The Digital Markets, Competition and Consumers Act (the Act), an omnibus bill some 3 years in its fruition, was finally passed into law in May 2024, during the wash up period of the last Parliament and slightly under the radar of the impending election.
The digital is in the name and the ink spilt (or content posted) has largely been about how it proposes to shape the behaviour of powerful technology companies operating in the UK, Google, Facebook and the rest. However, the Act itself is poised to significantly change how all consumer facing businesses deal with promotions, advertising and how they sell their products and services. Huge swathes of the Act have been drafted to modernise consumer protection standards and enforcement, and which apply equally to digital or physical businesses covering everything from drip pricing to weights and measures. Moreover, unlike key provisions of the much more well known Consumer Rights Act 2015, the Act applies to land sales, tenancies and other property-related work wherever a trader (any entity, including charitable body carrying out its ordinary ‘business’) faces a consumer.
So, it does not matter if your property, retail or other business is online, in person or somewhat in between it makes sense now to engage with the Act and understand the potential impacts on your operations and staff.
The Act in brief
As well as creating increased powers for the Competition and Markets Authority (CMA) to investigate digital firms with a “substantial and entrenched market power”, the Act will also:
- provide further protections for consumers against ‘subscription traps’, and traders will have to provide fuller pre-contract information and “straightforward” termination rights;
- give direct enforcement powers to the CMA to investigate and penalise businesses for infringements of certain consumer protection laws; and
- replace and modernise the old “Consumer Protection from Unfair Trading Regulations”.
The new Government has advised that the majority of the consumer changes set out in the Act will come into force “in 2025”, albeit certain reforms to subscription pricing (see above) have now been delayed until spring 2026 “at the earliest”.
More or Less Unfairness
The Regulations should be well known to most prudent traders and many will be aware of the schedule of normally proscribed “practices which are in all circumstances consider unfair” including material inaccuracies in descriptions, describing something as free when it is not, and falsely stating a product is available in limited numbers or for a ‘limited time only’. These provisions from the Regulations are being retained wholesale but with some significant amendments.
The Government has also agreed to include further protections around ‘greenwashing’ and ‘drip pricing’, i.e. where a product or service is advertised with an artificially low headline price with necessary fees and other charges only revealed later on. You might think of the paradigmatic examples as event tickets and budget flights. It will almost certainly have a broader application in practice, as the Act provides that an offence is committed if an invitation to purchase “omits[or hides] material information…”, and otherwise asks the trader to consider whether the presentation of misleading, unclear information, is likely to cause a consumer to “take a transactional decision they would not otherwise have taken”.
In practical terms, you will undoubtedly need to think about how your advertising (online and in person) presents information to customers, including matters dealt with by sales offices and via your usual channels for promoting house sales and renting, e.g. if you advertise a low minimum deposit you must be careful in also disclosing any extras, e.g. service charge pre-payments, works costs and any fees.
It would also be sensible to carry out a review of your sales and marketing practices (end-to end), in light of the updates to the Act and to unfair practices as it might be expected that some of the matters already prohibited by the Regulations will be under increased scrutiny by the beefed up CMA. As a trader you remain responsible for approving the actions undertaken by your third party agents (i.e. sales agents) and via online platforms you use to advertise.
The Act also gives the Department of Trade the power to add new blacklisted ‘unfair practices’ as it sees appropriate in the future without further primary legislation, so the new Government may undertake further reforms in this area. In particular, further regulation of so-called “dark patterns” in online platforms has been mooted.
Vulnerabilities
Another headline area to consider is that traders will need to consider the ‘situational vulnerability’ of consumers to unfair trading practices. Previously under the Regulations this was limited to identifiable classes or groups of consumers, e.g. the elderly or unwell. This now also includes a group of consumers being “vulnerable to a practice because of the product to which it relates”, or otherwise being “particularly vulnerable” due to the “circumstances they are in”. This means that not only do traders have to consider how those groups might be treated by their trading practices, but also what and how products themselves may be targeted in an unfair way towards a particular class of consumers.
For property managers, you may need to think how your property sales are targeted and whether there is an identifiable sub-set of consumers make up your market segment. Obvious examples include supported and care accommodation, but you should also think more widely and see potential connections. Could the marketing of studio flats particularly attract customers experiencing a family breakdown, and so, theoretically be ‘vulnerable’ due to the circumstances they are in?
Future Proofing
There is still some time for our clients to consider and review the likely impact of the Act on their businesses. Much of this will involve taking a common sense approach and ensuring that already high standards are being maintained. Indeed, many of our readers will be well versed in dealing with vulnerable customers and have fairness as part of their ethos (whether charitable or otherwise). However, the fundamental point is to understand the entire ‘consumer journey’, which from a real estate perspective includes everything from initial advertising through to sales packs, property information and post-sale services. Interestingly, recent European case law has suggested that groups of consumers, which may include ‘residents management companies’ (RMCs) could be considered to be consumers themselves, suggesting that our consumer duties under the Act could continue for a long time after development and sale has concluded.