Smarter regulation? Department of Business and Trade launches new consultation on core UK consumer law
Published on 6th Sep 2023
Consultation includes user reviews and 'dark patterns' such as drip pricing
The UK Department of Business and Trade (DBT) has launched a new consultation seeking views on a range of proposed measures across core consumer laws in the UK, entitled "Smarter Regulation: Consultation on Improving Price Transparency and Product Information for Consumers", which supplements the significant consumer reform proposed by the Digital Markets, Competition and Consumers Bill (DMCC Bill).
The consultation opened on Monday 4 September and will conclude on Sunday 15 October, with an expectation that the consultation response will be published in autumn 2023.
What is covered by the consultation?
The DBT is seeking feedback on a range of proposed measures falling within the following six broad categories:
Dark patterns including hidden fees and drip pricing
Parliamentarians have hinted at concerns about so-called drip pricing during the progression of the DMCC Bill so it is no surprise that this practice is a firm feature of the consultation. Drip pricing refers to a practice where compulsory fees are inconspicuously added during the consumer journey, so that the actual price paid by the consumer is higher than the price initially advertised to them.
At the same time as launching the consultation, the DBT published research on the prevalence and impact of drip pricing on UK consumers, illustrating that this is firmly on the government's radar.
While the DBT's proposals mainly codify existing law into blacklisted offences (in that a failure to inform consumers about compulsory charges will almost certainly be viewed unfavourably by consumer regulators under the existing unfair commercial practice regime), they will make enforcement action easier and firmly categorise the conduct as unfair and unlawful.
Fake and misleading reviews
After being quietly dropped from the DMCC Bill, reviews are now back on the agenda. The DBT is consulting on adding the following to the "blacklist" of offences automatically considered unfair under 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; and
- misrepresenting reviews, or publishing or providing access to reviews of products and/or traders without taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews and/or 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.
This means an obligation on platforms to conduct reasonable and proportionate checks is also back on the table, and potentially goes further than what is required by EU law. It is expected that the Competition and Markets Authority (CMA) will provide guidance that will state that such an obligation amounts to:
- having proactive detection processes in place to identify suspicious reviews;
- having procedures for removing and preventing consumers from encountering fake reviews;
- sanctioning users and businesses in response to fake reviews;
- having a process for assessing the risk that fake reviews will appear on their website;
- implementing a reporting mechanism that allows people to report suspicious activity; and
- undertaking regular evaluation of the effectiveness of these systems.
In addition, it is expected that transparency measures targeting incentives for reviews will capture influencers.
While the devil will be in the detail, an offence targeting the presentation of information that is "determined or influenced by reviews" could be fairly broad in scope, and include matters such as using reviews to drive ranking, average star ratings and testimonials in marketing copy. The express inclusion of this as part of the blacklisted offence could make using reviews in this way without risking breaching the rules more challenging.
The DBT is proposing to create new guidance on what "professional diligence" means in the context of online platforms.
The consultation invites comments on this but suggests that it could mean an obligation to take "active steps" to prevent consumer harm. This to some extent mirrors EU proposals to publish guidance on this topic, illustrating that regulatory expectations on platforms to police content and protect consumers may continue to rise across Europe.
Online interface orders
Existing powers under the Enterprise Act 2002 empower the CMA to apply to court for an online interface order (or, in urgent cases, an interim online interface order). In essence, these orders direct a person to remove or modify content; disable or restrict access; display a warning; or delete a fully qualified domain name. The DMCC Bill restates a simplified and streamlined version of these powers.
Among other matters, the DBT is proposing to enable other enforcers to use online interface orders to force platforms to take down content – this may include sector-specific regulators such as Ofcom and Ofgen, as well as local authority trading standard services.
With multiple regulators comes the potential for an ad hoc and splintered approach – so, if the DBT's proposals come to fruition, there is a possibility that traders will receive a slew of uncoordinated approaches by regulators.
Display of pricing information
Generally, the display of pricing in the UK is primarily governed by the Price Marking Order 2004. The DBT is now seeking feedback on whether this is up to date and fit for purpose.
The DBT's focus on price displays follows the CMA's investigation into unit pricing in the grocery sector, and – based on the questions asked by the DBT – is focused on unit pricing.
Private rights of redress
Currently, consumers have the right to exercise private rights of redress under certain circumstances where they have been the victim of a misleading action or an aggressive practice. Such rights are restated in the DMCC Bill. However, consumers who have suffered detriment as a result of a misleading omission or a breach of professional diligence by a trader, or as a result of a trader's breach of the "blacklist" of offences, do not have private rights of redress.
The DBT is seeking views on whether consumers' private rights of redress should apply to a broader range of practices. If the DMCC Bill is expanded to include them, then traders may encounter a higher volume of private actions (in addition to enforcement action by regulators).
Osborne Clarke comment
This is the latest step in post-Brexit moves by the UK government to pave its own way in respect of consumer protection law, following the introduction of the DMCC Bill in April 2023 (which is currently at the House of Commons Report stage).
The consultation demonstrates that the government is now actively starting to review retained EU laws and it seems that consumer law is a particular focus. In some cases, the proposals go further than what is required under EU law, including under the EU New Deal for Consumers. If adopted, these new blacklisted offences in relation to reviews would make it difficult for businesses to have a consistent compliance approach across the EU and UK.
The biggest unknown is what the new guidance on professional diligence will mean for platforms. The consultation is largely silent, but the possibility of some shift in expectations on platforms to protect consumers cannot be ruled out. While there is equivalent guidance proposed in the EU as part of its refit of consumer law, it is likely that there will be some differences.
If you would like to hear more about how the measures proposed may affect your business, or need assistance to respond to the DBT's consultation, then get in touch with one of our experts.