The Government has outlined plans for a number of reforms to consumer protection law. The new bill, announced in the Queen's Speech, follows the Department for Business, Energy and Industrial Strategy's response to its consultation in July 2021 and covers a number of areas including introducing protections for consumers in subscription contracts, new rules around fake reviews, and changes to enforcement powers.
Businesses will be under an obligation to prevent any 'subscription traps' by being more transparent at the outset of subscription agreements.
Consumers will need to be provided with a reminder that their free-trial or a reduced price offer is about to end or that their agreement is due to auto-renew. The process of cancelling a subscription agreement should be simple, economical and should not be time consuming.
Some sectors will be exempt from these requirements if it is already regulated and the regulator imposes comparable restrictions.
The Government plans to add some additional automatically unfair practices to the Consumer Protection from Unfair Trading Regulations 2008.
These include displaying consumer reviews where a business has not taken appropriate steps to verify that the review is legitimate, commissioning or incentivising people to create fake reviews and offering or advertising to submit, commission or facilitate such reviews.
Preventing online exploitation of consumer behaviour
Although undisclosed paid-for advertising and drip pricing were mentioned in the consultation, the Government has opted not to introduce any specific measures at the moment. Instead it has said that it will continue to build up its evidence base in relation to these practices.
The response also sets out intended changes to enforcement.
Similar to the current regime under competition law, the Competition and Markets Authority (CMA) will have increased enforcement powers to make judgments on whether consumer law has been breached and issue penalties directly. There will also be a statutory duty of expedition across all of the CMA's responsibilities to allow for swift decision making.
For example, the CMA will be able to take action to bring unlawful practices to an end and will have the power to enforce penalties of up to 10% of global annual turnover. They will also be able to grant redress to consumers who have suffered as a result of unlawful practices. In addition to fines issued by the CMA, there will also be new civil financial penalties that can be issued by the courts.
What does this mean for businesses?
The Government has not yet published its draft bill. However, there are steps businesses can take now to prepare for these changes.
For example, if your business model operates around subscription agreements with consumers, you may want to consider what operational changes you will need to make when the legislation comes into effect and how this might impact on your current approach to sales and marketing (for example the use of free trials).
Where your business publishes customer reviews, you may want to consider what methods you can use to verify reviewers.
The changes are likely to make it easier for the CMA and consumers to enforce penalties or seek monetary compensation than they can at present so now may be a good time to review current documents and processes and ensure they comply with consumer protection law to avoid future exposure when these changes come into effect.
The full consultation response can be found at here.
If you would like to discuss how the proposed changes may impact on your business, or have other questions on consumer protection laws, please get in touch.