In brief:
The Department for Business & Trade (DBT) has recently published the Government’s outcomes from its consultation on ‘Smarter Regulation: Improving consumer price transparency and product information for consumers’. The key takeaways are as follows:
- Hidden fees and drip pricing: the Government, through the landmark Digital Markets, Competition and Consumers Bill (the DMCC Bill), which is due to come into force later this year, will prohibit the use of headline prices which fail to include fixed and variable mandatory fees (including how variable mandatory fees will be calculated).
- Fake Reviews: certain commercial practices related to fake reviews will be prohibited and added to the list of practices that are considered unfair in all circumstances. While the Government decided against such practices being subject to criminal liability, they will carry the risk of civil liability.
- Unit pricing and the display of pricing information: the Government proposes to make various amendments to the Price Marking Order 2004 (PMO) and associated guidance including, for example, to mandate the consistent use of unit pricing and create clear legibility criteria for instore price labels.
- Online platforms: further stakeholder engagement regarding platform obligations will be undertaken.
- Online interface orders: powers to make applications to the court for online interface orders and interim online orders will be extended to all public designated enforcers listed in the DMCC Bill.
- Private redress: the Government is still considering whether to extend private redress rights to more unfair commercial practices.
In more detail:
Hidden fees and drip pricing
- The Government has committed to prohibiting the provision of headline prices which do not incorporate fixed mandatory fees or disclose the existence of variable mandatory fees and how these will be calculated.
- The Government wants to enable the Competition and Markets Authority (CMA) and other enforcers to take more effective and swifter action against misleading pricing practices and will reinforce existing legal provisions in the DMCC Bill. In addition, the Government will remove the need for a court or enforcer to consider whether a commercial practice has influenced consumers’ ‘transactional decision-making’ where the relevant practice is said to have involved the omission of material information and where it constitutes an invitation to purchase.
- In respect of optional fees, the Government has said that, for now, it does not intend to legislate, but will continue to review the impact of optional drip fees on consumers and will further consider how to regulate these in a proportionate way.
Fake reviews and updates to the list of banned practices
The Government intends to add certain practices involving fake reviews to the list of automatically unfair commercial practices under Schedule 19 of the DMCC Bill.
- The list, as amended, includes:
- submitting a fake review, or commissioning or incentivising any person to write/submit a fake review;
- offering or advertising to submit, commission or facilitate a fake review; and
- mispresenting reviews, or publishing or providing access to reviews without: (i) taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews; and/or (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 capable of misleading consumers.
- The Government has said that it will make the proposed banned practices in respect of fake reviews subject to civil liability only, i.e. such practices will not give rise to criminal liability.
- The CMA, alongside the Government, will consult on and produce guidance on the ‘reasonable and proportionate’ steps that traders will be expected to take.
- In the consultation, over 80% of respondents were supportive of proposed measures on what ‘reasonable and proportionate’ steps traders in scope might need to implement, including:
- proactive detection processes to identify suspicious reviews;
- processes which avoid consumers from encountering fake reviews, including processes for removing fake reviews;
- sanctions for users and traders in response to fake reviews;
- processes for assessing the risk that fake reviews will appear on traders’ websites; and
- mechanisms for reporting suspicious activity and regular evaluations of the effectiveness of such systems.
Unit pricing and the display of pricing information
- Building on recommendations from the CMA’s investigation into unit pricing, the consultation sought views on proposals to reform the PMO, which governs the transparency of pricing information to consumers.
- A majority of respondents agreed with the Government’s proposals to reform the PMO, including, for example:
- mandating the use of consistent units of measurement for unit pricing; and
- clarifying requirements on legibility and on how promotional pricing should be displayed.
- In response, the Government confirmed that the proposal to mandate the consistent use of unit pricing will be taken forward and the Government will work with stakeholders to determine whether any exceptions should remain.
- The Government considers that there is a need to set out clearer legibility criteria and intends to work with retailers and enforcement bodies to improve legibility of price labels, whether by legislation, guidance or both.
Other conclusions
- Online platforms: the Government has acknowledged the need for more engagement with online platforms to create further guidance on the requirement under the DMCC Bill to act with ‘professional diligence’ in relation to digital transactions.
- Online interface orders: the CMA has specific powers to seek an order from the court requiring online traders to remove or modify content which infringes consumer law. In response to the consultation, the Government intends to extend these powers to other public enforcers. At this stage, it was decided not to extend these powers to private enforcers such as Which?
- Private rights of redress - prohibited practices: where consumers have been subject to misleading or aggressive commercial practices, the Consumer Protection from Unfair Trading Regulations 2008 provides consumers with the private right to redress. However, no such rights automatically arise in the case of the banned practices listed at Schedule 19 of the DMCC Bill. The DMCC Bill allows the Government to change this through secondary legislation, and in its response, the Government said that it is continuing to consider evidence as to whether this is needed.
