In brief
The UK Government passed the long-awaited Digital Markets, Competition and Consumers Act (DMCC) on 24 May 2024.
The DMCC will bring radical change to the enforcement of consumer law in the UK, introducing new powers for the CMA to issue direct fines of up to 10% of global annual turnover for breaches.
The DMCC also introduces changes to substantive UK consumer law provisions, including changes related to subscriptions, online reviews and drip pricing. This spotlight series will focus on the substantive changes to consumer law introduced by the DMCC, and how it compares to the position in the EU.
This week’s spotlight is on the DMCC provisions related to online consumer reviews.
Context – Why the focus on online reviews?
The focus on online consumer reviews is not new: it has been an area of regulatory focus in the UK over the past decade, with the CMA issuing a number of reports and guidance on the topic. The CMA has also carried out a series of company investigations related to fake and misleading online reviews, and its broad investigation into online reviews remains open.
The CMA, and consumer rights organisations have long been vocal about the potential consumer harm from fake reviews. This was a clear focus of parliamentary debates on the proposed text of the DMCC, which cited CMA research that the average UK household spends £900 a year as a result of being influenced by online reviews, and research published by the Department for Business and Trade which stated that 11% to 15% of reviews it assessed were “fake”.
The express inclusion of these provisions as new banned practices within the DMCC provides a clear indication that fake and misleading reviews continue to be perceived as a significant market problem, and we anticipate further scrutiny and enforcement action in this area.
What are the new provisions?
The DMCC introduces new entries to the list of commercial practices which are in all circumstances considered unfair (previously under the Consumer Protection for Unfair Trading Regulations 2008). This includes detailed provisions on online reviews which impact both traders submitting or commissioning online reviews, and traders that host online reviews on their websites.
There are four new banned practices related to online consumer reviews:
- Submitting or commissioning: (a) a fake consumer review, or (b) a consumer review that conceals the fact it has been incentivised.
- Publishing consumer reviews, or consumer review information, in a misleading way.
- Publishing consumer reviews, or consumer review information without taking reasonable and proportionate steps to: (a) prevent the publication of fake consumer reviews, consumer reviews that conceal the fact they have been incentivised, or consumer review information that is false or misleading; and (b) remove any such reviews or information that has been published.
- Offering services to traders to submit or commission fake reviews or publish reviews in a misleading way, and facilitating those prohibited commercial practices.
The explanatory notes to the DMCC confirm that the CMA will publish guidance on these provisions (particularly on the requirements to take reasonable and proportionate steps to prevent and remove fake or misleading reviews). However, the anticipated date for publication of this guidance has yet to be confirmed. In the interim, enforcement practice and historical CMA guidance provides an indication of the CMA’s expectations and likely focus.
How does the position under the DMCC compare to the position under EU consumer law?
The DMCC provisions on online reviews do not directly mirror the language of the amendments to EU consumer law introduced by the Omnibus Directive. For example, the language of the Omnibus Directive puts emphasis on providing information about whether and how traders ensure reviews are genuine. In contrast, under the DMCC there is no express information requirement, instead there is a more express focus on requiring traders to take practical steps to prevent (and remove) the publication of fake or misleading online reviews.
However, regulator focus on the consumer harm stemming from fake and misleading online reviews remains broadly aligned across the EU and UK (with potential for broad enforcement action taken under provisions such as the obligation of professional diligence under the UCPD or DMCC). Therefore, traders should carefully consider if changes to processes required under the DMCC should also be rolled out to the EU markets (and indeed, if having two regimes is practically feasible!).
Next steps
With the introduction of significant new enforcement powers for the CMA, including the potential for fines of up to 10% of global annual turnover for breach of consumer law, and the historical and renewed focus on online reviews, there is a clear incentive to ensure compliant processes are in place.
Secondary legislation (yet to be published) will confirm the date when these new provisions will come into force, but we recommend beginning to think carefully about your compliance plan to bring existing practices into line with these obligations.
For further practical advice on implementing these new provisions, or assistance responding to relevant regulatory requests please reach out to our Consumer and Regulatory Investigations team.
