Mislead the public and you'll pay a heavy price - Pauline McCulloch and Jo McLean

The DMCCA aims to bring the consumer protection regime in line with competition law, with more direct monitoring and enforcement from the Competition and Markets Authority (CMA).

The CMA will be able to impose significant penalties on businesses in breach of UK consumer laws, investigating alleged breaches and requiring organisations to take remedial steps such as website changes or even payment of financial redress to consumers.

However, it is the CMA’s new power to issue fixed penalty notices of up to £300,000 or 10 per cent of annual turnover (whichever is higher) that will be of most significance to businesses making, distributing, advertising or selling products and services to UK consumers. If a business does not comply with a CMA enforcement order or court order, further fines may be imposed (up to £150,000 or 5 per cent of annual turnover).

This represents a major change as, to date, the CMA has only been able to enforce consumer laws via the courts – a process typically reserved for only the most egregious breaches. From a consumer perspective, the CMA’s ability to order compensation could negate any need to bring litigation against companies who they allege have broken consumer law. While some muse that this may herald a drop in consumer claims generally, individuals may still bring litigation for losses they claim have not been recovered via a CMA order, so businesses should be alive to the possibility of breaches resulting in both investigation and litigation.

The DMCCA replicates a well-established list of unfair practices from existing legislation, such as misleading advertising and use of aggressive sales techniques, but also adds two additional prohibited practices.

The first is “drip pricing”, a tactic whereby consumers are shown an initial price, with extra charges added later in the transaction process. Traders will have to be more upfront and transparent about total costs.

The second involves fake reviews – firms must take “reasonable and proportionate steps” to stop fake reviews and avoid misleading presentation of reviews generally.

The DMCCA also introduces new regulations for subscription contracts, often used for gym memberships, food delivery boxes and streaming platforms. The moves place a greater onus on organisations to notify consumers and provide an opportunity to opt-out when introductory offers end and prior to each renewal payment. Certain pre-contractual information must also be provided before the consumer signs up.

The DMCCA represents the biggest change to UK consumer laws in a decade, and preparation is key. All consumer-facing businesses should review their customer journeys and terms and conditions to ensure compliance. Failure to do so could be costly.

​Pauline McCulloch is director (product liability), Burness Paull LLP. This article was co-written by Jo McLean, director (technology & commercial).