New Era For UK Consumer Protection

• Law Firm: Global Advertising Lawyers Alliance (GALA)
• Subject Matter: Consumer Protection, Media, Telecoms, IT, Entertainment, Advertising, Marketing & Branding, Dodd-Frank, Consumer Protection Act
• Author: Mr Giles Crown (Lewis Silkin - AdLaw)
• Published date: 15 May 2023

The new Digital Markets, Competition and Consumers Bill will, according to the government, "crack down on rip-offs, protect consumer cash online and boost competition in digital markets".

On the consumer side, there are some significant proposed developments for anyone doing business with UK consumers which will substantially increase the risks, and financial exposure, for traders and advertisers for breach of consumer protection laws.

The Competition and Markets Authority ('CMA') will, for the first time, be able to award compensation to consumers and directly impose financial penalties for breach of consumer protection laws. There are some hefty potential fines of up to 10% of global annual turnover (or 3% for breaching undertakings given to the CMA; or 1% for failing to provide information to the CMA, or concealing or providing false information).

Consumers will still have a right to damages for financial loss, distress or physical inconvenience or discomfort arising from entering into a contract with a trader by reason of a prohibited practice.

There are proposed new laws, following a consultation, against fake reviews, including

• prohibiting the commissioning of someone to write a fake review;
• posting consumer reviews without taking reasonable steps to check they are genuine; and
• offering or advertising to submit, commission or facilitate fake reviews.

'Subscription traps', in which businesses make it difficult to exit a contract, will also be stopped.

Businesses will have to provide clearer information to consumers before they enter a subscription contract; issue a reminder to consumers that a free trial or low-cost introductory offer is coming to an end, and a reminder before a contract auto-renews onto a new term; and ensure consumers can exit a contract in a straightforward, cost-effective and timely way. There is also a new insolvency protection requirement for any business operating a consumer savings scheme.

The Bill 'cuts and pastes' existing consumer protection law from The Consumer Protection from Unfair Trading Regulations 2008 (including the prohibition on misleading acts, omissions and aggressive trade practices), with a very similar list of banned practices (with tweaks in some of the wording, notably a new prohibition on false claims that a product "is able to modify a person's appearance").

Interestingly, the CMA is also given powers to apply for...