Businesses in the UK could face swifter and more direct action if they are found to be infringing consumer rights as new powers for the Competition and Markets Authority (CMA) come into force.
The new consumer protection regime, introduced under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), aims to tackle “poor corporate practices” and give the CMA the ability to deliver more effective consumer protection.
Through the changes, the CMA can directly decide whether consumer protection laws have been broken, eliminating the need for court cases, and tackle breaches in a direct and proportionate manner, including through consumer redress and fines.
Two key areas of focus for the DMCCA are banning fake reviews, including the posting or commissioning of fake reviews, and “drip pricing” – the practice of providing products and services at initial low prices with hidden additional fees – to address deceptive online practices and ensure transparency in pricing.
Over the next 12 months, the CMA has confirmed it will be targeting a series of behaviours “particularly harmful to consumers” including:
- Aggressive sales practices targeting vulnerable consumers.
- Hidden fees revealed late in the buying process.
- Objectively false information being given to consumers.
- “Unfair and unbalanced” contract terms.
As well as opening its first enforcement cases under the new regime, focused on more egregious breaches of the law, the CMA has outlined a number of positive actions it will be taking as part of its next steps. This includes working with stakeholders to understand the areas and issues that most require consumer law advice and to explore new opportunities for businesses to access advice where a lack of legal precedent could be impacting innovation.
Guidance has been issued on how to comply with the existing, well-established aspects of the law and will look to consult on the new aspects, which have created uncertainty, in order to provide final guidance later this year.
Kate Westbrook, Thrings Head of Commercial, said: “This new regime demonstrates the CMA wanting to take a firmer approach to ensure a level playing field and it is positive to see their commitment to taking a proportionate approach as well as giving businesses support to ensure their compliance.
“That being said, with such a wide raft of changes coming into force immediately, businesses will need to be sure that they are compliant or else face potential action. We would certainly recommend that any such business seek legal advice on any areas of doubt and engage with the CMA on its upcoming consultation to ensure guidance and clarity is provided on any unclear areas.”
Thrings’ Commercial lawyers are experienced in supporting businesses of all sizes through the complicated changing worlds of contracts, intellectual property and technology, helping clients to stay on top of new laws and ensure best practice. Get in contact to find out how they can help your business achieve its goals.
