Fair game for online shopping? New laws to target unfair trading practices

Following a consultation into consumer transparency launched in September 2023 (see here) and in the context of the Digital Markets, Competition and Consumer Bill (DMCC), the Department for Business and Trade yesterday announced that it will add fake reviews to a list of banned business practices, and outlaw unavoidable dripped fees. These measures will be legislated for as the DMCC Bill progresses through Parliament, and we’ve taken at look at the proposals in more detail below. 

Fake reviews

The government has previously expressed its commitment to tackling fake reviews and set out its proposals for doing so in the consultation. As expected, the government will add the proposed fake review practices to the list of banned practices in Schedule 19 of the DMCC Bill. These practices are:

• 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; and
• misrepresenting reviews, or publishing or providing access to reviews of products and/or traders without: 
  1. taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews; or
  2. 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.

However, the government has clarified that, after considering the representations received in consultation regarding the fake review banned practices attracting criminal liability, such practices will be subject to civil liability only. 

The government will work with the CMA to publish guidance, which will also be consulted on, 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. 

Drip pricing 

Drip pricing occurs when consumers are shown an initial “base price” for a product, following which additional fees are disclosed or “dripped” as consumers proceed with a purchase or transaction. It can occur in both online and offline settings, and “dripped fees” may be mandatory or optional.

The consultation sought views on whether and how the government should approach the issue. Having received strong support for its proposals, the government will expressly prohibit presenting a headline price which does not:

• incorporate in the price any fixed mandatory fees that must be paid by all consumers; 
• disclose the existence of any variable mandatory fees (including delivery charges) and how they will be calculated.

The proposals will enable swifter enforcement action. Enforcers will no longer be required to prove that a failure to present the total price and the existence of any variable fees will cause, or be likely to cause, the average consumer to take a different transactional decision.

The government response also notes that in the context of the unfair commercial practice of omitting material information from an invitation to purchase, enforcers will be able to take into account limitations resulting from the means of communication (for example, limitations of space or time) when assessing whether there has been a failure to provide information on mandatory fees to consumers up front. 

The government is not planning, at this stage, to legislate in relation to optional fees such as upgrades, customisation, and accessories. However, further consideration will be given to the practice of optional dripped fees, including proposals to regulate such fees in a way that (i) does not adversely impact specific sectors and (ii) allows for consumers to compare prices in a fair and transparent way across providers.

Online platforms

The DMCC restates and updates consumer law, which sets out rules around unfair trading. These include the responsibilities of online platforms (and all other commercial actors) to act with professional diligence in relation to consumer transactions promoted or made on their platforms.

While the government recognises that further clarity would be helpful in relation to the professional diligence requirements on online platforms, it also acknowledges the need for further engagement. Therefore, it will undertake further work with stakeholders to identify the scope and content of further guidance in this area. In the meantime, many of the specific harms reported by respondents are already being addressed by several government initiatives.

Adding to the list of banned practices

The government does not intend to add any additional banned practices to the list but acknowledges that the CMA and several consumer organisations raised the potential of adding greenwashing to the list. Greenwashing is an area subject to significant enforcement from both the CMA and UK Advertising Standards Agency (read more). 

In that regard, the government will continue to work with the CMA to ensure the law is understood and to set out the reasonable and proportionate steps traders are expected to take to ensure all claims about the environmental impact and efficacy of ‘green’ products and services are truthful, accurate and do not mislead consumers.

Private rights of redress: prohibited practices

Many respondents to the consultation wanted private redress rights extended to all practices listed in Schedule 19 of the DMCC Bill, while others specifically mentioned practices such as fake reviews and misleading omissions. The government has not taken a decision on this, advising that it will continue to consider the evidence for extending private redress and, should it prove necessary, it will take delegated powers through the DMCC bill which will allow for the extension of private redress rights in the future. 

This would be a (further) significant step change in the risk surrounding consumer protection laws – read more in our previous posts: The DMCC Bill: a (so far) failed attempt to open the door for collective consumer law actions  here and Update: The DMCC Bill – consumer law collective actions back on the cards?.

What’s next?

The DMCC Bill is expected to receive Royal Assent in the Spring, with the changes outlined above in relation to fake reviews and drip pricing now expected to become law when it does. Other changes in relation to guidance for online platforms, greenwashing and private rights of redress will have to wait for now but the government looks set to keep them under review.