The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) has received Royal Assent. Among other things, it will make major changes to the UK's consumer protection regime. We explain why now is the time for B2C businesses to take a fresh look at their approach to compliance with consumer law.
- The legislation is a game-changer – don't be caught out when it comes into force
- Get ready for new rules on subscription contracts and fake or misleading reviews
- Don't wait until the new regime comes into effect – start preparing now
- How we can help
The legislation is a game-changer – don't be caught out when it comes into force
The risks for business of infringing consumer law are about to increase substantially, mainly because of new powers that it confers on the Competition and Markets Authority (CMA):
- Substantial fines: The CMA will gain a raft of
new enforcement powers, including the ability to impose fines of up
to 10% of global annual turnover on businesses found to have
infringed consumer law. This is higher than in most EU countries.
In the sphere of competition law, such powers have enabled the CMA
to impose fines as high as £260 million.
- Consumer redress: The CMA will also be able to impose "enhanced consumer measures", which could require compensation to be paid to consumers or early termination of contracts. In the financial services sector, regulator-imposed redress schemes for misselling of PPI (imposed under sectoral legislation) have resulted in pay-outs of over £38 billion (and billions more in associated costs).
The upshot is that the CMA will have a great deal more clout as a consumer regulator than it does under the current, relatively weak enforcement regime. With the cost of living crisis likely to remain high on the political agenda, the CMA is also likely to come under pressure to demonstrate that it is using these new powers to deliver a better deal for consumers. This step change in the enforcement environment requires a change in mindset from business when it comes to compliance – see section 3 below.
Ben Chivers, Partner
For a deeper dive into why we think the DMCC Act will prove to be a game changer on enforcement, see our earlier briefing.
Get ready for new rules on subscription contracts and fake or misleading reviews
Businesses will need to prepare for new rules on:
- Subscription contracts: businesses will be
required to provide more information to consumers before entering
into the contract, send reminders before a contract "rolls
over" into a new term (auto-renewal) and allow "cooling
off" periods.
- Fake or misleading reviews: the DMCC Act effectively prohibits the submission or commissioning of fake reviews. It will also require businesses to ensure that they do not publish consumer reviews in a misleading manner and that they take "reasonable and proportionate steps" to prevent fake reviews and avoid misleading presentation of reviews more generally.
Richard Offord, Senior Associate
For more detail on what you can do to prepare, see section 3. Note also the Government has used the DMCC Act to "tidy up" UK consumer law more generally and there are a number of other changes which may be of interest for particular types of B2C business – see further section 2 of our earlier briefing.
Don't wait until the new regime comes into effect – start preparing now
Our understanding is that the CMA and the Civil Service had been working towards a "go live" date towards the end of 2024, although we are now unlikely to get further clarity on this until after the election in July. But our view is that the next Government will almost certainly implement the legislation – so businesses should get ahead of the curve and start preparing now, for example by asking themselves the following questions:
New consumer legislation: key questions to ask yourself
- Are we sitting on any "ticking time bombs" in terms of our existing practices and processes involving consumers?
- Are our existing processes (e.g. customer sign-up) likely to remain compliant and if not, how easy would it be upgrade them to e.g. meet the new rules on subscription contracts or misleading/fake reviews? Are there any longer term projects where the specification may need to be adapted to take account of the DMCC Act?
- Are relevant staff – particularly those in sales roles – aware of the risks that infringing consumer law poses to the business? Do staff need a refresher on what types of behaviour or practices are likely to be problematic?
- Do we have a plan for how we would respond if investigated by the CMA for breaches of consumer law? The DMCC Act also significantly strengthens the CMA's investigatory powers and fines can be imposed for non-compliance with e.g. information requests.
See section 4 for how we can help you address these issues.
How we can help
We can help you to ensure that your business is prepared for these imminent changes. Our specially designed packages aim to equip you with the training, resources and analysis that you and your teams need to ensure your business is legally compliant and insulated from the most punitive aspects of the new regime. To find out more, please speak to any of the contacts listed below.
Don't overlook other aspects of the DMCC Act
Finally, note that the DMCCA is not just about consumer law – it also makes important changes in the following areas, which may be just as important to your business:
- Digital markets, where it gives the Digital Markets Unit within the CMA new powers to regulate Big Tech and intervene in the fast-moving digital space;
- Merger control, where it expands the CMA's jurisdiction and will introduce mandatory reporting requirements for certain tech deals; and
- Competition law, where the legislation streamlines and/or tightens up numerous aspects of the current regime
Watch this space for further coverage of the legislation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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