Digital Markets, Competition and Consumers Bill introduced
In April 2023, the Digital Markets, Competition and Consumers Bill was introduced into the House of Commons. The Bill aims to regulate the market power of digital service providers with "strategic market status" and to introduce new consumer protections to tackle subscription traps and fake online reviews. It will also replace (and amend) The CPUT Regulations which deal with unfair commercial practices.
See our overview of the Bill and articles on subscription traps (here) and unfair commercial practices (here).
Government announces further delays to restrictions on HFSS multibuy deals
The Prime Minister's Office has issued a press release announcing a further two-year delay to the introduction of new rules restricting the promotion of multibuy deals for high fat, salt and sugar (HFSS) food and drink products. This includes offering HFSS products as part of a volume price promotion, such as "buy one get one free" or "3 for 2" offers. When they come into force, the proposed restrictions will apply in England and Wales to promotions both in store and online.
The restrictions were initially scheduled to come into effect on 1 October 2022. The government's rationale for the continued postponement is to help consumers cope with rising food prices and current cost of living pressures. While confirming its commitment to tackling obesity, the government expressed its reluctance to restrict consumers' ability to buy cheap food and drink products in the current economic climate.
The announcement follows a delay to the introduction of a 9pm watershed for TV adverts for HFSS products and ban on paid-for online advertisements of them (see article here).
Ofcom consults on advertising in public service broadcasting
Ofcom has consulted on the quantity and scheduling of advertising that is permitted under its Code on the Scheduling of Television Advertising (COSTA) on public service broadcasting (PSB) channels.
Ofcom is considering two options - bringing PSB advertising rules fully into line with those for non-PSB channels or bringing them into line with those for non-PSB channels while retaining safeguards that limit the number of internal breaks allowed in programmes.
The latter is Ofcom's preferred course of action since it would mean that PSB channels remain subject to stricter rules on the number of internal breaks permitted in programmes. However, Ofcom has made it clear that it is open to all options (including keeping the rules as they currently are) depending on the consultation responses.
CMA publishes open letter on urgency and price reduction claims
The CMA has published an open letter to online businesses regarding the use of urgency and price reduction claims. In the letter, the CMA urges businesses to review their online selling practices to ensure they are not unfair or misleading.
Two days after publishing the open letter, the CMA launched a number of investigations to determine whether certain companies had misled consumers by using countdown timers and other urgency claims to put unfair pressure on consumers to make purchases quickly. The results of these investigations are awaited.
ASA targets subscription traps with designated Enforcement Notice
The ASA has published an Enforcement Notice aimed at the promoters of digital advertisements offering free trials and other promotional subscriptions (where consumers sign up to ongoing payment plans).
The notice states that advertisements for a free trial or promotional offer must prominently communicate all significant conditions where there is likelihood that they would make a difference to the consumer's decision to enrol. In particular, adverts must make clear:
- Whether a paid subscription starts automatically (after the free trial) unless cancelled.
- The extent of the financial commitment if the subscription is not cancelled (during the free trial).
The Notice makes clear that pop-ups containing this information are insufficient and do not meet the threshold. If an advertisement does not adhere to the Notice and display significant conditions with sufficient prominence, it is likely to be in breach.
From 27 April 2023, the ASA has been actively enforcing the rules against non-compliant advertisers.
FCA announces new advertising rules for marketing cryptoassets to consumers
The FCA has announced new rules to ensure consumers have appropriate knowledge and experience to invest in crypto. The rules follow government legislation to bring crypto promotions into the FCA's remit.
Those promoting crypto to consumers must display clear risk warnings and ensure that adverts are clear, fair and not misleading. They must also introduce a cooling-off period for first time investors and not use ‘refer a friend’ bonuses (which will be banned). Failure to comply with the new provisions will carry sanctions including fines and up to two years' imprisonment. The rules will cover cryptoassets which are transferrable and fungible (ie not NFTs) and will apply to all entities marketing cryptos in the UK.
The FCA is also consulting on additional guidance for those advertising crypto to consumers – the consultation is open until 10 August 2023.
CAP and BCAP publish updated guidance on misleading environmental claims
CAP and BCAP have published updated guidance to assist with interpreting their rules in the context of environment-related advertising claims. The update addresses the situation where a marketer makes positive environmental claims about specific aspects of its businesses but much of the marketer's business model is responsible for a significant amount of environmental harm or emissions. The concern is that such adverts are likely to be understood as making claims about the business's wider environmental impact ie they exaggerate the business’s overall environmental credentials, which is likely to mislead consumers.
The updated guidance includes a new section entitled “Claims about initiatives designed to reduce environmental impact” in section 3.1. This draws on the principles established by recent ASA rulings and contained in the CMA's Making environmental claims on goods and services guidance.
The new section includes 10 principles to which marketers will need to adhere to ensure their adverts do not breach the rules. They include that claims are more likely to mislead if they do not include "balancing information about the business’s significant ongoing contribution to emissions or other environmental harm. This is particularly the case in sectors where consumers are less likely to be aware of the business’s contribution to emissions or other environmental harm (such as the financial sector’s contribution to funding high-carbon industries)…".
FCA and ASA warn "finfluencers" of risks of promoting illegal "get rich quick" schemes
The FCA and the ASA are collaborating with social media influencer, Sharon Gaffka, to help educate "finfluencers" (financial influencers) about the risks involved in promoting financial products.
Both the FCA and the ASA have become increasingly concerned about the advertising of financial products by influencers on social media. They will engage with influencers and their agents to provide them with clear information about what could constitute an illegal financial promotion. As part of this, the FCA has published an infographic to explain to influencers what they should check before accepting brand deals for financial products and services.
In addition, the FCA will invite influencer agents and the Influencer Marketing Trade Body to an open roundtable discussion on illegal financial promotions.
CAP publishes new guidance on avoiding racial and ethnic stereotypes
CAP has published new guidance on avoiding racial and ethnic stereotypes likely to cause harm or serious or widespread offence.
The CAP Code specifies that particular care must be taken to avoid causing offence on the grounds of race, though the rules do not explicitly address racial or ethnic stereotypes. In 2020, the ASA undertook detailed research to establish whether, and (if so) to what extent, racial and ethnic stereotypes in ads contribute to real-world harms. The new guidance partly addresses the results of that research.
The guidance states that, while content and context are relevant, to comply with the Codes marketers should:
- Avoid explicitly harmful stereotypes ie ads that depict people negatively in a way that is explicitly linked to their racial or ethnic group, or that explicitly incite hatred, discrimination or physical harm towards people of a particular racial or ethnic group. The guidance notes that such depictions are also likely to be illegal.
- Take care when using scenarios that seek to challenge harmful racial or ethnic stereotypes. Even ads that use depictions of harmful racial or ethnic stereotypes in order to challenge them may risk causing harm, regardless of the advertiser’s intention. It is important to ensure that the purpose of depicting harmful racial or ethnic stereotypes is clear and proportionate to the main message.
- Avoid mocking or insensitive depictions of people on the basis of their racial or ethnic group, including in relation to their accents, appearance or beliefs. The use of humour or "banter" is unlikely to mitigate the likelihood of harm or offence.
- Avoid depicting roles and characteristics stereotypical to racial or ethnic groups in a way that is likely to cause harm. This includes, for example, roles showing a particular behaviour, employment, taste and preference.
CAP states that marketers should not be discouraged from showing people from diverse racial and ethnic groups in ads for "fear of getting it wrong".
ASA issues guidance on using testimonials and endorsements
The ASA has published guidance on how to avoid "fake views" when using quotes in testimonials and endorsements. The ASA notes that testimonials and endorsements are a perfectly legitimate method of promoting products and services. However, marketers must be careful to make sure that any claims, whether by celebrities or members of the public, are accurate, capable of substantiation and unlikely to mislead.
The ASA has published seven key tips to help ensure that marketers comply with the CAP Code when using testimonials and endorsements from clients. Marketers should:
- Demonstrate testimonials and endorsements are genuine.
- Obtain permission from clients before using testimonials and endorsements (except where an exception applies).
- Make sure testimonials and endorsements are relevant and not misleading.
- Use #AD to indicate that content is an advert, where necessary.
- Avoid incentivising positive endorsements and amending or deleting negative reviews.
- Take care around particular sensitive categories eg healthcare professionals and celebrities should not be used to endorse medicines.
CAP and BCAP publish new guidance on advertising of mobile and broadband contracts
CAP and BCAP have published new guidance on misleading advertising of mobile and broadband contracts that include mid-contract price increases.
CAP and BCAP says that many contracts include clauses under which monthly costs will increase by an unknown amount often more than once a year. Information about future price increases must be clear so that consumers do not have the misleading impression that the initial stated price will remain the same throughout the contract period.
The guidance sets out six principles to which marketers must adhere to ensure their adverts do not breach the Codes. The guidance will take effect on 15 December 2023, following a six-month grace period to allow advertisers to makes necessary changes to their campaigns.
ASA publishes its annual report for 2022
The ASA has published its annual report for 2022. As well as looking back, the report looks ahead as the ASA completes the final year of its five-year strategy and begins work on its next strategy. The report suggests that net zero claims, crypto ads, and hidden influencer advertising will continue to be key focuses for the ASA in future. The ASA is also looking increasingly to use AI to help monitor online advertising.
CAP and BCAP publish technical amendments relating to medicines and medical devices
CAP and BCAP have published technical amendments to CAP Section 12 and BCAP Section 11 to reflect changes to the regulatory frameworks for medicines and medical devices as a result of the UK’s exit from the EU. The amendments are largely administrative or reflect changes in terminology.
ASA publishes guidance on misleading advertisements
The ASA has published a checklist identifying key points to consider to ensure advertisements are not misleading. Among the points are:
- Include all information required for the consumer to make an informed decision.
- Hold evidence to substantiate objective claims (including objective comparisons and testimonials).
- Present qualifications, such as limitations or conditions, clearly.
- Do not exaggerate the capability or performance of a product in a way that is likely to mislead.
- Make sure price claims are accurate and include all non-optional charges (eg VAT and booking fees), and all applicable delivery charges.
ASA publishes guidance for small businesses
The ASA has published a collection of resources designed to help small businesses better understand and follow advertising rules. The guidance follows an increase in the number of non-compliant non-paid for ads on social media by small businesses and sole traders.
Topics include how to avoid misleading consumers, details on pricing claims and how to responsibly market promotions and competitions.
CMA consults on commitments offered by Meta in investigation into collection and use of advertising data
In May 2023, the CMA launched a consultation on commitments offered by Meta to address concerns that Meta might be abusing a dominant position in the social media or digital advertising markets through its collection and use of advertising and single sign-on data.
Meta has offered to implement technical systems to prevent the use of certain advertising data in the operation of Facebook Marketplace and to ensure that employees refrain from using certain advertising data for product development in competition with advertisers.
The CMA has said that it is minded to accept Meta's commitments, subject to the consultation responses. The consultation closes on 26 June 2023.
EU Commission informs Google of preliminary view that it has abused dominant position in digital advertising
The European Commission has sent a statement of objections to Google setting out its preliminary view that the company has breached its dominant position in advertising technology. This is by favouring its own online display exchange, AdX, over those of its competitors in ad selection auctions run by its publisher ad service, DFP.
Conduct which led to this conclusion includes informing AdX in advance of the value of the best competitor bids and favouring AdX in the way Google Ads and DV360 place bids on ad exchanges.
The Commission's preliminary view is that only mandatory divestment of part of Google's services would provide the necessary remedy. A behavioural remedy is unlikely to be effective to prevent the risk of Google continuing to use such self-preferencing conducts or engaging in new ones.
If the Commission concludes, after Google has exercised its rights of defence, that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of the company's annual worldwide turnover.
Call for carbon neutral claims to be banned
The European consumer organisation, Bureau Européen des Unions de Consommateurs, has called on the EU to ban the use of carbon neutral claims in sales and marketing of food and drink. This follows the BEUC's report earlier this year which concluded that these claims need to be banned for various reasons including that they are scientifically inaccurate and often based on carbon offsetting (which is less effective and guaranteed than cutting emissions).
Next phase of 'Online Rip-Off Tip-Off' campaign launched by CMA
The CMA has launched a new phase of its Online Rip-Off Tip-Off campaign asking consumers to report online rip-offs via a new digital reporting form. The campaign aims to enable consumers to spot and report misleading online sales tactics. The misleading practices particularly mentioned are pressure selling, hidden charges, subscription traps and fake reviews.
