Consumer law | UK Regulatory Outlook September 2024

UK updates

UK government publishes DMCCA timeline

The UK government has published a ministerial statement setting out a vague timeline for the implementation of the Digital Markets, Competition and Consumers Act 2024 (DMCCA). According to the statement:

• The government expects to commence the consumer enforcement regime in Part 3 of the DMCCA and the new unfair trading regulatory regime in Chapter 1 of Part 4 of the DMCCA in April 2025. New savings schemes rules will not commence before April 2025, the government said, and the timeline is subject to continuing engagement with consumers and industry.
• Reforms to subscriptions contracts will not commence before spring 2026 "at the earliest".
• The aim is to commence the competition and digital markets parts of the DMCCA in December 2024 or January 2025, with the relevant secondary legislation due to be laid before Parliament this autumn. The government expects the Competition and Markets Authority (CMA) to launch the first Strategic Market Status investigations shortly after the digital markets regime is brought into effect.

The government is clearly keen to ensure that the competition and digital markets aspects of the DMCCA are up and running as soon as possible. However, the consumer enforcement and unfair trading regimes will not be far behind – the CMA is also progressing matters, having already consulted on consumer enforcement guidance (see below). We will continue to follow progress closely.

Please see the Competition section for more discussion of this.

CMA consults on draft direct consumer enforcement guidance and rules under DMCCA

The CMA has consulted on draft guidance and rules for the exercise of its new direct enforcement powers in relation to consumer protection law under the DMCCA. The consultation closed on 18 September 2024.

The draft guidance sets out the CMA's procedures and explains how the CMA will generally conduct direct consumer enforcement investigations. The CMA has also produced draft procedural rules (consumer rules) on the use of its direct enforcement powers which are subject to approval by the Secretary of State.

The CMA sought views on:

• The proposed process for responding to provisional infringement notices, which the CMA can issue to a party if it has reasonable grounds to believe that they are, or are likely to be, in breach or they are an accessory to a breach.
• The factors the CMA will consider when deciding whether to accept, vary or release undertakings if it does not issue a final infringement notice or an online interface notice.
• The factors the CMA will consider when accepting a settlement on an admissions basis, and when determining whether a reasonable excuse for certain breaches exists, including examples of what might amount to reasonable excuse.
• The approach the CMA will take in relation to imposing and setting monetary penalties. In assessing the amount, the starting point will generally be up to 30% of a party's UK turnover. Substantive penalties are capped at 10% of world-wide turnover.

Once it has analysed the feedback, the CMA will prepare its final guidance and consumer rules and will seek secretary of state approval as required by the DMCCA.

Once that approval is obtained, the CMA will publish the guidance and work with the Department for Business and Trade to lay a statutory instrument containing the consumer rules before Parliament, for its approval. The government plans to bring the direct consumer enforcement rules into force by April 2025. We will continue to monitor progress closely.

DMCCA in CMA's annual report 2023-2024

The CMA's annual report 2023 to 2024 explains, among other things, how over the last year, the CMA has been preparing for the new digital and consumer frameworks in the DMCCA.

The CMA says that empowering it to tackle unlawful consumer practices more directly and to issue meaningful penalties means that it can take decisions that have a wide-ranging deterrent effect and that create powerful incentives for businesses to comply with consumer protection law. The regulator sees the new legislation as a "potential watershed" moment for it to be able to tackle rip-offs, misleading sales practices and unfair terms.

However, it notes that enforcement will be just one of the tools it uses to achieve a positive outcome and it will continue to assess problems based on the evidence, acting flexibly to deploy whatever interventions are most appropriate. This includes issuing guidance to businesses, running consumer awareness campaigns and working with consumer protection partners.

UK CMA launches investigation into Ticketmaster's Oasis ticket sale

Following the wave of disappointment from Oasis UK fans who could not get tickets to the band's reunion tour because of the "dynamic pricing" system implemented by Ticketmaster, the CMA has launched an investigation into the ticket seller, including into how "dynamic pricing" might have been used.

For more information see our Insight.

CMA publishes update on its review of loyalty pricing in groceries sector

The CMA has published an update on its ongoing review of loyalty pricing in the groceries sector. See this Regulatory Outlook for background.

To date, the main focus of the review has been whether the loyalty pricing offered by some grocery retailers could mislead consumers. The CMA says that, while its analysis is still ongoing, the results gathered so far indicate that it is unlikely to identify widespread evidence of misleading loyalty promotions.

The CMA is currently looking at the practice of alternating between "was/now" promotions and loyalty price promotions, which raises questions as to what the "regular" price of the product is and therefore whether the claimed savings for "was/now" promotions are genuine.

It is also comparing loyalty prices charged by different supermarkets at the same time. The CMA has also commissioned a consumer survey to understand the impact of loyalty pricing on how people shop.

The regulator intends to publish its findings in November 2024. It also intends to provide retailers with guidance on loyalty price promotions in due course. We will monitor progress closely.

Ofcom consults on draft transparency reporting guidance under OSA

Ofcom has published for consultation its draft transparency reporting guidance under the Online Safety Act 2023 (OSA).

The requirement to publish transparency reports under the OSA is an additional duty under the Act for "categorised services". Under the OSA, some regulated online services, will be categorised as category 1, 2A or 2B services, depending on their key characteristics and whether they meet certain numerical thresholds. It is for the government to set out the thresholds in secondary legislation.

Under the OSA, the transparency reports that categorised services will have to publish will have to contain the information requested by Ofcom in transparency notices, which it must issue to every provider of categorised services once a year. The information that Ofcom may require will mostly depend on the category of the relevant service and the type of service.

Ofcom plans to start sending the transparency notices to relevant services in mid-2025, subject to the necessary secondary legislation mentioned above being passed. It anticipates that providers will have between two and six months to produce their transparency reports in response.

The guidance on which Ofcom is consulting sets out the regulator's proposed approach to deciding the information that categorised services will be required to publish. It also explains how information from these reports will be used to inform its own transparency report, which Ofcom is also required to produce annually, drawing conclusions based on the contents of the providers' reports.

The consultation closes on 4 October 2024.

Ofcom consults on its information gathering powers under OSA

Ofcom has published for consultation draft Online Safety Information Powers Guidance, which explains when and how it might use its powers to require and obtain information to allow it to carry out its duties and functions under the OSA.

The non-binding guidance also explains the legal duties imposed on regulated services and other third parties in relation to information gathering, and sets out Ofcom's expectations on how services or other third parties should respond when it requests information. For example, the information provided will have to be complete and accurate, and delivered by the required deadline. Failure to comply may result in enforcement action, which in certain circumstances could, in theory, involve criminal liability.

The consultation closes on 4 October 2024.

Ofcom's consultation on strengthening its draft illegal harms codes of practice and guidance under OSA to include animal cruelty and human torture

Over the summer, Ofcom consulted on strengthening its draft illegal harms codes of practice and guidance under the OSA by specifying animal cruelty and human torture as types of content that platforms must tackle. The consultation closed on 13 September 2024 and Ofcom's statement is awaited.

Ofcom notes that the OSA lists over 130 "priority offences" and includes animal cruelty. However, the animal cruelty priority offence does not fully capture the online content associated with animal cruelty. In addition, the priority offences under the OSA do not fully capture explicit content depicting human torture. To clarify that providers need to remove this type of content, Ofcom has identified other legal provisions which would require the removal of this content and consulted on including such content in its regulatory documents to clarify that providers need to remove it even if it is not under the priority offences in the OSA.

Ofcom highlights its focus on online safety in annual report 2023-2024

In its Annual Report 2023-24, Ofcom emphasises that online safety is one of its priority areas, with the protection of children being its first priority.

The report also stresses that Ofcom's approach to online regulation is data-led and that throughout the year it has continued to build its capabilities and expertise in data engineering, science and analytics by developing infrastructure, tools and processes. For example, its data and innovation hub examined how recommender systems can be made safer for users and Ofcom has started working with companies developing and deploying generative AI models to examine the risks and benefits to keep users safe.

Ofcom has also been building its technical expertise in online safety and working with the academic sector to influence the direction of research towards AI, privacy and online harms. To support this focus on online safety, it has been reported that Ofcom plans to expand its current online safety workforce of over 460 staff by 20% (550+ people) by next March. Ofcom has also said that it plans to hit the ground running as soon as its duties under the OSA come into force by launching enforcement programmes against non-compliant services.

EU updates

EU Commission publishes evaluation of Consumer Protection Cooperation Regulation

The Consumer Protection Cooperation Regulation (CPC regulation) lays down a framework for EU and EEA consumer law enforcement authorities to cooperate with their counterparts in other EU jurisdictions in cross-border breaches of EU consumer rules or where there are multiple infringements across jurisdictions.

In its recent evaluation report the EU Commission has found that the CPC regulation has generally fulfilled its objectives of enforcing compliance with EU laws, having a positive impact on infringement detection and ensuring consistency in enforcement.

Businesses told the Commission that they appreciated being involved in a common and centralised dialogue rather than having to deal with several different authorities, but consumers said that the CPC regulation is inadequate in terms of significantly decreasing harm to consumers in the medium term – the speed at which consumer markets are evolving and the green and digital transition have led to more consumers being exposed to new threats.

At the same time, the Commission found that CPC authorities are facing new enforcement challenges, including:

• enforcement actions can be long and cumbersome;
• digitalisation has made it easier for illegal practices to spread across borders and new business models, driven by emerging technologies, mean that enforcement authorities are having to develop specialised expertise;
• applying the CPC regulation to businesses established outside the EU/EEA, but that target consumers in the EU, needs to be more straightforward;
• the effectiveness of the CPC regulation is hampered by differences in the capacity of national authorities to deal with cases due to limited resources, different interpretations of the laws and differences in the implementation of minimum investigation and enforcement powers; and
• the deterrent effect of the CPC regulation is limited due to difficulties in coordinating the imposition of fines by CPC authorities.

The Commission concludes that the CPC regulation needs to be strengthened. It is currently carrying out impact assessments to determine whether to keep the current framework as it is or to introduce new legislation. The Commission's "fitness check" on EU consumer law, which focuses on digital fairness and was launched in 2022, is also awaited. Indications are that it might be published this autumn, but that is not yet confirmed.

EU Commission launches call for evidence to inform upcoming guidelines on protection of children online under DSA

The EU Commission has launched a call for evidence to assist it in drafting guidelines on the protection of minors online under the Digital Services Act (DSA). It will then consult on the guidelines and plans to adopt the finalised version before summer 2025.

The Commission is seeking feedback on the proposed scope and approach of the guidelines, as well as on good practices and recommendations for mitigation measures to address the risks that children may encounter online. The guidelines will apply to all online platforms that are accessible to children, including those not directed at children, but which still have child users due to a lack of age-assurance mechanisms.

The call for evidence is open until 30 September 2024.

BEUC publishes report on regulating in-game and in-app premium currencies to protect consumers

The European Consumer Organisation (BEUC) has published a report denouncing "harmful commercial practices" in video games, such as the use of loot boxes, deceptive designs and aggressive marketing. BEUC is particularly concerned about in-game purchases.

The report finds that the current EU consumer rules have limitations that need to be addressed once the European Commission's digital fairness "fitness check" is completed. BEUC sets out recommendations for reform to further regulate in-game and in-app premium currencies, that is, virtual currencies (such as gems, points, coins) that can be purchased with real money through an in-game or in-app store.

Recommendations include banning the use of these currencies, at least in relation to under 18s, or at least introducing stricter transparency requirements, such as requiring game and app developers to make clear what the equivalent real monetary value of a virtual currency is before each transaction is processed. BEUC also recommends obliging game and app developers to deactivate in-game payment mechanisms by default, making consumers "opt-in" if they wish to make a purchase, and ensuring that notifications are sent to the payment card holder to validate each transaction before it can be made.