What's the issue?
In April 2023, the government published the draft Digital Markets, Competition and Consumers Bill (DMCC Bill), intended to tackle competition issues in big tech and reform consumer protection law (read more here).
Among other things, the DMCC Bill will provide powers to introduce secondary legislation, particularly but not exclusively with the aim of tackling fake reviews. This is part of a wider reform of the unfair commercial practices regime which will see the Consumer Protection from Unfair Trading (CPUT) Regulations overhauled and replaced.
The government has long held the ambition of dealing with the issue of fake consumer reviews. While provisional wording was published alongside the DMCC Bill, the government did not include it in the Bill because it felt further consultation was required about how the rules would work in practice and what businesses would need to do to comply with them.
What's the development?
The government has published a 'Consultation on Improving Price Transparency and Product Information for Consumers' and a report on 'Estimating the prevalence and impact of online drip pricing'.
The consultation sets out proposed wording for a ban on fake online reviews which would be added to the list of automatically unfair commercial practices in the DMCC Bill and consults on what businesses will need to do to comply.
The consultation also looks at:
- display of pricing information
- hidden fees and drip pricing
- how professional diligence requirements should be interpreted for online platforms and whether the term should be redefined with the aim of ensuring online platforms and consumers have greater clarity over their respective rights and responsibilities
- whether enforcers other than the CMA should be able to apply to court for an online interface order.
In addition, there are questions on the suitability of the current list of 31 automatically unfair commercial practices which are intended to be imported into the DMCC from the outgoing CPUT Regulations.
Key proposals are as follows:
Fake reviews
The government proposes adding the following to Schedule 18 of the DMCC Bill:
- submitting a fake review or commissioning or incentivising any person to write and/or submit a fake review of products or traders
- offering or advertising to submit, commission or facilitate a fake review
- misrepresenting reviews or publishing or providing access to reviews of products and/or traders without (i) taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews; (ii) taking reasonable and proportionate steps to prevent any other information presented on the platform that is determined or influenced by reviews from being false or in any way capable of misleading consumers.
Traders which publish or provide access to reviews will have a responsibility to ensure consumers are not misled by the information they present to them. They will be required to take reasonable and proportionate steps to prevent consumers from encountering fake reviews which is likely to involve traders having policies and processes in place for regularly and proactively assessing risk, detecting suspicious reviews, removing fake reviews and sanctioning those who facilitate or post them. Some of the consultation questions relate to the extent of requirements on traders, and at what constitutes "reasonable and proportionate steps".
This is not expected to lead to traders being subject to enforcement action on the basis that they have published a single fake review. The government is asking whether failings should be criminal offences and proposes working with the CMA to produce guidance on what will constitute appropriate action by traders.
Online platforms professional due diligence requirements
Under UK consumer protection law, all commercial actors including online platforms have duties to protect consumers and act with "professional due diligence". Given the increasing volume of online products and services, the government wants to ensure online platforms and consumers have greater clarity over their respective rights and responsibilities and that online platforms take active steps to ensure their consumers are treated fairly. The government is therefore consulting on what practices of online platforms are or should be considered consistent with the requirements of professional due diligence, and at how best practice for compliance should be set out and communicated, eg through guidance or a code of conduct.
Hidden fees and drip pricing
Drip pricing refers to the practice of quoting a base price and then gradually adding fees as consumers proceed with a purchase or transaction. Government-commissioned research suggests that this practice is problematic when used to attract a consumer to a low base price which is misleading given the subsequent addition of mandatory fees. The practice is considered less of an issue where the additional prices occur as a result of personal preference and optional additional features. The purpose of the consultation is to seek views on whether the government should act to tackle harmful drip pricing and if so, how – for example, through intervention or guidance.
Display of pricing information
How retailers display prices for consumers is governed principally by the Price Marking Order (PMO) 2024 and its Northern Irish equivalent. This legislation is nearly 20 years old and is retained EU law. Among other things, the PMO requires traders to display the final selling price and, where appropriate, the final unit price. Following a CMA report, the government is now looking to simplify requirements on unit pricing so that it is more consistently applied, to clarify legibility requirements and the way promotions should be displayed, and to review the "small shops" exemption. The government is therefore consulting on:
- mandating consistent use of unit pricing measures
- improving the legibility of pricing information through adoption of consistent standards
- reviewing the current small shop exemption under the Price Marking Order 2004
- clarifying rules on promotional unit pricing
- reviewing how the Deposit Return Scheme deposit should be displayed on pricing labels.
What does this mean for you?
Consumer facing online platforms and e-Commerce sites, especially those which allow reviews, will be particularly interested in this consultation and may wish to respond. The consultation is, however, also relevant to all consumer facing businesses as it covers a wide range of issues. The consultation closes on 15 October 2023 and the government's response is due later on this autumn.
