On 16 November 2023, the Competition and Markets Authority (CMA) issued a warning to Wowcher, calling on the e-commerce site to change its online sales practices and in particular its “urgency claims” that risk misleading consumers. Wowcher has an opportunity to respond and offer undertakings to change its practices and avoid potential court action.
This warning represents the latest development in the CMA’s programme of work focusing on online choice architecture (OCA) in the consumer space, following its recent enforcement action against Emma Group over similar concerns and publication of research papers and an open letter to businesses.
This blog post summarises the CMA’s investigation, warning to Wowcher, and wider focus on OCA under consumer law.
In March 2023, the CMA launched an investigation into Wowcher’s “urgency claims”, such as countdown timers and marketing claims like “Running out!” and “In High Demand” that can place “unfair pressure” on consumers to make purchasing decisions quickly.
Under the Consumer Protection from Unfair Trading Regulations 2008, it is an automatic breach of consumer law for a trader to “Falsely stat[e] that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice.” Such practices are regarded as automatically unfair, irrespective of their impact on consumer decision-making. In addition, traders can breach consumer law if they mislead consumers or act contrary to requirements of professional diligence, if their actions or omissions cause consumers to take different decisions.
According to the CMA, it has found evidence that Wowcher’s urgency claims give a misleading impression that either the products will soon not be available, or will be increased in price, when this is often not the case. The CMA’s Chief Executive Sarah Cardell emphasised that urgency claims pressure shoppers to “make quick decisions when spending their money” and that “with soaring living costs people need time to shop around and find the right deals.”
The CMA is also concerned about other practices such as hidden charges and the use of pre-ticked boxes to enrol consumers into VIP memberships, leading to unintended purchases by consumers.
The CMA currently has no ability to find that a trader has breached consumer law or impose fines or remedies absent a court order (although this is due to change under forthcoming changes in the Digital Markets, Competition, and Consumers Bill currently before Parliament: see further below). If Wowcher fails to offer the CMA satisfactory undertakings, the CMA can apply to court for an order under s. 217 of the Enterprise Act 2002 requiring Wowcher to comply with its obligations.
The CMA’s investigation into Wowcher forms part of the CMA’s wider programme of work focusing on OCA, i.e., the “environment in which people act, including presentation and placement of choices and the design of interfaces.” This work includes:
- CMA research paper (April 2022). The CMA published a paper and evidence review outlining how OCA design can influence consumer behaviour and impact competition and consumer welfare.
- Emma Group enforcement action (November 2022). The CMA opened an investigation into Emma Group regarding suspected breaches of consumer law. The investigation focuses on similar OCA practices to the Wowcher investigation, including countdown clocks and misleading discount offers. In July 2023, the CMA wrote to Emma calling on it to change its practices.
- CMA open letter to businesses (March 2023). The CMA published an open letter to businesses focusing on the use of urgency and price reduction claims. The CMA urged businesses to review the examples of non-compliance it provided, re-examine their consumer practices, ensure that there is evidence to substantiate urgency and price reduction claims, and keep adequate records to “genuinely reflect selling conditions”.
CMA Illustration of Urgency Claims
Source: CMA Open Letter (March 2023)
- CMA and ICO joint paper on OCA (August 2023). The CMA and Information Commissioner’s Office published a joint position paper on OCA titled “Harmful design in digital markets: How Online Choice Architecture practices can undermine consumer choice and control over personal information.” The paper summarises potential harms resulting from OCA from a competition law and data protection law perspective.
The Digital Markets, Competition, and Consumers Bill is set to strengthen the CMA’s ability to enforce UK consumer protection law. The CMA has welcomed the Bill’s efforts to place consumer protection law “on a par” with the UK competition law regime, describing it as a “watershed moment” for the protection of UK consumers. Under the Bill, the CMA would have the ability to decide directly whether a company has infringed consumer protection law without having to take court action. It could fine infringing companies up to 10% of their global turnover and impose remedies. The Bill is currently expected to receive Royal Assent by Q2 2024.
In addition, in September 2023 the Government launched a consultation into various consumer protection rules concerning OCA, including price transparency and product information, hidden fees and so-called “drip pricing”, fake and misleading reviews, and online interface orders (a form of remedy that a court can impose following a beach of consumer law). This consultation may result in a further strengthening of the law in this area. Given the CMA’s focus on OCA practices to date, it can be expected to make full use of its direct enforcement powers once the Bill enters into force.