The Digital Markets, Competition and Consumers Act 2024 (DMCCA) is set to make significant changes to UK consumer protection law, including providing new enforcement powers to the Competition and Markets Authority (CMA). Recently, the Advertising Standards Authority (ASA) has upheld complaints of misleading advertising against Banquist Ltd and Haven Leisure Ltd, for issues surrounding product reviews and pricing claims. While the ASA upheld these complaints, the enforcement impact may have been significantly greater under the CMA's forthcoming enforcement powers under the DMCCA.
This blog considers the implications of these ASA rulings in the context of the new DMCCA regime and explores the broader enforcement landscape businesses must now navigate.
ASA Rulings on Misleading Advertising
Banquist Ltd t/a Winedrops
In February, the ASA ruled that Banquist Ltd, trading as Winedrops, marketed their products using pricing structures and product reviews in a way that was likely to mislead consumers. The complaint focused on the accuracy of product endorsements and the way discounts were communicated.
In the ruling, the ASA found that Winedrops had misled consumers by exaggerating their savings claims through price comparisons with higher, unrepresentative retail prices, which excluded supermarkets and larger wine retailers. Additionally, it misrepresented product reviews by displaying a 5-star rating in a way that resembled Trustpilot, when it was actually from a single customer on its own website.
Haven Leisure Ltd
More recently in March, the ASA ruled that Haven Leisure Ltd misled consumers with adverts containing unsubstantiated holiday price claims. These adverts were posted on Facebook and the company's website that listed advertising prices across a range of dates that had limited or no availability.
In both rulings the ASA upheld the complaints on the basis that the advertising practices were misleading and unsubstantiated. The ASA held that the advertising practices breached the provisions set out in CAP Code (Rule 3) which imposes obligations to prevent advertisements from misleading consumers through false information, omissions, or ambiguous presentations.
Scope of ASA Sanctions
These rulings reinforce the ASA’s role in protecting consumers from misleading advertising. Whilst the ASA's enforcement powers do not extend to financial sanctions, the range of sanctions available to the ASA are widely regarded as a significant deterrent to businesses. For instance, negative publicity that comes from the publication of upheld complaints on the ASA website and other mainstream media is considered one of the most persuasive sanctions available to the ASA.
In addition, the ASA can refuse advertising space or impose pre-vetting requirements on advertisers. Trading privileges can also be withdrawn. Finally, the ASA can refer an advert for further enforcement through Trading Standards, although such measures are typically reserved for the most serious issues of non-compliance where the ‘teeth’ of legal enforcement is deemed necessary to address the impact of non-compliance.
The DMCCA: A Game-Changer for Consumer Protection
The DMCCA, is poised to introduce substantial changes to UK consumer protection laws. Notably, it grants the CMA enhanced enforcement powers to take direct action against businesses engaging in unfair commercial practices, avoiding the need for lengthy court proceedings. The DMCCA also makes changes to the rules on unfair commercial practices, including new rules on drip pricing and fake reviews.
These sections of the DMCCA come into force on 6 April 2025. For more information on changes to the law on unfair commercial practices, read our overview of the consumer protection aspects of the DMCCA.
Under the DMCCA, businesses that fail to comply could face substantial financial penalties, with the CMA empowered to impose fines of up to £300,000 or 10% of global turnover for serious breaches. By providing the CMA with greater autonomy and immediate sanctioning abilities, the DMCCA seeks to deter businesses from engaging in activities such as misleading pricing tactics and review manipulation.
The CMA's new enforcement powers will work alongside the ASA's current regulatory framework, complementing existing enforcement powers. However, it's worth noting that the Committee of Advertising Practice (CAP) will apply a temporary workaround pending its own review on the alignment of the CAP/ BCAP Codes with the DMCCA. On 21 March 2025, the CAP issued a statement to explain that some of the rules in the advertising codes are currently under review following CAP (and BCAP's) consultation on the impact of the unfair commercial practices provisions under the DMCCA. Until the review of the CAP and BCAP Codes is completed, marketers are advised to refer to the unfair commercial practices provisions within the DMCCA and the ASA will take these provisions into account when applying the relevant rules.
Ultimately, had the DMCCA been in force when the Banquist Ltd or Haven Leisure Ltd rulings were laid down, the enforcement impact may have been noticeably different.
Broader Enforcement and the Role of the CMA
As we discussed in our previous blog on unfair commercial practices and the CMA's new enforcement powers, the introduction of the DMCCA highlights a broader shift towards stronger regulatory oversight in consumer markets.
The CMA's role in enforcing consumer protection laws will be significantly expanded, and businesses should anticipate increased scrutiny. Unlike the ASA's current regime for misleading advertising, the CMA will have the power to directly impose fines and sanctions.
With this in mind, the CMA is set to publish the following before the 6 April 2025:
- Enhanced guidance on unfair commercial practices, making it more accessible and clearer. This will be complemented by a comprehensive business outreach program to help companies understand and comply with the new regulations.
- An approach document outlining the CMA's strategy for consumer protection. This will detail their implementation of the '4Ps' framework (pace, predictability, proportionality and process) and specify the enforcement priorities for the first year of the new regime, with an emphasis on addressing the most severe violations.
- Procedural guidance for the direct enforcement model, detailing the entire process of enforcement actions from initiation to conclusion, including interactions with involved parties. Additionally, guidance on the consumer protection regime will explain how it fits within the broader regulatory landscape and outline the circumstances under which the CMA will exercise its direct enforcement powers.
While these changes will apply to all traders, this shift is particularly relevant for e-commerce and online retail, where pricing transparency and customer trust are critical. With fake reviews and misleading discount strategies becoming more prevalent, regulators are keen to ensure that consumers are not misled by deceptive marketing tactics.
The DMCCA’s explicit blacklisting of certain practices means that businesses must now exercise greater diligence in how they present their products and services online. Notably, in relation to the new duty to take steps to prevent fake reviews, the CMA have stated that the first three months of the DMCCA regime will prioritise assisting businesses in their compliance efforts rather than focusing on enforcement actions, recognising that the new provisions may necessitate adjustments to existing systems and compliance programs.
Key takeaways for businesses
- Increased scrutiny on pricing transparency – The DMCCA introduces new rules against misleading pricing practices including drip pricing, meaning businesses must ensure that discounts and promotional claims are clear, accurate, and substantiated. Any pricing strategies that create a false sense of urgency or exaggerate discounts or do not clearly state the total contract price could now attract direct enforcement action.
- Fake reviews are now blacklisted – Any attempt to manipulate consumer trust through fabricated or incentivised reviews could lead to direct enforcement action by the CMA, with significant financial and legal consequences. Businesses using third-party platforms for reviews must ensure their authenticity and compliance with these new regulations.
- Stronger enforcement mechanisms – Unlike the ASA, the CMA will have the power to impose immediate sanctions, making compliance with consumer protection laws a priority for all businesses operating in the UK market. This means that businesses must be proactive in monitoring their advertising practices to avoid regulatory breaches.
- A shift in regulatory culture – The DMCCA represents a shift in the UK’s approach to consumer protection, bringing it more in line with jurisdictions such as the EU and the US, where regulators take a more aggressive stance on misleading advertising and unfair commercial practices.
Preparing for regulatory changes
With the DMCCA on the horizon, businesses should take a proactive approach to compliance. This includes auditing current advertising and pricing strategies, reviewing review systems and the authenticity of customer reviews, and implementing internal controls to ensure alignment with the new legal framework. Failure to comply could lead to significant financial penalties, reputational damage, and loss of consumer trust.
In addition, businesses should monitor the upcoming changes to regulatory guidance from both the ASA and CMA in light of the DMCCA to stay ahead of enforcement trends. Ensuring that all marketing communications are transparent, accurate, and evidence-based will be crucial to avoid regulatory scrutiny.
The recent ASA rulings highlight the growing regulatory focus on transparency in advertising and pricing. However, when the DMCCA comes into force, businesses can expect a more robust enforcement landscape, with higher stakes for non-compliance. Businesses must now ensure that marketing practices align with both existing ASA guidance and the forthcoming CMA enforcement powers.
We have extensive experience advising clients on advertising requirements and compliance with the new DMCCA regime. Should you wish to discuss anything raised in this blog further, please contact Grant Strachan, Martin Sloan or your usual Brodies contact.
