Clifford Chance

A new UK law is set to raise the risk profile of consumer protection law compliance – for UK companies and for all businesses whose products or services are supplied to consumers in the UK.

The Digital Markets, Competition and Consumers Act 2024 became law in June 2024, shortly before the UK general election, with cross-party support in Parliament. Attention has tended to focus on the new regulatory regime for digital markets – but the Act also contains important reforms of consumer protection law which could well have even greater impact for businesses, across all sectors involving consumer products.

It's expected that these consumer protection laws will come into effect in spring 2025. Businesses can get ahead of the game by preparing themselves for the new, much tougher, consumer protection regime – by compliance training, internal due diligence, and seeking advice on specific issues.

The new rules will be enforced primarily by the CMA – the UK's Competition and Markets Authority , where I spent the last ten years before joining Clifford Chance.

Until now, consumer protection law has in many ways been the "poor relation" of competition law enforcement at the CMA. This was not because of any deficiency on the CMA's part, but because the CMA's consumer protection powers have been quite weak before now. Unlike for Competition Act cases, when it came to consumer protection law enforcement, the CMA couldn't issue binding decisions – the only way that the CMA could formally enforce the rules was to apply to the courts for an order (which wouldn't always be granted), so in practice it resorted to negotiating non-binding undertakings and commitments from companies it was investigating to change their practices, rather than go through the expense and risk of court proceedings. And, again unlike Competition Act enforcement, there have until now been no powers to impose fines on companies found to have breached consumer protection law.

All that is set to change under the new legislation. Once the new regime comes into force in spring 2025, the CMA will have the power:

• to make binding decisions declaring a company in breach of consumer protection laws, following a full investigation (subject to appeal)
• to order companies in breach to change their practices to become compliant and, where appropriate, to pay compensation to consumers
• to fine companies in breach – up to 10% of a corporate group's global turnover for the infringement, plus up to 5% of global daily turnover for each day the infringement continues after that.

These sanctions, and the procedures for CMA investigations, will be very similar to those that already exist under the UK's Competition Act. So consumer protection law enforcement will no longer be the "poor relation" – and the risk factor for companies if they are found non-compliant becomes at least as great as for competition/antitrust infringements. Plus, of course, the reputational risk of appearing (as the media would portray it) to have "ripped off" consumers.

For business which are compliant and find that their rivals might be competing unfairly by cheating on consumer protection, the new legislation offers an opportunity to "level the playing field" by drawing the CMA's attention to such conduct by rivals.

Although the sanctions and procedures for enforcement are changing, the underlying consumer protection laws remain essentially as before – although they are being toughened up when it comes to certain specific issues such as "drip pricing", the right to end subscriptions, and digital platforms' liability for false or misleading online reviews on their sites.

This means we can look to recent CMA practice to get a sense of likely concerns and issues that matter to the CMA. These include:

• misleading pricing – such as: discounts where the “higher” price was not real; lack of clear and consistent unit price comparisons for groceries; loyalty card schemes; “drip pricing” (especially hidden compulsory fees)
• online “pressure selling” – such as: false scarcity claims (for example when hotel rooms or tickets are sold online); or false "countdown" timers for completing a purchase
• fake and misleading reviews – including writing such reviews, commissioning them, or even hosting them on online platforms
• “greenwashing” – misleading, exaggerated or unsubstantiated claims or images about the environmental impact of goods or services
• automatic renewals of subscriptions etc – ensuring adequate transparency, reminders and optionality to avoid “subscription traps”
• unfair terms in T&Cs – these are typically clauses which are excessively skewed against the consumer, such as “doubling ground rent” clauses in leaseholds; certain exclusions of seller’s liability; lack of cancellation rights; or inadequate refund policies for cancellations. (Note that unfair terms can now result in fines for the company concerned.)

At Clifford Chance we are well-placed to advise and assist companies on all these issues. We've acted for clients on some major CMA investigations, including the long-running CMA consumer protection probe into online reviews. I have recently joined the firm as a Partner, having spent the past decade at the CMA, where I had overall responsibility for the enforcement of competition and consumer protection laws and, as an executive director on the CMA Board, had input into strategy including preparing for the new legislation. We'd be delighted to help.