Consumer Law | UK Regulatory Outlook January 2024
Published on 11th Jan 2024
Digital Markets, Competition and Consumers Bill | Digital Services Act | Fitness check on EU consumer law
Digital Markets, Competition and Consumers Bill
The UK Digital Markets, Competition and Consumers Bill (DMCCB) has completed its passage in the House of Commons and had its first and second reading in the House of Lords. A new version of the DMCCB has been published, incorporating the amendments passed on the third reading in the House of Commons. All the amendments the government tabled ahead of the third reading were incorporated into the bill.
The DMCCB is expected to be pushed through and become law in early 2024. Its implementation will bring a fundamental change about how we think about the risks and sanctions associated with non-compliance with consumer law in the UK.
We also expect to see further developments regarding the secondary legislation due to accompany the DMCCB in 2024. The government has recently consulted on a range of matters, including a new "blacklist" of offences under the DMCCB that relate to fake reviews and "dark patterns" in the form of hidden fees and drip pricing. The Competition and Markets Authority has responded to the consultation and agreed with the proposed list of banned practices, However, the UK regulator also suggested that misleading environmental claims should be added to the list under the DMCCB. Further government consultation is expected on the possibility of creating new banned practices around these issues.
Digital Services Act
The EU Digital Services Act (DSA) became enforceable for the first set of very large online platforms (VLOPs) and very large online search engines (VLOSEs) (as defined by the DSA) on 25 August 2023. The DSA will become applicable to all in-scope digital services from 17 February 2024. Therefore, 2024 will likely be the year when we start to see what "market practice" DSA compliance looks like for non-VLOPs and VLOSEs. Guidance from the EU on the DSA is also anticipated. (You can see our Insight to find out more about the scope of the DSA.)
Fitness check on EU consumer law
The consultations allowed us to have an understanding of the topics the Commission is focusing on as part of its review. The areas of focus that emerged in both consultations include dark patterns, the addictive use of digital products, subscriptions (including subscription cancellation), the misuse of personal data and personalisation practices, and influencer marketing. The targeted survey conducted last year widened the scope of topics, additionally addressing, among other things, artificial intelligence (AI) and the use of automation in consumer services (such as chatbots), virtual and augmented reality, and the use of connected products (that is, the Internet of Things).
It is not likely that legislation will be passed in 2024, but more concrete proposals regarding any new legislation or amends to existing legislation are expected, most likely around dark patters and AI. There is a suggestion that this will take the form of standalone digital-fairness legislation to promote fairness for consumers in the digital world and to address the asymmetry in power caused by the ability of platforms to leverage data.
New guidance on professional diligence
We expect more guidance on what professional diligence means for businesses both in the UK and EU. In the UK, this issue was addressed as part of the government's consultation on a range of proposed measures across core consumer laws. The Department of Business and Trade (DBT) proposed to create new guidance on what "professional diligence" means in the context of online platforms. The DBT consulted on whether and how the government should build on the existing definition of professional diligence.
In the EU, this issue was addressed as part of the Commission's fitness check of consumer law, in which it sought views on whether the concept of "professional diligence" should be further clarified in the context of digital environment.
Definition of vulnerable consumers
A new definition of vulnerable consumers was incorporated in the DMCC B in the UK. As part of its fitness check of EU consumer law, the Commission also sought views on whether the concept of "vulnerability" (including situational vulnerability) in the digital space is sufficiently addressed in current EU consumer law. We could, therefore, expect a new definition to be introduced in the EU as well (which could be different to the one incorporated in the DMCCB).
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