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‘Flagship’ digital bill to clamp down on subscription traps and fake reviews

Paloma Kubiak
Written By:
Paloma Kubiak

Legislation will be introduced today to tackle subscription traps and fake reviews, while the competition regulator will be able to fine tech firms up to 10% of turnover if they don’t follow rules.

The Digital Markets, Competition and Consumers (DMCC) Bill will be introduced to the House of Commons today as the Government looks to crack down on rip-offs and unfair practices while protecting online users and boosting competition.

Subscription traps which make it difficult to exit a contract currently cost shoppers £1.6bn a year.

The Department for Business and Trade (DBT) will bring in new laws to ensure people can exit subscriptions in an easy, cost-effective and timely way.

Businesses will be required to provide clearer information before people enter a subscription contract and they will also need to issue customers with a reminder when a free trial or introductory offer is coming to an end. Further, a reminder will need to be sent before a contract auto-renews onto a new term.

Fake reviews

The Bill and measures which are expected to come into effect as soon as possible following parliamentary approval, subject to secondary legislation, will also combat fake reviews.

This includes banning the practice of “facilitating fake reviews or advertising consumer reviews without taking reasonable steps to check they are genuine”.

Meanwhile, the Competition and Markets Authority (CMA) which has helped shoppers to the tune of £7.7bn in the three years to 2021, will be given greater powers, allowing it to enforce consumer law rather than going through lengthy court processes.

The CMA will be able to impose penalties of up to 10% of global turnover for any firms found to be breaching consumer protection laws.

As part of the Bill, a Digital Markets Unit (DMU) within the CMA will be given new powers to tackle “the excessive dominance that a small number of tech companies have held over consumers and businesses in the UK”.

Rules for big tech firms

Under the laws, the DMU will monitor whether businesses and shoppers are not unfairly disadvantaged by the biggest players.

The DBT explained: “If a firm is deemed to have strategic market status in key digital services, the DMU will be able to step in to set tailored rules on how they behave and operate.

“For example, the biggest tech firms may be instructed by the DMU to provide more choice and transparency to their customers. The DMU will also be able to tackle the root causes of competition issues in digital markets by carrying out targeted interventions, opening up new paths for start-ups or smaller firms that have previously struggled to grow and compete in these markets.”

Paul Scully, minister for tech and the digital economy, said: “Today’s announcement shows we are proudly pro-growth and pro-innovation across the board in the tech sector, seeking to open up new opportunities for all firms, however small or large they are, while empowering consumers.

“The Prime Minister has made his intention to secure growth and innovation within every corner of our economy very clear – the new Digital Markets Unit will help fulfil this important priority for the UK in the digital economy.”

Sarah Cardell, chief executive of the CMA, added: “The new powers in this bill help the CMA take swift, decisive action to tackle rip-offs, protecting consumers whether they are shopping online or on the high street. The new fining powers will provide an important deterrent to businesses seeking to take advantage of people while also ensuring fair dealing businesses can thrive.”