On Tuesday, the UK government launched a consultation on its ‘Reforming Competition and Consumer Policy’ which sets out an ambitious vision to transform competition and consumer policies to make the UK the “best in class”.
The package of reforms in this consultation covers three areas: (i) competition policy; (ii) consumer rights; and (iii) consumer law enforcement. It comes as the government has identified that there is increasing evidence to suggest competition and consumer policies are failing to keep up with the times, compounded by the effect of the COVID-19 pandemic.
Specifically in relation to consumer laws, the government has highlighted two main areas where consumer rights need to be ramped up – first, when it comes to online shopping, and second, in relation to subscription contracts.
The rise of consumer catfishes responsible for fake online ratings and reviews will be targeted by rules that make it illegal to pay someone to write, or host, a fake review. Furthermore, the principle of ‘fairness by design’ should be at the forefront of traders’ minds in how it transacts with consumers online.
Unsurprisingly, strengthening and clarifying the rules on pre-contract information is a primary focus to tackle subscription traps. This is with a view to ensuring that consumers can make informed choices before they sign-up and are given a choice on auto-renewal; nudging consumers as to ongoing subscriptions; and making it easier for consumers to get out of subscriptions too.
Other proposals that will significantly change the regulatory and enforcement landscape in this area, includes handing the Competition and Markets Authority (CMA) civil consumer enforcement powers.
At present, many consumer protection cases are settled by way of voluntary undertakings given by companies following a lengthy court procedure that can take months or years.
This change is significant as it will enable the CMA to investigate and make decisions itself relating to consumer law infringements (like it can with competition law breaches), and impose penalties (including fines of up to 10% of annual turnover) directly for breach of the rules by traders.
As the regulatory spotlight shines down on consumer laws, traders should take this time to revisit their practices when it comes to engaging with consumers and get comfortable that they are doing everything by the book.
The consultation closes on 1 October 2021.
Tough penalties for non-compliance are being put forward, with new powers for the CMA and similar enforcers to hit unscrupulous traders who breach consumer law with fines of up to 10% of their global turnover, and civil fines for businesses who refuse or give misleading information to enforcers.