Consumer Law | UK Regulatory Outlook November 2024

UK government consults on new DMCCA subscription contracts regime  

The government has kicked off the implementation process for the new subscription contracts regime under the Digital Markets, Competition and Consumers Act 2024 (DMCCA) with a consultation. For an overview of the new measures for subscription contracts, not expected to come into effect until spring 2026 at the earliest, see this Insight.

The consultation seeks feedback on proposed policies to inform the content of secondary legislation that will implement the new regime. It also seeks views on particular issues likely to be covered in guidance. The consultation covers proposals for:

• Cooling-off cancellation rights: returns and refunds.
• Cancellation remedies for breach of implied terms by the business.
• Consumer refund repayments.
• Preventing businesses from using contractual terms which may lead to so-called "subscription traps" where consumers become stuck in subscriptions they no longer want.
• Ensuring consumers can cancel contracts easily and proposals for guidance to clarify DMCCA provisions in this area.
• Additional requirements for reminder, end of contract and renewal cooling-off notices.
• Guidance that may be issued on the DMCCA's pre-contract information requirements. 

The deadline for responses is 10 February 2025.

Businesses should remember that the DMCCA effectively introduces a dual enforcement regime, such that, in addition to the potential for enforcement action to be taken through the courts in the usual way, the CMA will also have enhanced enforcement powers under the new legislation. This is currently expected to come into effect in spring 2025. These powers will allow the regulator to enforce directly and impose fines for breaches of consumer protection laws, including the subscription rules in the DMCCA once they are in effect. Businesses now have a chance to review the government's approach to the new subscription contracts regime and provide their thoughts on the proposals.

CMA publishes advice for trader recommendation platforms on compliance with consumer law

Following consultation, the CMA has published advice, together with an "at a glance" summary, for trader recommendation platforms (TRPs) to help them comply with consumer law.

TRPs are businesses that operate websites or apps that assist consumers with finding traders, or that recommend traders to consumers. The advice applies to TRPs on any channel, including social media, in online ads (such as sponsored ads), posters and sales brochures.

The CMA sets out six principles, illustrated by examples of good and bad practice, which are:

• making clear and accurate representations about the service;
• ensuring effective trader vetting processes are in place;
• having an effective complaints process;
• ensuring ongoing monitoring of trader performance;
• having effective investigation and sanctions processes; and
• ensuring compliant practices in relation to online reviews.

Non-compliant businesses will risk enforcement action by the CMA or Trading Standards Services once the relevant provisions in the DMCCA come into effect (see above). The CMA calls on businesses to review and update their practices promptly.

The regulator has also published practical tips for consumers when using trader recommendation platforms. 

Secondary legislation made under Media Act 2024

The Media Act 2024 (Commencement No. 2 and Transitional and Saving Provisions) Regulations 2024 brought into force the following provisions of the Media Act 2024 on 17 October 2024:

• Part 5 (Regulation of radio services) – regulates commercial radio, removing longstanding regulatory requirements for commercial analogue radio services, as well as for local radio and local/national multiplex services. It also contains new local news and information requirements for analogue commercial radio stations and new requirements for multiplex licensees to provide certain information to Ofcom. Ofcom can now proceed with its planned consultation; and
• Section 19 (amount of financial penalties: qualifying revenue), but only for the purposes of enabling Ofcom to carry out the necessary work to bring the section into force. Under the current rules, the maximum penalty that Ofcom can impose on a public service TV channel is set by reference to the "qualifying revenue" of the provider. Section 19(3) will create a new definition of "qualifying revenue" to include revenue from both the provider's traditional linear channel services and its on-demand services.

The regulations also contain transitional and saving provisions.

The Internet Television Equipment Regulations 2024, which came into force on 14 November 2024, set out the descriptions of devices that are considered to be "internet television equipment" for the purposes of the new prominence framework under the Act. Essentially, the regulations name smart televisions and streaming devices as internet television equipment.

The government has also published a policy paper outlining its approach to deciding the categories of TV devices that will be considered internet television equipment. It explains that smart TVs, set-top boxes and streaming sticks will qualify, but that smartphones, laptops, tablets, PCs and video games consoles will not, as watching TV on these devices is not their primary function.

Newer devices, such as home cinema projectors and portable lifestyle screens, internet-connected car touchscreens, virtual reality headsets, smart watches and in-home screens (such as smart fridges and smart speakers with in-built screens) will also be excluded for the same reason. However, the government intends to review the list in one-year's time to reassess.

Culture, Media and Sport Committee re-launches British film and high-end TV inquiry

This inquiry will continue the previous Parliament's work looking at the challenges faced by the British film and high-end TV industry and ways to support the sector and its workforce better. It will also examine the ethical use of AI in film-making.

CMA launches project to consider dynamic pricing

The Competition and Markets Authority (CMA) has launched a project looking at the use of dynamic pricing across various sectors. This follows its letter to the government, published after the dynamic pricing mechanism implemented by Ticketmaster resulted in many Oasis fans being unable to secure tickets for the band's upcoming reunion concert. This new project is separate to the CMA's investigation into Ticketmaster and is not a formal market investigation or study.  

The project will explore different dynamic pricing strategies, their advantages for businesses and consumers, and any challenges they pose for consumers and competition. The project will contribute to the government's thinking on dynamic pricing, in conjunction with its upcoming call for evidence on price transparency in the live events sector.    

Government research on potentially harmful choice architecture on e-commerce websites and apps

The government has published research on the prevalence and potential harm of "defaults" in online shopping. Defaults include pre-selected options, automatic opt-ins to certain options or settings, and ordering or formatting options to enhance their prominence or to mimic pre-selection. The review covered consumer journeys on 558 e-commerce websites and apps in the UK.

The key findings include:

• Nearly half of sampled platforms used defaults.
• Defaults were most common in the retail sector, with preselected options and mimicking defaults being particularly prevalent.
• Defaults made 60% of consumers more likely to choose the more expensive item and 70% more likely to select the more expensive shipping option. 
• While defaults can influence consumers, the way they are currently used does not indicate that they are misleading consumers. There is therefore no compelling case for active legislative intervention at present. However, given the potential for misuse, the government makes various policy recommendations to protect consumers, such as introducing standards for default settings, increasing awareness of vulnerable consumers, and ensuring online retailers adopt consumer-benefitting practices when investing in online choice architecture.

See also Digital Regulation section for more updates.