Here are the latest legal, regulatory and other developments in the advertising sector for Q1 2024.

DMCC Bill passes its third reading in the Lords and returns to the Commons

The Digital Markets, Competition and Consumers Bill has passed its third reading in the House of Lords and will now return to the House of Commons for further consideration. Key Lord's amendments include:

• The addition of new provisions to address drip pricing in clause 228 (omission of material information from invitation to purchase).

• The addition of the draft provisions regarding fake reviews in Schedule 19 (as opposed to such provisions being introduced by secondary legislation).

• Various amendments to the provisions governing subscription contracts in clauses 251 to 279 including a requirement that reminder notice information is given in such a way that it is more prominent than any other information given to the consumer at the same time (clause 257) and changes that would mean that consumers do not have to be able to end a subscription contract "in a single communication" but "in a way which is straightforward" (clause 258). The government earlier confirmed that it will publicly consult on secondary legislation governing returns and refunds under the new subscription regime.

The proposed amendments will be considered by the Commons after recess ends on 15 April 2024. The amendments relating to drip pricing and fake online reviews should be read in light of the government's response to its consultation on price transparency and product information (see below). 

Meanwhile, the CMA has published an overview of how it intends to operate the new digital markets competition regime proposed in the DMCC Bill. 

Government publishes response to consultation on price transparency and product information

The Department for Business and Trade has published its response to its consultation on improving consumer price transparency and product information for consumers. The consultation focused on display of pricing information, hidden fees and drip pricing, fake and misleading reviews, online platforms and online interface orders, and on automatically unfair commercial practices and private redress in the DMCC Bill.

In light of the responses, the government proposes to:

• Amend the Price Marking Order (retained EU law), largely in line with the CMA's recommendations. This will mean amendments relating to consistent measures for unit pricing, clear legibility criteria for instore price labels, defining which types of promotional/loyalty scheme are included and making provision for the Deposit Return Scheme. The exemption for small shops will be retained in its current form. Technical detail of the proposed amendments will be published this spring. 

• Clarify the law on drip pricing by expressly prohibiting the presentation of a headline price which does not incorporate in the price any fixed mandatory fees that must be paid by all consumers and does not disclose the existence of any variable mandatory fees and how they will be calculated. While this is (effectively) already in the CPUT Regulations, the latter require enforcers to prove that the failure will cause, or be likely to cause, the average consumer to take a different transactional decision. That will not be required under the DMCC Bill (for the omission of material information). The government will not legislate on optional fees but will give further consideration to the practice of optional dripped fees, including proposals to regulate such fees in a proportionate way that does not adversely impact specific sectors.

• Amend the DMCC Bill to add submitting, commissioning, incentivising, publishing or providing access to fake reviews to the list of banned practices in Schedule 19. The wording will be as proposed in the consultation. Fake reviews will attract civil liability only. The government will work with the CMA to publish guidance to explain the law and set out what ‘reasonable and proportionate’ steps traders are expected to take to remove and prevent consumers from encountering fake reviews and 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.

• Work with stakeholders and consumer groups to consider the scope of guidance for online platforms to help clarify their professional due diligence obligations under the DMCC Bill (currently under the CPUT Regs).

• Continue to consider the evidence for extending consumers' rights of private redress to additional unfair practices, taking into account whether it is effective and proportionate to do so. 

• Extend the power to make applications to the court for online interface orders and interim online interface orders to public designated enforcers (including the FCA, ICO and Trading Standards) but not to private enforcers (currently, Which?). Currently, only the CMA has power to seek such orders (which allow the modification or removal of online content that infringes consumer law) from the court.

• Not make any additional (subject to the above) amendments to the list of terms which are automatically unfair in the DMCC Bill (or CPUT Regulations) but keep them under review. 

The Chartered Trading Standards Institute has welcomed the update but calls for more effective powers for Trading Standards officers, including the ability to exercise powers across UK borders, and provisions to help tackle rogue traders.

Global Privacy Enforcement Network undertakes sweep of dark patterns from privacy perspective

The Global Privacy Enforcement Network has undertaken a privacy sweep, looking at deceptive design patterns used by websites and apps to influence people into making potentially harmful choices relating to their privacy. Investigations and enforcement actions may follow. 

FCA publishes final guidance on financial promotions on social media

The Financial Conduct Authority (FCA) has published its finalised (non-exhaustive) guidance on financial promotions on social media, which replaces its 2015 guidance. The final guidance contains minor amendments compared to the draft consulted on.  The guidance does not create any new obligations but clarifies the FCA's expectations of firms, (f)influencers and others communicating financial promotions on social media. The FCA reminds firms working with affiliate marketers that they should take proactive responsibility for how the affiliates communicate including having appropriate monitoring and oversight systems in place.

Meanwhile, the FCA has reported that over 10,000 financial advertisements and other promotions were withdrawn or changed in 2023 following its intervention. The FCA's focus has been on illegal cryptoasset promotions and the promotion of financial products by influencers. As of 7 February 2024, authorised firms need permission from the FCA if they want to approve promotions by unregulated persons.

UK Finance responds to FCA's guidance on anti-greenwashing rule

UK Finance has responded to the FCA's guidance on its upcoming anti-greenwashing rule. The anti-greenwashing rule requires FCA-authorised firms to ensure that any references they make to the sustainability characteristics of their financial products and services are consistent with the sustainability characteristics of the product or service and are fair, clear and not misleading. 

UK Finance recommends that the FCA amend and/or supplement the guidance in certain places and provide a greater number and variety of examples. It also recommends that the FCA take a proportionate approach when applying the rule, in line with existing rules on communications and financial promotions.

Vaping continues to be in the spotlight

The Tobacco and Vapes Bill has been introduced to parliament. It will introduce measures to reduce the appeal and availability of nicotine and non-nicotine vapes to children, including by restricting flavours, restricting flavour descriptions and regulating packaging and product presentation. The Bill will receive its second reading in the House of Commons on 16 April 2024.

It sits alongside the Environmental Protection (Single-use Vapes) (England) Regulations 2024, which will ban the supply of single-use vapes in the course of a business - whether or not they are paid for - from 1 April 2025.  Disposable vapes are devices which are not both rechargeable and refillable.

The above follows the issue of an enforcement notice by CAP relating to advertising of e-cigarettes on social media and the issue of guidance on the advertising of vaping products online.

ASA publishes guidance on quoting RRPs in ads

The ASA has published guidance covering the situation where advertisers seek to compare the price of a product against the recommended retail price (RRP). The guidance provides the following:

• Don't rely on RRPs solely given by the manufacturer. The ASA is likely to uphold complaints if marketers cannot demonstrate that the product was sold at the quoted RRP. 

• Be aware of the difference between selling and advertising at a price. Complaints have been upheld for ads claiming to offer products on sale, where the advertiser could not show that sales had been made at the original price.

• The product and/or sector can influence what constitutes the ‘generally sold’ price. For example, large, seldom-bought items may be considered ‘generally sold’ if available in a small number of stores, which is unlikely to be the case for more frequently purchased products.  

• Don’t reference a RRP for products not yet launched. 

• Make sure the ‘generally sold’ price is not significantly different to the RRP.

US SEC announces enforcement actions for "AI washing"

The US Securities and Exchange Commission (SEC) has announced the first ever settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their purported use of artificial intelligence (AI). 

The statements were made in SEC filings, a press release, and on its website (Delphia) and on its website and social media (Global Predictions). The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties.

Further consultation under the Online Safety Act

Ofcom has published a further consultation under the Online Safety Act relating to the additional obligations imposed on categorised services including in relation to fraudulent advertising. The consultation closes on 20 May 2024. It follows the publication by Ofcom of advice to Government on the thresholds for Category 1, 2A and 2B services. 

CMA publishes open letter to fashion retail sector on environmental claims

The Competition and Markets Authority (CMA) has published an open letter to businesses in the fashion retail sector to inform them of the outcomes of the CMA’s investigation into environmental claims in the sector, and to highlight the need for businesses to consider their obligations under consumer protection law. 

It says that businesses should familiarise themselves with the Green Claims Code and take all necessary steps to ensure that any environmental claims they make comply with consumer protection law, including that their processes to ensure compliance are robust. The CMA intends to publish further guidance on environmental claims for the fashion industry in due course.

The letter concludes by saying that the CMA will continue to take enforcement action where necessary and by reminding businesses that, should the Digital Markets, Competition and Consumers Bill become law, significant monetary penalties (of up to 10% of worldwide turnover) may be imposed by the CMA or courts.

Barristers publish opinion that directors will fail in their duties if they do not consider sustainability risks

A group of prominent barristers has published a legal opinion confirming that directors will fail in their duties to companies and shareholders if they do not consider sustainability risks – both physical and transition - in their decision making. They are clear that this could render directors liable to be sued or removed from office by motivated shareholders.

EU Parliament adopts first reading position on Green Claims Directive

The EU Parliament (EP) has adopted its first reading position on the Green Claims Directive. The proposal includes clear criteria on how companies should prove their environmental claims and labels, requirements for certain claims and labels to be checked by an independent and accredited verifier and new rules on governance of environmental labelling schemes to ensure they are solid, transparent and reliable.

Various proposed amendments were introduced. The EP wants claims and their evidence to be assessed under the verification procedure within 30 days, but simpler claims and products could benefit from quicker or easier verification. The EP is also of the view that green claims about products containing hazardous substances should remain possible for now, but that the Commission should assess soon whether they should be banned entirely. The proposals will be taken forward by the new EP after the European elections on 6 to 9 June 2024.

Empowering Consumers for the Green Transition Directive published in Official Journal

The Directive on Empowering Consumers for the Green Transition (sometimes known as the Greenwashing or Empco Directive) was published in the Official Journal on 6 March 2024. More here. 

EU Political Advertising Regulation published in Official Journal

The EU's Regulation on transparency and targeting of political advertising was published in the Official Journal on 20 March 2024. The Regulation requires political advertising to be clearly labelled, allowing citizens to see why they were targeted, who sponsored the ad, how much they paid and to which elections or referendum it pertains. Sponsoring ads from outside the EU will be prohibited in the three-month period leading up to elections. Various obligations are imposed upon political advertising publishers, with additional obligations on very large online platforms and very large online search engines.

CMA publishes Annual Plan for 2024/25

The Competition and Markets Authority (CMA) has published its annual plan 2024/25. Key aims are to: 

• Act in areas of essential spending and where people are under particular financial pressure.

• Broaden its work to protect consumers from harmful practices in online choice architecture and misleading pricing.

• Encourage effective competition and consumer protection in emergent markets (such as AI foundational models and sustainable products/climate tech).

DSA enforcement actions and information requests against AliExpress, LinkedIn and X

The European Commission has announced that it has opened formal proceedings to assess whether AliExpress may have breached the Digital Services Act (DSA) in areas linked to the management and mitigation of risks, to content moderation and the internal complaint handling mechanism, to the transparency of advertising and recommender systems, to the traceability of traders and to data access for researchers. This is the first proceeding focused on consumer protection issues.

Meanwhile, the Commission has also sent a formal request for information to LinkedIn relating to how it complies with the ban on personalised advertising using special category data, and how it complies with transparency requirements. It follows the filing of a complaint against the company by civil society organisations against about profiling in advertising. The Irish regulator has also sent out a large number of letters to businesses asking for information about DSA compliance.

It follows the opening of formal proceedings at the end of last year to assess whether X has breached its obligations under the DSA including regarding dark patterns.

ASA launches project on supplier pathway of online ads in breach of CAP Code

The ASA has launched two projects aimed at better understanding where responsibility lies for inappropriately targeted and irresponsible ads online. The projects involve looking in depth at the supplier pathway of online ads that are found to have breached the CAP Code.

One project uses innovative technology to monitor for ads for age-restricted products, including alcohol, gambling and foods high in fat, salt or sugar (HFSS), on sites of particular interest to under-18s. Another project will use the same approach to monitor for seriously offensive and potentially harmful ads, which we know to have appeared in mobile quiz and game apps.  This is the first time the ASA has undertaken tech-assisted monitoring in that media.

Using monitoring findings, the ASA will undertake a number of in-depth case studies seeking to identify the parties involved in the supplier pathway of these non-compliant ads, assessing the part played by the advertiser, the publisher and the intermediary companies that sit between them. We will seek their input to better understand how the ads came to appear, publishing our findings and assessments to help deliver our strategic commitments.

House of Lords Committee on Food, Diet and Obesity publishes call for evidence on inquiry into HFSS and ultra-processed foods etc

The House of Lords Committee on Food, Diet and Obesity (appointed on 24 Jan 2024) has published a call for written evidence for its inquiry into the role of foods, such as ‘ultra-processed foods’ (UPF), and foods high in fat, salt and sugar (HFSS), in a healthy diet and tackling obesity.

It will consider how consumers can recognise UPF and HFSS foods, including the role of labelling, packaging and advertising, the cost and availability of such foods and their impact on health outcomes. The consultation closes at 10am on Monday 8 April 2024. The Committee will report by 30 November 2024.

ASA consultation on implementation of less healthy food and drink advertising restrictions

The ASA has consulted on the implementation of new rules (due to come into force in October 2025) further limiting food and drink advertising to children on TV and in on-demand programme services and paid-for ad media. The consultation covers three areas which support implementation of the new restrictions:

• guidance on the new rules

• transposition of the new requirements into the new UK Advertising code

• technical updates to the existing rules.

ASA publishes guidance on advertising high fat, salt, and sugar products

The ASA has published guidance on ads relating to high fat, salt and sugar (HFSS) products. An ad featuring an identifiable HFSS product alone or as part of a range qualifies as an HFSS product ad. This also includes ads that use branding elements such as logos, colours, or straplines generally associated with an HFSS product. 

The guidance explains that HFSS ads must not be directed at individuals under 16. This applies to children's media such as kids' magazines and any other media where more than 25% of the audience comprises those under 16. HFSS ads targeting pre-school or primary school children through content must not use licensed characters and celebrities popular among children, in such ads. More detailed guidance from the ASA is here. 

Scottish government publishes consultation on HFSS food and drink

The Scottish Government is consulting on a proposal for regulations under the Food Safety Act 1990 and the Food (Scotland) Act 2015 to restrict the promotions of HFSS foods where they are sold to the public, including across retail and out of home settings, both in-store and online. The consultation is open until 21 May 2024.

Changes to enforcement of nutrition and health claims and streamlining of legislation

The Nutrition and Health Claims Enforcement (England) (Amendment) Regulations 2024 have been laid before Parliament and will come into force on 1 October 2024. The Regulations amend the Nutrition and Health Claims (England) Regulations 2007 in order to modify the enforcement regime relating to certain requirements specified in retained EU law on nutrition and health claims made on foods. Improvement notices will be able to be used for non-compliance with nutrition and health claims legislation as an alternative to criminal prosecution and failure to comply with an improvement notice will constitute a criminal offence.

It follows a government consultation on proposed reforms to nutrition and health claims on food in an attempt to introduce a more proportionate response to enforcement which is less burdensome on both businesses and enforcement authorities. In its response to that consultation, the government made clear that it also intends to revoke 60 pieces of "redundant" tertiary legislation which authorised or rejected health claims under its REUL powers and provide guidance relating to legislative changes to businesses through a nutrition legislation information sheet.

DEFRA publishes consultation on fairer food labelling

The Department for Environment, Food and Rural Affairs has published a consultation on proposals to improve transparency and consistency through improved country of origin, and animal welfare labelling in the UK. The consultation closes at 23:45 BST on 7 May 2024. 

ASA publishes guidance on media placement and targeted ads

The ASA has published guidance on media placement and ads that target certain audiences (including children and young people). The guidance mentions the following points for consideration:

• Attitudes of the audience. The likelihood of an ad causing offence is linked to the attitudes of the people who see it.

• Type of media used. An ad's perception can vary depending on the type of media in which it is placed. The ASA upheld a ruling on a Kentucky Fried Chicken Poster in 2023 due to references to expletives in a medium that was accessible by children. However, the same content sent via an email targeted at KFC's mailing list was considered acceptable. 

• Potential audience. Marketers should consider the potential audience demographics for their ads. Some products are inherently more likely to offend than others, for example intimate products designed specifically for adults. 

• Targeting can help but it does not offer absolute protection. The ASA's ruling on Ads from Whaleco UK Ltd t/a Temu in 2023 were deemed inappropriate for audiences of any age regardless of efforts towards over-18 targeting.

The ASA has provided more detailed guidance on media placement and online targeting. 

UK's ICO and USA's FCC sign MoU to prevent predatory marketing

The UK's ICO and the USA's Federal Communications Commission have signed a Memorandum of Understanding formalising their commitment to work together to protect people from unwanted nuisance calls, spam messaging and the misuse of private and sensitive data.

ASA publishes guidance on deepfakes

The ASA has published recommendations to advertisers on the use of 'deepfakes'. It notes that there is not a separate section of the CAP Code that deals with AI-generated ads. This means any ads the ASA might assess that use deepfake technology to employ manipulated video, imagery or audio for marketing purposes, will have the relevant existing sections of the Code applied to them. Such ads will need to, for example, comply with the rules around misleading advertising, especially the rules concerning testimonials and endorsements. It also highlights potential IP and personality rights issues if real figures are used.

ASA dos and don'ts of lead generation advertising

The ASA has published dos and don'ts of lead generation advertising. It points out that whoever sees an ad needs to know they are replying to a company who is filtering out potential customers.  Sometimes it will be necessary to include more explicit messages so consumers can be clear on what is going on and who they are dealing with.  The ASA regularly finds ads in breach of the Code where that wasn't clear, and lead generators and the companies they’re working for can be considered jointly responsible. CAP Code Rule 2.3 is the most relevant rule on this issue.

UK government publishes "not for EU" labelling consultation

The government has published a consultation on its plans to  introduce the requirement of "not for EU" labels on agrifood products across Britain from 1 October 2024. The consultation closes at midnight on 15 March 2024. The wider Safeguarding the Union paper explains the wider context and approach to Northern Ireland.

UK government updates Parliament on UK Conformity Assessment marking and plans for continued use of CE marking

The Department for Business and Trade has updated Parliament on developments to the government's approach to the UK Conformity Assessment (UKCA) product marking and plans to continue recognition of "conformite europeenne" (CE) beyond 31 December 2024. The government intends to lay legislation in spring 2024 to provide businesses with the flexibility to place goods that fall under 21 product regulations and meet current EU requirements on the market in Britain and to introduce greater labelling flexibility, including the option for manufacturers to use digital labelling.

It will also bring forward measures to introduce a "fast track UKCA" process, allowing manufacturers to use the UKCA marking to demonstrate compliance, in Great Britain, with either UKCA product requirements or EU product requirements where they are recognised. Where products are covered by multiple regulations, a mixture of both UKCA and CE conformity assessment procedures can be used.

CAP issues enforcement notice targeting cosmetic surgery providers based abroad

CAP has issued an Enforcement Notice to cosmetic surgery providers based abroad, setting out the strict advertising rules in place that are designed to protect people, in particular young and other vulnerable audiences, from potential harm. CAP has also begun enhanced monitoring to identify and tackle irresponsible ads for cosmetic surgery procedures. CAP' is already working with regulatory partners in the UK and abroad, including Turkey, to make its rules clear to advertisers. It will also be proactively searching for adverts that break the rules using its AI-assisted monitoring system.

CMA investigates loyalty pricing by supermarkets

The CMA has begun an investigation into loyalty pricing by supermarkets. It follows a rise in some supermarkets making cheaper prices only available for loyalty card members. The review is part of a programme of work by the CMA to help tackle cost of living pressures in the groceries sector. The review will consider issues such as:

• Whether any aspects of loyalty pricing could mislead shoppers, for example whether the loyalty price is a genuine promotion or as good a deal as presented.

• Whether any groups of shoppers are disadvantaged by this type of promotional activity.

• Whether loyalty pricing is impacting consumer behaviour, and whether this has an impact on how supermarkets compete with each other.

The review is at an early stage and the CMA says that it has not formed any views on the issues. It is now beginning its engagement with supermarkets. It will publish an update in July 2024, and expects to complete the review by the end of the year.

ASA issues advice and tips for advertising on social media and Twitch

The ASA has issued advice and tips for advertising on social media as well as guidance on advertising on video game platform Twitch.

Government consultation on digital identities and age assurance to help prevent sales of alcohol to under-18s

The government has consulted on the possible use of digital identities and age assurance technology for alcohol sales in England and Wales. It will look at whether measures to prevent the sale of other age-restricted products (such as bladed products) being sold to children online have been successful.

CMA consults on draft consumer law compliance advice for green heating and insulation products

The CMA has consulted on draft consumer law compliance advice for businesses marketing green heating and insulation products to consumers. It plans to publish the final version of its compliance advice and an anonymised summary of the responses that fall within the scope of the consultation in the spring of 2024.

EU Commission consults on proposed revision of EU textile labelling rules

The European Commission has consulted on its proposal to revise EU textile labelling rules by introducing comprehensive requirements on the physical and digital labelling of textiles and related products. It principle aims are to ensure accurate, intelligible and comparable information to consumers, notably on environmentally relevant aspects, reduce compliance costs and ensure regulatory clarity and consistency.

EU Parliament publishes non-legislative resolution on addictive design of online services and consumer protection

The EU Parliament (EP) has adopted a non-legislative resolution urging the Commission to legislate against the use of addictive design features not already covered by the Unfair Commercial Practices Directive.  It also advocates creation of a new digital "right not to be disturbed". The Commission is not required to respond but will consider the resolution as part of its overall evaluation of consumer protection legislation.

CMA announces investigation into Simba Sleep over dark patterns

The CMA has announced that it is investigating whether the mattress firm, Simba Sleep, has misled consumers about price reductions and put unfair pressure on consumers to make quick purchases. This is part of the CMA's enforcement programme looking at harmful online choice architecture.