The Digital Markets, Competition and Consumers Act 2024

How the Digital Markets, Competition and Consumers Act 2024 affects your business when dealing with consumers 

If you sell to consumers, online or offline, the Digital Markets, Competition and Consumers Act 2024 (DMCCA) could change the way you deal with your customers. The DMCCA applies just as much to small and medium businesses as it does to larger corporations. Its main objective being to stop unfair sales tactics, improve transparency for the consumers and enhance regulator rights to enforce any breaches. 

The good news is that the DMCCA is not a complete overhaul of previous consumer rights laws and so businesses should not need to make drastic changes to remain compliant. However, it is important for business owners to know what changes will impact their particular business, how to navigate and make changes for them and the implications of not doing so. In short, the changes provide greater consumer protection, with some practices being banned outright. A detailed audit of your current practices against the DMCCA is advisable, if you have not already done this yet. 

In this blog, we provide an overview of what the Act means in practice and how it could impact businesses. 

How does the DMCCA fit with existing consumer laws? 

Prior to the Act coming into effect, there were three main pieces of consumer protection legislation that businesses needed to adhere to:  

• Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR); 

• Consumer Rights Act 2015; and  

• Consumer Protection from Unfair Trading Regulations 2008 (CPUTR). 

The DMCCA updates and replaces parts of the CPUTR in an attempt to make some provisions clearer and increase enforcement powers for regulatory bodies, allowing them to act faster and fine businesses directly. 

Below are some (non-exhaustive) areas worth looking at if your business deals with consumers directly. 

Unfair practices that are now banned 

One area where the DMCCA has sought to make things clearer is in updating the so-called blacklisted practices and making sure there are no workarounds or exceptions to such practices. These include drip pricing, fake or misleading reviews, as well as tightening up how subscription contracts are sold and managed. It is prudent to ensure your business is not falling foul of the new rules around these, even unintentionally.   

Drip pricing  

The practice of drip pricing means you advertise a product or service for a (low) price and then add fees or additional charges prior to the checkout or purchase point. For example, if you offered a product for sale for a certain price but that product needs a very specific cable or software to function or be used which is an extra cost - the end cost ends up being higher than what initially may have drawn your customer to choose your product. For service-based businesses, these additional charges may look like administrative fees or booking fees. 

It is acceptable to offer ‘add ons’ or upgrades if the customer has a choice to accept or not and the ‘add ons’ are not crucial to the original purchase of the product or service. The key here is that these extras must be genuinely optional. 

Here, the simple rule is: if a consumer must pay it, the cost must be included the headline or originally stated price. 

This reiterates the purpose of the DMCCA which is that while the requirement to give customers pre-contract information (including pricing) remains, businesses are now to be held more accountable for how genuine and clear that information is. A thorough review of your website, advertisements, online campaigns and booking systems (if applicable) is, therefore, highly recommended. 

Fake or misleading reviews 

Unsurprisingly, the DMCCA has increased the protection for consumers who rely on exemplary reviews placed on the websites of businesses or even some review websites such as Trustpilot or Google Reviews. Fake and misleading reviews are now explicitly banned. This includes: no writing fake reviews yourself; no asking others to write them (family members, friends or employees); no paying for positive reviews or paying influencers to leave glowing reviews; and most importantly, no displaying reviews without checking if they are genuine. So, how does one navigate this requirement? 

Businesses, small or large, are subject to ensuring all reviews left on websites are genuine. Of course, it is impossible to police this to the level one would like, but what the law is looking for is a concerted and properly planned method for reviewing, checking and dealing with potentially fake reviews. Fake reviews could also mean people leaving really negative reviews to damage the reputation of a business. 

Examples of some practical steps you can take may include cross checking reviews against verified customers, not requesting customers to remove low rated reviews if you have resolved any issues online, and being transparent if reviews are incentivised in any way. However, our team of solicitors can help you put together a comprehensive plan to manage this requirement and how to collate the evidence.  

Trapping in a subscription contract 

Previous consumer rights laws have dealt with subscription contracts and how businesses need to ensure consumers are not ‘trapped’ inside subscriptions unwillingly. However, the DMCCA now further clarifies the rights your business needs to give to consumers. 

Using the ‘How and When’ rules, we can help you check and implement the rules around keeping the subscription part of your business compliant with the new laws. In short, these rules include (but are not limited to): 

• clearly explaining how much the subscription costs, how often they will be charged, and when price increases may come into effect; 

• clearly explaining and reminding customers when their subscription will start and renew, including the end of any free trial offered; and 

• clearly explaining how to end the contract, should the consumer wish to do so.  

Some businesses currently like to offer incentives when a consumer presses ‘cancel’ (such as discounts or free products), or they may ask questions why the consumer is cancelling. All of these, under DMCCA, may be seen as not making cancellation easy and would need to be considered as part of your overall audit on the new laws. 

Enforcement and penalties 

One of the biggest impacts of the DMCCA is the increased enforcement powers now available to the Competition and Markets Authority (CMA). Rather than relying on court proceedings and protracted time to enforce, the CMA now has the right to directly impose fines on companies and even individuals in some cases. The CMA can fine up to £300,000 or 10% of a company’s global annual turnover for significant breaches of the DMCCA. For procedural infringements, fines could be 5% of a company’s global annual turnover. This law, therefore, is not one to push under the rug.  

How we can help  

Since the inception of the DMCCA, the CMA has allowed time for companies to review, audit, and implement any necessary changes to become compliant. However, if you still have not been able to do this, we can assist you in aligning your business with the requirements. 

Maintaining consumer trust in a competitive market is paramount for consumer-led businesses and so staying on top of the latest laws, regulations and requirements is crucial to keeping that trust and success going. Whether it is practical steps such as conducting an audit across your platform, varying consumer channels or guiding you through the DMCCA to see which areas affect your particular business and how to stay compliant, our team of solicitors can help you safeguard your business. 

For further information, please contact a legal adviser in our Corporate and Commercial team. 

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.