New consumer protection regime 'will level playing field for business'

A major update to consumer protection law has now come into force, aiming to boost consumer confidence and create a fairer marketplace for businesses. Under the new Digital Markets, Competition and Consumers Act 2024, the Competition and Markets Authority gains stronger powers to directly tackle breaches, impose fines, and ensure redress without needing to go through the courts.

The new consumer protection regime, designed to provide greater confidence for consumers and level the playing field for businesses, has now come into effect. The new provisions are part of the Digital Markets, Competition and Consumers Act 2024 (DMCCA).

The Competition and Markets Authority (CMA) will now be able to decide whether consumer protection laws have been infringed (rather than litigating through the courts) and to tackle any breaches directly and proportionately, including through consumer redress and fines. The CMA also emphasised the importance of fostering a level playing field for fair-dealing businesses - so they can grow and invest, confident that competitors cannot gain an advantage by breaking the law.

Sarah Cardell, Chief Executive of the CMA, said: “Most businesses work hard to serve their customers and do the right thing. We recognise the importance, particularly for small businesses, of any new rules being clear and proportionate to comply with – and that this is a period of change when they may need help to understand their legal obligations.”

The DMCCA includes an explicit ban on the posting and commissioning of fake reviews. The CMA has previously taken action in this area and will be focused on ensuring compliance with the new provisions. The DMCCA also updates the law on pricing information businesses must show to customers. This includes a ban on ‘drip pricing’ – where shoppers are shown an initial price for a product, but more fees are added (‘dripped’) as they proceed with their purchase.

The CMA has issued guidance to ensure businesses understand how to comply with those aspects of the law which are already well established and largely unchanged. Before enforcing new provisions, and following clear feedback, the CMA has said it will consult further on newer aspects which have created some uncertainty – such as fixed-term periodic contracts – with the aim of publishing final guidance in the autumn.

Action: The first 12 months

The CMA will open its first enforcement cases under the new regime, focusing on more egregious breaches of the law.

It will target behaviour that is particularly harmful to consumers and represents clear infringements of the law, such as:

• aggressive sales practices that prey on consumers in vulnerable positions
• fees that are hidden until late in the buying process
• information being given to consumers that is objectively false
• unfair and unbalanced contract terms
• behaviour where the CMA has already put down a clear marker through its previous enforcement work, such as on drip pricing and fake reviews

We shall keep clients informed of developments.

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