UK Government consults on consumer law reform
11 September 2023
Even before the Digital Markets, Competition and Consumers Bill (DMCC Bill) completes its passage through the UK parliament, the UK Government is consulting on further consumer law reform. A key purpose of the legislation under review in the consultation is to ensure consumers are provided with timely and relevant information when making decisions.
Its proposals cover these key areas:
- The display of pricing information;
- Hidden fees and drip pricing;
- Fake and misleading reviews;
- Online platforms;
- Online interface orders; and
- Protection from unfair trading – further issues.
Display of pricing information
How retailers display prices for consumers is governed by the Price Marking Order 2004 (PMO) and, for Northern Ireland, the Price Marking Order (Northern Ireland) 2004. The PMO requires traders to display the selling price and, where appropriate, the unit price of products sold to consumers. Unit price means the final price for a metric unit of the particular product, for example kilogram or litre. The final price must be inclusive of VAT and other taxes.
There are concerns that how the requirements of the PMO apply to certain types of promotion, such as volume pricing (e.g. multibuy discounts) or loyalty pricing (e.g. lower prices for customers who are members of the trader’s reward scheme) are unclear and capable of differing interpretation by retailers. For example, some retailers provide unit pricing for promotional items, but this practice is not consistent. To add further weight to this concern, the Competition and Markets Authority (CMA) has carried out a study in this area and identified that, although the larger retailers often comply with the PMO, there are certain provisions of the PMO which are unclear which is leading to inconsistent approaches taken by traders as well as additional regulatory burden.
Taking these issues into account, the Government is consulting on the following proposals:
- Mandating the consistent use of unit pricing measures for products so businesses can more easily comply, and consumers can compare similar items more easily.
- Improving the legibility of pricing information through adopting consistent standards that businesses can easily comply with rather than having to invent their own.
- Whether the current small shop exemption should be revised.
- Strengthening and clarifying the requirement to provide promotional unit pricing for promotional offers, such as loyalty schemes or multibuys of similar items.
- How the proposed glass deposit return schemes should be dealt with on pricing labels.
Hidden fees and drip pricing
Drip pricing occurs when consumers are shown an initial price for a product (known as the base price) and additional fees are introduced (or “dripped”) as consumers proceed with a purchase or transaction.
Drip pricing can result in consumers being “baited” into choosing a product because of its lower base price, but then ultimately paying more once further fees and optional products are added.
Drip pricing can undermine price transparency and make it difficult for consumers to make informed purchase decisions based on price and/or the characteristics of the product. As well as leading consumers to spend more than they otherwise would if the total price was clear upfront, this lack of transparency may also limit price competition as traders compete on artificially low headline prices rather than the price which consumers pay in practice. This means that consumers cannot easily compare prices across providers and make informed purchasing decisions.
The DMCC Bill will make the omission of material information from an invitation to purchase a separate unfair commercial practice and an offence. This means that, where there is an invitation to purchase, consumers must be provided with information which they need in order to make an informed transactional decision.
The Government is not currently making any further concrete proposals in this area but has called for more evidence on whether there should be further intervention specifically focused on drip pricing, and if so, which practices it should address.
Genuine consumer reviews can help consumers make better informed purchasing decisions, but the growing prevalence of fake reviews can distort consumer purchase decisions, potentially leading consumers to choose poorer quality products and making it difficult for traders to operate on a level playing field.
The Government is proposing to add the following practices to Schedule 18 of the DMCC Bill, which sets out those commercial practices which are unfair in all circumstances:
- 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.
- 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;
- 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.
The Government is also considering whether, given the scale, sophistication and commercial impact associated with the generation of fake reviews, the carrying out of these practices should be a criminal offence. It also wants the CMA to produce and consult on guidance and then use its new enforcement powers in the DMCC Bill to secure compliance, alongside trading standards bodies.
Other unfair practices
The Government has also requested suggestions for further improvements to Schedule 18 (the banned practice list). The practices currently proposed to fall within Schedule 18 of the DMCC Bill largely reflect those set out at Schedule 1 of the Consumer Protection from Unfair Trading Regulations (CPRs) which date back to 2008 and so it is important to ensure they remain relevant and necessary.
In addition, the Government has asked if further unfair commercial practices should be added to the list of prohibited practices which attract private rights of redress i.e. when a consumer has been the victim of a misleading action or an aggressive practice. By way of contrast, consumers who have suffered detriment as the result of a misleading omission, a breach of professional diligence by a trader or a practice listed at Schedule 1 of the CPRs or Schedule 18 of the DMCC Bill do not currently carry any private rights of redress.
Consumers are increasingly buying products from online platforms. The DMCC Bill restates the rules in the CPRs which include the responsibilities of online platforms (and traders more generally) to act with professional diligence in relation to consumer transactions promoted or made on their platforms. The Government seeks view on whether and how it should build on the existing definition of professional diligence. This could involve taking "active steps" to prevent consumer harm. The aim would be to ensure online platforms and consumers have greater clarity over their respective rights and responsibilities.
Online interface orders
Under the Enterprise Act 2008, the CMA may apply to court for an online interface order (OIO) or, in urgent cases, for an interim online interface order (IOIO). These are court orders that direct a person to do one or more of the following:
- Remove content from, or modify content on, an online interface;
- Disable or restrict access to an online interface;
- Display a warning to consumers accessing an online interface;
- Delete a fully qualified domain name and take any steps necessary to facilitate the registration of that domain name by the CMA.
The Government is considering whether to extend the power to apply to court for OIOs and IOIOs to additional consumer law enforcers, such as trading standards authorities and sector regulators like Ofcom.
The consultation ends on 15 October 2023 with a response due before the end of the year. Organisations trading with consumers will already be keeping an eye on the passage of the DMCC Bill and preparing to review their practices accordingly, but it looks like there may be more change to come. In addition, the EU has also been considering further changes, including to the use of “dark patterns” (something not fully considered in this consultation other than regarding drip pricing, although the CMA has been actively investigating their use) so it is a busy time for B2C traders.
Another issue for traders to consider is product safety regulation – the Government called for evidence in August, and has, according to the Times, indicated that it will be introducing amendments to the DMCC Bill to deal with the liability of online marketplaces for unsafe products.