Online trading among proposed new consumer protections
Online reviews, subscription services and Christmas savings clubs are among a wide range of areas where the UK Government is planning new regulation to increase competition and protect the public from unfair practices.
Business Secretary Kwasi Kwarteng announced today that in an effort to counteract the effect of bogus online ratings, rules will make it automatically illegal to pay someone to write, or host, a fake review.
Other tactics to be targeted include "dark patterns" that manipulate consumers who shop online into spending more than they wanted to, and "sludges", or negative nudges, such as when businesses pay to have their product feature highly on a trader’s website while hiding the fact that they paid for it.
To clamp down on subscription traps, businesses will require to make it clear exactly what consumers are signing up for and let them cancel easily.
Prepayment schemes like Christmas savings clubs will have to safeguard customers' money, to prevent scandals like Farepak, where tens of thousands of people, many on low incomes, lost all they had saved for Christmas when the company went bust.
For the used car and home improvement sectors, where consumers often make large, important one-off purchases, the Government will make it mandatory for businesses to take part in arbitration or mediation where disputes arise over a transaction.
The proposals come in a new consultation on Reforming Competition and Consumer Policy, which takes forward the Government's commitment to give the Competition & Markets Authority "enhanced powers to tackle consumer rip-offs and bad business practices".
The CMA will be able to fine unscrupulous traders who breach consumer law up to 10% of their global turnover, and impose civil fines on businesses who refuse or give misleading information to enforcers.
It would also be given power to disqualify company directors who make false declarations to the regulator, accept voluntary binding commitments from businesses at any stage in its investigations, rather than only at the end, and block a wider range of harmful mergers, including "killer acquisitions" where big businesses snap up prospective rivals before they can launch new services or products.
Rocio Concha, the Which? director of Policy & Advocacy, commented: "It is positive that the Government is moving to give the competition and consumer regulator greater powers to take strong enforcement action which will address issues with the current system and help tackle business practices that harm consumers.
"The pandemic has highlighted weaknesses in UK consumer protections that have allowed unscrupulous businesses to exploit customers, while our competition regime has been in need of an update to deal with the challenges of digital markets.
"The Government must now ensure that these proposals are swiftly implemented, and are underpinned by the right resources at a local and national level, so that consumer protection is strengthened."