What's the issue?
With the majority of the Digital Markets, Competition and Consumer (DMCC) Act 2024 now in force and the Competition and Markets Authority (CMA) empowered to take direct enforcement action against unfair commercial practices, it is crucial for businesses to focus on enhancing their governance frameworks to ensure compliance with the new regime.
The CMA’s enforcement guidance suggests that having an effective governance programme can mitigate enforcement action in case of a breach. Therefore, implementing robust policies, processes, training, monitoring, recording and other measures will not only prevent non-compliance but also potentially reduce any penalties imposed if a breach occurs.
Key changes introduced by the DMCC
The DMCC replicates and builds on the Consumer Protection from Unfair Trading Regulations 2008 (CPUT). Key changes include:
- Fake and misleading consumer reviews. The list of practices always considered unfair (and therefore banned) now includes various provisions banning the submission, commissioning and publishing of fake and misleading consumer reviews and consumer review information. The provisions are very broad and cover a wide range of reviews including reviews on a business’s own website (even if just thumbs up/down). Those who publish reviews have certain positive obligations. For more on this, see our article here and our flyer here.
- Drip pricing. The DMCC clarifies the rules on how pricing information is to be displayed, aiming to tackle the practice of drip pricing. The “total price” of a product must now be set out prominently in all invitations to purchase. This includes all payments that the consumer will necessarily incur, with limited exceptions. See our article here and our flyer here.
- Practices always considered unfair. Some of these practices have been amended (see our article here).
- Enforcement. The CMA now has the power to investigate and determine whether there has been a breach of the rules and – where there has - to impose fines (of up to £300,000 or 10% of a trader's annual worldwide turnover, whichever is higher) and/or other sanctions, without the need to go to court. See our article here.
What good governance looks like
- Identify internal stakeholders and practices affected. The first step is to identify and notify relevant internal (and, potentially, external) stakeholders and practices or parts of the business impacted.
- Familiarise yourself with your DMCC obligations. Businesses should build a thorough understanding of the specific obligations introduced by the DMCC. Reviewing the CMA's guidance and what enforcement action it has undertaken in the past few years can help to understand what's required and what practices have caused concern. It's also worth signing up to receive ASA adjudications and news so that you can see how the ASA is interpreting similar provisions under the CAP and BCAP Codes and what areas it's focusing on.
- Review the consumer journey. Businesses should put themselves in the shoes of their customers and walk the end-to-end journey of dealing with them. They should assess the whole shopping process, from the initial advertising/marketing materials to the information and prices displayed, to securing a sale, the terms and conditions, and how people are dealt with through customer service and support systems. Ideally, each element of the consumer journey should be mapped against key obligations in the DMCC so as to identify areas of non-compliance. The focus should not only be on the key changes introduced by the DMCC but the wider DMCC obligations including the practices always considered unfair.
- Make necessary changes to websites, marketing materials, labelling etc to reflect pricing and other obligations. Remember that there will often be more than one invitation to purchase in a consumer's purchasing journey and that each should comply with the new pricing obligations. Other changes might be needed to reflect wider DMCC obligations.
- Undertake risk assessments. The CMA guidance says that all those who publish consumer reviews and/or consumer review information should conduct reasonable and proportionate risk assessments on a regular basis. They should assess the risks of fake consumer reviews, concealed incentivised reviews and consumer review information that is false or misleading appearing on their media and take such further proactive steps as are reasonable and proportionate to address the issues identified. This means that even a business that publishes reviews of its own products (eg star ratings) is required to conduct some sort of risk assessment.
- Draft or review consumer review policy. Those who publish consumer reviews and/or consumer review information will also need to have a published policy which prohibits fake reviews and sets out the business's approach to incentivised reviews and consumer review information. Existing policies will need to be reviewed and amended or a new policy drafted.
- Implement systems to detect, investigate and take action against fake consumer reviews, concealed incentivised reviews and consumer review information. The CMA guidance says that those who publish consumer reviews and/or consumer review information will need to develop and apply such reasonable and proportionate steps as are necessary to address the issues identified in the risk assessment. This includes detecting, investigating and taking action (including sanctions) against fake consumer reviews, concealed incentivised reviews and consumer review information. What is reasonable and proportionate will vary depending on a number of factors including the level and nature of the risks identified and the nature and size of the business. Some might need to consider automated systems for detecting suspect reviews, establishing reporting tools, implementing human review processes, establishing processes to eg delete banned reviews and to label incentivised reviews, and deciding on and implementing appropriate sanctions. Regular assessments of the effectiveness of the prevention and removal process should also be undertaken.
- Consider impact on influencer and affiliate marketing. The new rules on fake and misleading reviews will also impact influencer and affiliate marketing – see our article here. It may be necessary to review existing contracts with influencers and affiliates, as well as to develop clear guidelines for them.
- Focus on key issues. As with all compliance issues, there will be decisions to be taken about what to prioritise and how far to go. The CMA has said that it intends to focus – at least in the short term – on the most egregious breaches. It has also said that it is likely to take action against the sorts of issues it has previously prioritised. We've written about the CMA's likely areas of focus here.
- Review accountability structures. Some may need enhanced structures setting out responsibilities and/or dedicated compliance teams, as well as new methods for escalation. Ensuring transparency so that problems are flagged and dealt with will be key.
- Develop and roll out training. Marketing and product teams and others will need to be trained on the new rules and their obligations.
- Embed compliance by design. Changes to internal policies, processes and technologies may be required, taking a safety by design approach and focusing on key issues. New checks and routing systems might be needed to ensure future compliance.
- Establish monitoring and oversight. Going forwards, ongoing monitoring and oversight will be vital to maintaining DMCC compliance. Internal policies should be updated regularly alongside continuous education both internally and when engaging third parties.
- Watch for updates. Businesses should watch for - and consider inputting into - the second consultation on pricing in summer 2025, and the guidance which should follow in autumn 2025. Though the new rules on subscription contracts have yet to take effect, preparations relating to internal contracting processes should commence ahead of time with appropriate stakeholders identified and training conducted on what's in the DMCC. Although much is to be fleshed out in secondary legislation, there is still scope to plan now. See our article here.
