New Digital Markets, Competition and Consumers Bill will revoke the Consumer Protection from Unfair Trading Regulations 2008, and introduce additional rights for consumers as regards unfair commercial practices.
What has happened?
The newly proposed Digital Markets, Competition and Consumers Bill (DMCC) reforms protections for consumers as regards unfair commercial practices. It revokes the EU-derived Consumer Protection from Unfair Trading Regulations 2008 (The CPUT Regulations) and replaces them with similar (but enhanced) provisions.
The main changes are two-fold. First, the list of commercial practices that are always considered unfair has been amended and supplemented to reflect the fact that consumers and traders increasingly interact online. Secondly, some of the definitions have been amended. The other changes are largely structural or reflect minor differences of wording.
This article compares the provisions dealing with unfair commercial practices in the new Bill with the existing provisions in The CPUT Regulations. While the overall changes introduced by the Bill are relatively minimal, they should not be ignored not least because the Bill also gives the CMA new powers to enforce consumer laws directly (as well as through the courts).
Commercial practices always considered unfair
As with The CPUT Regulations, the Bill contains a list of commercial practices which are in all circumstances considered unfair. The new list builds on and adds to those practices already contained in The CPUT Regulations. The changes are in keeping with wider attempts by regulators to address dark patterns and other unfair commercial practices online. For example, the list will now include falsely stating that a product will only be available for a limited time to elicit an immediate decision from the consumer.
Those practices that have been added to, or amended by, the Bill are listed below. (Where there are amendments to provisions already included in The CPUT Regulations, the amendments are show in italics. Otherwise, the practices listed below are new.)
- Claiming that a trader, a trader’s commercial practice, or a product has been approved, endorsed or authorised by a public or private body when the claim is false (para 4).
- Making an invitation to purchase products at a specified price where (a) the trader has reasonable grounds for believing that it will not be possible for the trader to offer those products, or equivalent products, for supply at that price, in reasonable quantities, for a reasonable period of time (or to procure another trader to do so), and (b) the trader does not disclose that fact. References to reasonable quantities and a reasonable period of time are references to what is reasonable having regard to (a) the nature of the product, (b) the extent of advertising for the product, and (c) the price offered for the product (para 5).
- Falsely stating that a product will only be available for a limited time, or that it will only be available on particular terms for a limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice (para 7).
- Undertaking to provide an after-sales service to consumers and then making such service available only in a language which is different to the language used in communication with the consumer for, or prior to, the transaction without clearly disclosing this to the consumer before the consumer committed to the transaction (para 8).
- Falsely claiming or creating the false impression that an after-sales service is available, including falsely claiming that it is available in, or accessible from, any particular country or location (para 9).
- Making a materially inaccurate claim concerning the nature and extent of the risk to the personal security or safety of the consumer, a member of the consumer’s family or anyone living in the consumer’s home, if the consumer does not purchase the product (para 13).
- Establishing, operating or promoting a pyramid promotional scheme. A pyramid promotional scheme means a scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the supply or consumption of products (para 15).
- Falsely claiming that a product is able to (a) prevent or treat disease or a malformation, (b) restore, correct or modify a physiological function, or (c) modify a person’s appearance. … “disease” includes any injury, ailment or adverse condition, whether of body or mind (para 18).
- Providing (including passing on) materially inaccurate information about market conditions or about the availability of the product with the intention of inducing the consumer to acquire the product under conditions that are less favourable than normal market conditions (para 19).
- Ignoring a request from a consumer to leave or not return to the consumer’s home except in circumstances and to the extent justified to enforce a contractual obligation (para 26).
- Making persistent and unwanted solicitations by any means, other than by attending at the consumer’s home, except in circumstances and to the extent justified to enforce a contractual obligation (para 27).
All the other commercial practices (which are in all circumstances considered unfair) listed in the Bill replicate what is contained in The CPUT Regulations.
Power to amend the list of commercial practices always considered unfair
The Bill gives the Secretary of State power to amend the list of practices always considered unfair using secondary legislation. This should give the government greater scope to respond to changes in the marketplace. The government has said that it intends to consult on the use of this power to prohibit fake reviews, namely to prohibit the following practices:
- commissioning or incentivising any person to write and/or submit a fake consumer review of goods or services
- hosting consumer reviews without taking reasonable and proportionate steps to check they are genuine
The consultation is expected to take place during the Bill's passage through parliament.
Definitions of key terms
Some of the key terms used in the legislation have also been updated, including the definitions of average consumer, transactional decision and commercial practice.
The "average consumer" is now deemed not to know information in relation to a commercial practice where such information has been concealed by the trader (even if the average consumer might know the information from another source). This puts more onus on the trader to ensure that the consumer is made aware of all relevant facts relating to the purchase of the goods or services.
There is a slight widening of the definition of "transactional decision".
Lastly, the changes to the definition of "commercial practice" extend application of the rules to any act or omission by a trader relating to the promotion or supply of (a) another trader's product to a consumer and (b) a consumer's product to another trader. However, the new definition arguably narrows the scope of conduct that falls foul of the rules.
Impact on retained EU case law
The restatement of the law in the DMCC might give the UK courts greater scope to move away from pre-Brexit EU case law on the Unfair Commercial Practices Directive which The CPUT Regulations implement.
Where a piece of retained EU law has been modified, pre-Brexit CJEU case law is no longer binding. However, the UK courts can rely on retained EU case law to interpret modified EU law if doing so is consistent with the intention of the modifications. We must wait to see how the courts proceed.
What does this mean for you?
The DMCC largely replicates and builds on The CPUT Regulations. The government has said that businesses should not need to take additional action as a result of the changes though they should ensure that they are familiar with the requirements of the regulations. This is particularly so given that the Bill also introduces a new power for the CMA to enforce these (and other provisions) directly as well as through the courts.
We will report on the CMA's new enforcement powers and other aspects of the DMCC in our next edition of Interface.
