On 4 September, the Department for Business and Trade launched a consultation on proposals designed to improve the quality and accessibility of information for consumers making purchases. The background to the consultation is: (i) the government’s review of the Price Marking Order 2004 (PMO), which implemented the EU Price Indications Directive and therefore now can be amended following Brexit, (ii) the CMA’s report on grocery unit pricing,[1] (iii) Government research into drip pricing and hidden fees,[2] and (iv) the Digital Markets, Competition and Consumers (DMCC) Bill, currently going through the legislative process in Parliament.
The PMO is designed to ensure that consumers are presented with the necessary information regarding their purchases clearly and up front. The DMCC Bill envisages introducing a range of consumer protection measures, including restating the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) in UK primary legislation and specific provisions addressing fake reviews and misleading or aggressive sales practices.
The consultation is focused on measures to improve price transparency and product information for consumers, covering the following topics:
- The display of pricing information, which follows the CMA investigation into grocery unit pricing. The government wants to (i) simplify requirements on unit pricing to allow for more consistent application; (ii) clarify requirements on legibility and the way promotional pricing (such as multi-buys or discounts for customers who are members of the trader’s loyalty scheme) is displayed; and (iii) review the “small shops” exemption, which currently means that shops under a certain size are not bound by the unit pricing requirements set out in the PMO.
- Hidden fees and drip pricing, which occurs when a product is advertised for an initial price, before additional fees are added as a consumer goes through the purchase process. This is particularly common in certain sectors: the government’s research has found that 72% of transport providers, 56% of the hospitality sector and 54% of entertainment businesses engage in so-called “drip-pricing”. The consultation highlights that this practice can undermine price transparency and exploit consumers’ behavioural biases, by enticing purchases on the basis of a lower base price that will eventually be increased by add-ons. The consultation seeks views on a series of possible reforms in this area, such as requirements to include mandatory fixed fees in the up-front price, greater clarity over the existence of mandatory variable fees and possible ways to increase the transparency of optional fees to enable consumers to take informed decisions.
- Fake reviews, which is discussed in the context of the regulation making powers in the DMCC Bill, and was the subject of government research[3] published in April this year. That research estimated that between 11 and 15% of all reviews on the nine most frequently used e-commerce platforms by UK consumers were fake, and that consumers cannot spot well-written fake reviews.
The government is proposing to make specific practices relating to fake reviews (such as submitting fake reviews and misrepresenting reviews) automatically unfair in all circumstances (by adding a specific fake review section into Schedule 18 of the DMCC Bill). The practice of misrepresenting reviews would catch traders and online platforms who had not taken reasonable and proportionate steps to remove fake reviews and to prevent information being presented on a platform derived from reviews in a way that is capable of misleading consumers. The consultation also considers whether the fake review practices proposed to be automatically unfair should attract criminal as well as civil liability, or whether civil liability alone is a sufficient deterrent.
- Online platforms’ responsibilities to consumers, which focuses on the definition of professional diligence, to ensure that consumers and online platforms have greater clarity over their rights and responsibilities. The CPRs contain a prohibition on acting contrary to the requirements of professional diligence, which will be included in the DMCC. Acting with professional diligence requires that traders act with “reasonable skill and care, commensurate with honest market practice and the general principle of good faith in their field of activity.”[4] The consultation seeks to determine whether this responsibility is understood by consumers and online platforms, and explains that the government is considering introducing guidance on its meaning.
- Online interface orders (OIOs), which are provided for under Part 8 of the Enterprise Act 2002 (EA02) and allow the CMA to apply for a court order to prevent or limit access to online content and online interfaces and domains in certain cases of infringement of consumer protection law. This regime is being amended by the DMCC Bill, including to expand the ability to seek OIOs beyond the CMA to sectoral regulators and the Consumers Association (Which?).
As part of the consultation, the government is considering whether to expand this ability even further, to apply to additional consumer enforcers. The consultation gives the example of OIOs potentially being applicable to third parties hosting another trader’s content, to place a legal obligation on the hosting platform to stop the harmful practice.
The government is seeking views on its proposals from all interested parties, and specifically consumers and consumer bodies, business (of all sizes), trade bodies and representative groups / representative groups of manufacturers, enforcement agencies and charitable organisations. The consultation is open for a six-week period, until 11:59pm on 15 October 2023.
[1] Groceries unit pricing review of compliance, CMA, July 2023.
[2] Estimating the prevalence and impact of online drip pricing, Department for Business & Trade, September 2023.
[3] Fake online reviews research: estimating the prevalence and impact of fake online reviews, Department for Business & Trade, April 2023.
[4] Consultation on improving price transparency and product information for consumers, Department for Business and Trade, 4 September 2023, p.29.