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Understanding the new Digital Markets Competition & Consumers Act 2024 (DMCC).

With the rise of online shopping, subscription services, and influencer marketing, consumers are often left vulnerable to deceptive practices, misleading information and potential harm that are estimated to cost consumers £1.6 billion a year (Source; UK Gov.) This new Consumer Protection Act recognises that previous laws were not suitable for the modern world and seeks to aims to better safeguard consumer rights in today’s digital world with a particular focus on ; subscription traps, fake reviews and drip pricing.

Subscription traps

Subscription services have become a staple in modern consumer life, offering everything from streaming content to meal kits. However, consumers can often find themselves locked into contracts they didn't fully understand or are hard to get out of. The new law, effective from 2025, imposes specific obligations on businesses offering subscription contracts.

Firstly, they will have to provide clear "pre-contract information" to consumers so that they are fully informed about the terms, costs, and duration of the subscription before they commit. And there must be reminders before a free trial or low-cost offer ends and before a contract auto-renews. 

The Act also mandates that consumers should be able to exit a subscription contract in a straightforward, cost-effective, and timely manner and seeks to prevent them from being trapped in unwanted contracts.

Fake reviews

Online reviews have become a powerful tool for consumers to make informed purchasing decisions. However fake reviews have undermined the trustworthiness of this system. The new Act will prohibit businesses or individuals from submitting fake reviews or commissioning others to do so. It also bans ‘incentivised’ reviews (unless clearly labelled as such) and businesses are required to take reasonable and proportionate steps to ensure the authenticity of any reviews they host and remove any false or misleading content.

Drip pricing

This is where businesses initially advertise a low price for a product or service, only to reveal additional costs throughout the transaction process. Just think of low cost airlines and you will instantly understand the concept. This practice can lead to consumer frustration and a final price that is significantly higher than expected.

Under the new law, businesses are required to include all material information about the total price of a product, including fees, taxes, and any additional charges, in the "invitation to purchase." If a total price cannot be reasonably calculated in advance, consumers must be informed of the existence of additional costs and how they will be calculated. This transparency will ensure that consumers are fully aware of the true cost of a product or service before making a purchase decision.

Sanctions for non-compliance

Companies found to be providing unsubstantiated and misleading claims, engaging in fake reviews, or failing to disclose paid promotions can face fines of up to 10% of their global annual turnover or £300,000, whichever is higher. The Competition and Markets Authority (CMA) will be given additional powers to enforce consumer protection laws directly. 

The Director of Policy at Which? said:

Key takeaways for marketers

For brands looking to navigate the new consumer protection landscape, there are several important considerations. 

• If a brand wishes to use consumer reviews in a marketing campaign, it is crucial to ensure that they have sufficient proof of the review's authenticity and the details of the person who provided it. Additionally, brands must include clear, unavoidable, and explicit disclaimers within their marketing communications, if the review has been incentivised. 
• When working with influencers, brands must ensure that all promotional content includes clear and explicit disclaimers, such as #Advert or #Ad. 
• Clear pricing and contract terms – to avoid falling foul of the drip pricing or subscription traps

As the digital marketplace continues to evolve, these regulations will play a crucial role in ensuring a fair and transparent environment for all.