Fake online reviews to become illegal
The government also plans to force businesses to make it easier for consumers to opt out of subscriptions, so they are not stuck paying for things they no longer want.
Proposals published today also mean that prepayment schemes such as Christmas savings clubs will have to fully safeguard customers’ money through insurance or trust accounts. This will prevent scandals like Farepak, in which the business went bust and thousands of people lost their money.
The government is making these improvements to consumer protection by giving the Competition and Markets Authority (CMA) stronger powers to clampdown on bad business practices.
The CMA will be able to directly enforce consumer law, and will have the power to fine firms up to 10% of their global turnover for mistreating customers. This replaces going through a court process which can take years.
Paul Scully, consumer minister, said: “We’re making sure consumer protections keep pace with a modern, digitised economy. No longer will you visit a 5 star-reviewed restaurant only to find a burnt lasagne or get caught in a subscription in which there’s no end in sight. Consumers deserve better and the majority of businesses out there doing the right thing deserve protection from rogue traders undermining them.”
According to government figures, the average UK household spends about £900 each year influenced by online reviews, and spends £60 on unwanted subscriptions.
Fake reviews will be tackled by consulting on a new law which will ban commissioning someone to write a fake review, hosting consumer reviews without taking reasonable steps to check they are genuine, and offering or advertising to submit or facilitate fake reviews.
Regarding ‘subscription traps’, businesses will be forced to provide clearer information to consumers before they enter a subscription contract and issue a reminder to consumers that a free trial or low-cost introductory offer is coming to an end. The rules also mean that consumers must be able to “exit a contract in a straightforward, cost-effective and timely way”.
Changes to consumer law also mean that the CMA, instead of a court, will be able to award compensation to consumers and directly impose financial penalties to firms that break consumer protection laws.
Rocio Concha, Which? director of policy and advocacy, said: “It’s very positive to see action to tackle the avalanche of fake reviews that undermine confidence in online shopping and tougher powers for the CMA to protect consumers from rogue companies that consistently flout the law – including the ability to fine firms directly.
“The impact of these rip-off practices is enormous. It is currently a far too complicated and lengthy process for the CMA to hold businesses to account – whether that’s holiday companies and venues failing to give refunds people are entitled to, or secondary ticketing sites disregarding consumer law.”
Andrea Coscelli, chief executive of the CMA, said: “This is an important milestone towards strengthening the CMA’s ability to hold companies to account, promote fair and open markets, and protect UK consumers.
“The CMA stands ready to assist the government to ensure that legislation can be brought forward as quickly as possible, so consumers and businesses can benefit. Competition law is reserved and therefore extends to the whole of the UK.”