Authority (CMA) will be able to directly enforce an extensive suite of rules, including existing prohibitions under the (to be revoked) Consumer Protection from Unfair Trading Regulations 2008 (CPUT) on unfair contract terms in consumer contracts and unfair commercial practices. These include misleading consumers, acting aggressively, or contravening the requirements of professional diligence. The DMCC also introduces new rules about subscription contracts, fake reviews, and drip pricing.  

Subscription Contracts 

Subscription contracts, which automatically renew for an indefinite or fixed period, will be subject to rules requiring businesses to give consumers specified pre-contract information, issue reminders before free/discounted trials end, and allow customers to exit a subscription contract easily. 

Fake reviews 

Schedule 19 of the DMCC includes a list of unfair, banned practices. Many replicate Schedule 1 of CPUT, but practices surrounding fake reviews have been added. These include submitting or commissioning fake consumer reviews, publishing consumer reviews that conceal that they have been incentivised, publishing consumer reviews misleadingly, and not taking reasonable and proportionate steps to prevent the publication or removal of such reviews. 

Drip Pricing 

DMCC will ban hidden, unavoidable fees (drip pricing), where consumers are shown an initial price for a product or service, but additional costs are revealed during checkout. Businesses must show mandatory fees (e.g., additional booking fees) in the headline price.  

Enforcement Risk  

DMCC will give the CMA power to determine whether consumer laws have been breached and impose penalties of up to 10% of an offender’s global turnover, mirroring the CMA’s approach to competition law.  The CMA can fine businesses up to 5% of annual global turnover for failing to comply with an undertaking or direction. DMCC will allow the CMA to enforce with greater speed and ease, in contrast to the existing approach. This will, most likely, significantly increase the frequency of enforcement and the size of penalties. 

Actions for businesses 

With increased enforcement risk, consumer-facing businesses should carry out a full compliance audit.  In relation to the new rules, businesses will need to ensure that there are no ‘traps’ in subscription contracts, that headline prices contain all additional costs and that consumer reviews represent a fair and accurate representation of the business.  

For help on what this means for your business, speak to our retail experts.