The Digital Markets, Competition and Consumers Act (consumer aspects)

The Digital Markets, Competition and Consumers Act (DMCC) came into effect on 24 May 2024 and represents a major shift in UK digital, competition and consumer protection regulation.

From a consumer protection perspective, the key aims of the legislation are to provide increased protections for consumers against unfair or misleading business practices and significantly enhance the enforcement remit of the Competition and Markets Authority (CMA) – in particular, with respect to online activities.

Affected businesses

The consumer protection requirements of the DMCC apply to all businesses selling goods or services to consumers in the UK. By way of example, this includes:

• Retailers and service providers
• Business-to-consumer (B2C) ecommerce
• Online marketplaces
• Subscription services

Key impacts

The DMCC provides increased protections for consumers against unfair or misleading business practices, particularly in relation to the more pernicious behaviours which have emerged in UK ecommerce.

The key changes for businesses that engage with consumers include:

• Subscription traps – Stricter rules, including increased transparency requirements and enhanced rights for consumers, with respect to cancellation of subscription contracts
• Fake reviews – New rules aimed at preventing fake reviews, including putting in place systems and processes to identify, investigate, report, respond to and/or remove fake and/or misleading reviews
• Hidden fees – New requirements to display total costs upfront in adverts and online product listings in an effort to ban ‘drip pricing’ where extra fees appear late in the purchase process
• Stronger enforcement – Broader powers given to the CMA to investigate and fine businesses that break the rules

Enforcement

The DMCC empowers the CMA to directly enforce consumer protections through administrative proceedings, without having to go to court. For the first time ever, the CMA will have the power to:

• Issue direct infringement notices to businesses in suspected breach of consumer law.
• Impose fines of up to 10% of annual global turnover.
• Impose fines of up to 5% of annual global turnover for breaching undertakings and procedural breaches, such as failing to comply with information.

In addition, the DMCC empowers the courts to impose civil monetary penalties on businesses in breach, meaning designated enforcers –including the CMA and the Office of Communications (Ofcom) – will be able to apply to the courts for a range of consumer protection orders and ask the courts to impose fines. Court-issued fines will mirror those that can be imposed directly by the CMA (as described above).

Key timings

Late 2024: Although the DMCC has received Royal Assent, the most significant aspects of the act – including the enhanced consumer protections – are not expected to come into force before autumn 2024.

Ongoing: The precise timeline will be dependent on the legislative priorities of the new Labour government. However, the previous government confirmed that the rules around subscription traps will not come into effect before spring 2026. This is because secondary legislation and CMA guidance are required before these new rules on consumer protection can take effect.

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