The Digital Markets, Competition and Consumers Act (‘DMCC Act’) has received Royal Assent and its provisions are expected to come into effect over the next couple of years, following publication of secondary legislation and practical guidance.[1] The DMCC Act is a wide-ranging piece of legislation which establishes a new regulatory framework for digital markets and strengthens the CMA’s competition investigation and enforcement powers.
For consumer-facing businesses the DMCC Act brings a raft of changes to UK consumer protection law, including an expanded range of prohibited business practices and strict new obligations on traders. The new provisions are especially relevant to those who trade online or who offer products and services on a subscription basis.
Subscriptions
Traders who offer products or services to consumers on a subscription basis (subject to limited exceptions) will have to comply with stringent measures intended to help consumers avoid being locked into subscriptions which they no longer want, or have forgotten about. Most notably, the DMCC Act provides that:
- traders must provide consumers with specified pre-contract information before they enter into a subscription contract. The DMCC Act prescribes what, when and how this information must be provided;
- traders must send a reminder notice to consumers prior to the end of any free or discounted introductory subscription period, as well as in respect of the last renewal payment due in every six month period (or, where renewal payments are due less frequently than every six months, in respect of each renewal period);
- consumers are entitled to a 14-day cooling off period at the end of any free or discounted introductory period, or where their subscription will renew for at least 12 months. During these cooling-off periods consumers can cancel the contract without penalty or charge, and traders must give consumers notice of their rights to do so. This is in addition to the initial 14-day cooling off period at the start of a consumer subscription; and
- consumers must be able to cancel a subscription in a straightforward way, which includes an option to end the contract online, where it was entered into online.
Drip pricing
The DMCC Act contains measures to prohibit ‘drip’ pricing, where traders add unavoidable hidden fees to the advertised price of a product or service as the customer goes through the purchase process. Traders are prohibited from omitting material information when inviting a consumer to make a purchase, meaning that the total price of a product or service must be stated upfront, inclusive of any fees, taxes, charges or other payments the consumer will incur if they decide to purchase.
Fake customer reviews
The DMCC Act lists various commercial practices which are classed as unfair. The list will look familiar to consumer-facing businesses as it reflects the established provisions of the Consumer Protection from Unfair Trading Regulations 2008, which will now be covered by the DMCC Act.
Recognising the shift to online trading, a notable addition to the list is submitting (or commissioning another person to submit or write) a consumer review which is fake, or which conceals the fact it has been incentivised. It will also be illegal to publish consumer reviews in a misleading way, or without taking such reasonable and proportionate steps as are necessary to prevent fake or misleading reviews.
Strengthened enforcement of consumer protection legislation
The DMCC Act grants the CMA new, direct powers to enforce consumer law, which means the CMA will be able to directly impose significant financial penalties on infringing businesses (up to the greater of £300,000 or 10% of annual global turnover) where it determines that consumer law has been broken, rather than having to apply to the courts for an enforcement order.
The CMA will also be able to impose substantial fines for non-compliance with undertakings given to it, or where a party provides materially false or misleading information to it in connection with an investigation into a suspected infringement. The CMA has already stated that it “stands ready” to use its new powers.
What does this mean for your business?
The law applicable to consumer-facing businesses, particularly those trading online, will soon be changing quite significantly. The likelihood of enforcement action and the risk of substantial penalties for those who fail to comply with their responsibilities is potentially set to increase.
The new legislation is detailed and prescriptive and this article highlights only certain points around key changes.
Every consumer-facing business should take time to assess the impact on them and look out for the forthcoming secondary legislation and Government guidance which will help understand how to implement the new law in practical terms. However, there is no time like the present to start reviewing your business processes and terms and conditions to ensure your contracts with consumer customers will remain enforceable, to identify any gaps and to ensure that you will be ready to meet the standards set in the DMCC Act.
[1] The Government has confirmed that, in respect of the DMCC Act’s provisions on consumer subscription contracts specifically, these will not come into effect before spring 2026. This is to allow sufficient time for detailed secondary legislation and/or guidance to be published and in acknowledgement of the work that will be required by many businesses to update their systems and terms of business to comply with the new requirements.
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