The DMCC Act – General Updates to Unfair Commercial Practices

The Digital Markets, Competition and Consumers (DMCC) Act 2024 (the ''Act'') makes a number of updates to the rules on unfair commercial practices, which businesses should look out for as the Act's consumer-related provisions are expected to apply from Spring 2025. The Act specifically bans fake reviews and hidden fees (also known as 'drip pricing'), and introduces new rules on subscription contracts, which we covered in our earlier blog here. In this blog, we look at how the Act tackles unfair commercial practices by addressing fake reviews, drip pricing and subscription contracts while also offering a more precise understanding of what constitutes an unfair commercial practice.

Unfair commercial practices

Unfair commercial practices were previously regulated in the UK by the Consumer Protection from Unfair Trading Regulations 2008 (the ''2008 Regulations''), which implemented EU Directive 2005/29/EC.

The 2008 Regulations prohibited businesses from engaging in unfair commercial practices with consumers by placing a general ban on aggressive and misleading practices (including misleading actions and misleading omissions) as well as a ban on certain practices considered always unfair.

The Act integrates an amended version of the 2008 Regulations, with their principles being restated and enforced in amended form through the Act. The Act incorporates over 30 unfair commercial practices from the 2008 Regulations, while also introducing fake consumer reviews and drip pricing as specific banned practices, which we discuss in more detail below.

Underpinning these changes is the Act's revised definition of what constitutes an unfair commercial practice. Under the 2008 Regulations, a commercial practice was considered unfair if it distorted the economic behaviour of consumers. However, under the DMCC Act, an unfair commercial practice is one which is likely to cause the average consumer to take a transactional decision they would not otherwise have taken.

The new wording directly addresses how a commercial practice should affect consumer decision making to constitute an unfair commercial practice, which, in turn, will make it easier for the Competition and Markets Authority (the ''CMA'') to identify and address unfair commercial practices and make use of its new enforcement powers.

We discuss the CMA's new powers under the DMCC Act in more detail in our previous blog here.

Fake reviews

Fake reviews refer to misleading or fabricated reviews designed to deceive consumers or influence their buying choices. The Act introduces new measures to ban fake reviews and, while it does not define what constitutes a fake review, it clearly outlines and bans related practices.

Businesses will be prohibited from:

writing, publishing, advertising, distributing or otherwise facilitating fake reviews;
commissioning or incentivising others to write fake reviews;
failing to take reasonable steps to verify reviews; and
failing to take steps to remove or otherwise prevent consumers from encountering fake reviews.

There is a clear express duty on businesses that make reviews available to ensure they verify the authenticity of their reviews and take reasonable steps to prevent fake reviews being made accessible to consumers in any way.

Drip pricing

Drip pricing is when businesses show consumers an initial price for a good or service while additional fees are revealed or ''dripped'' on at a later stage in the purchase process prior to completing the transaction. These added hidden fees may or may not be compulsory but will ultimately increase the final price of the product or service.

The Act introduces provisions to ban drip pricing and prevent businesses from presenting prices that fail to incorporate the actual total price of goods or services. Headline prices are therefore required to include all mandatory fixed fees, including any additional fees, taxes or other charges that necessarily apply to the transaction.

The Act also generally prohibits the omission of any material information from the price and businesses are required to take steps towards making their prices more transparent and avoid mandatory costs from being imposed on customers without warning.

Subscription traps

As we have discussed in more detail in our previous blog here, the Act introduces new rules for subscription contracts, In summary, the Act aims to eliminate ''subscription traps'', i.e., contracts which are difficult to exit by design and which may have the effect of 'trapping' consumers into renewals.

The Act aims to achieve this by requiring businesses to provide consumers with clear subscription details, simple termination processes, offer cooling-off periods and issue reminder notices for trial expirations and renewals, among other things. The aim of the new subscription rules is to make subscription contracts more transparent and consumer friendly.

What this means for businesses

While we are yet to see exactly how the CMA will tackle fake reviews, drip pricing and subscription traps, the CMA has been actively investigating unfair commercial practices in various contexts over recent years, and we expect these to be areas of ongoing focus for the CMA.

It is anticipated that the new rules on unfair commercial practices will come into force in April 2025 with the new rules on subscription contracts coming into force in Spring 2026.

As we wait for the CMA to publish its proposed guidance, consumer-facing businesses should review all aspects of their commercial practices to ensure that they comply with the Act.

Businesses that publish consumer reviews should take steps to ensure their current reviews are genuine while also considering what methods to use to verify reviews going forward.

Headline prices presented by businesses should accurately reflect the final price of their products or services and avoid imposing any hidden or 'dripped' fees as consumers progress through a transaction.

Furthermore, businesses that use subscription contracts should start thinking about how they will ensure that they offer clear subscription details, simple termination processes, cooling-off periods and reminder notices for trial expirations and renewals. To read more about the new rules around subscriptions contracts, see our previous blog here.

Please note the new rules in relation to UK competition law introduced by the Act are expected to come into force ahead of April 2025, in December 2024 or January 2025. For further detailed information on the competition law changes under the Act you can read our 4-part series – published when the Act was going through parliament – here:

Brodies is already working with clients to prepare for the new rules coming into force. For more information on the DMCC Act and how your business can prepare for the new rules coming into effect or consumer law generally, please contact Martin Sloan or your usual Brodies contact.