Consumer law changes: What your business needs to know

As a business owner, you already juggle countless priorities, from serving customers to managing operations. Now, with the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), there are new rules on the horizon that could change the way you do business. These updates are designed to protect consumers, but they also bring opportunities for businesses like yours to build trust and stand out in the market.

In this guide, we’ll break down the key changes, show you how they might impact your operations, and give you clear steps to ensure you’re not just compliant but ahead of the curve.

What’s changing?

The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) strengthens the enforcement powers of the Competition and Markets Authority (CMA) and introduces new rules to protect consumers in today’s digital marketplace. Here’s a clear breakdown of the key changes:

1. Direct enforcement by the CMA

For the first time, the CMA can take direct action against businesses that break consumer protection laws without needing court approval. This gives the CMA greater power to enforce the rules quickly and effectively.

Key powers include:

• Ordering businesses to stop illegal practices immediately.
• Issuing fines of up to 10% of global annual turnover or £300,000, whichever is higher.
• Applying daily fines for ongoing non-compliance.
• Penalising businesses for providing false or misleading information during investigations.

These new powers mean businesses must take a proactive approach to ensure their practices comply with the law.

2. New rules on unfair commercial practices

The DMCC Act expands the list of practices that are automatically considered unfair and illegal, including:

• Fake reviews:

Under the Act, it is illegal to create, pay for, or publish fake reviews. Businesses are also required to take “reasonable and proportionate steps” to prevent fake reviews from appearing on their platforms.

• Drip pricing:

All costs, including fees and taxes, must be clearly displayed upfront in adverts and product listings. Hidden fees added at checkout are no longer allowed.

Looking ahead, more rules could be added to this list, targeting practices like “dark patterns”—design techniques that manipulate consumers into actions they might not have chosen otherwise.

3. Stricter rules for subscription contracts

The Act introduces new safeguards to prevent “subscription traps,” ensuring consumers fully understand and control their subscriptions. The key requirements include:

• Clear pre-contract information:

Businesses must clearly outline costs, cancellation rights, and how subscription terms may change.

• Cooling-off period:

Consumers can cancel a subscription within 14 days and get a full refund, with no penalties.

• Renewal reminders:

Businesses must remind customers before auto-renewals or the end of free trials.

• Simple cancellation process:

Cancelling a subscription must be easy, with no unnecessary steps or obstacles.

4. Additional enforcement tools

The CMA has also been given broader powers to address non-compliance, including:

• Enhanced consumer measures:

Businesses may need to offer refunds, improve customer information, or make changes to their processes to better protect consumers.

• Online interface notices:

The CMA can require businesses to change their websites or apps to comply with the rules. This could include displaying warnings, restricting access to non-compliant platforms, or making design adjustments.

These changes mean the CMA can act more quickly and effectively to protect consumers, making it critical for businesses to review and update their practices now to stay compliant and avoid penalties.

When do the new consumer law changes take effect?

The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) has a phased implementation plan, with different parts of the Act coming into force over the next two years. Here’s a breakdown of the key dates and what they mean for your business:

• December 2024 or January 2025
  

Introduction of the digital markets regime and enhanced competition law enforcement powers.

• April 2025

Implementation of consumer law enforcement measures, including the Competition and Markets Authority's (CMA) authority to issue monetary penalties for consumer law breaches, and new consumer protections addressing issues like fake online reviews and drip pricing.

• Spring 2026 (at the earliest)

Enforcement of new rules concerning subscription traps and alternative dispute resolution.

Implications for businesses

• Greater accountability

With the CMA’s expanded powers, businesses are at greater risk of penalties for non-compliance. Enforcement actions could also lead to increased consumer claims, particularly in areas like hidden fees and fake reviews.

• Heightened scrutiny of e-commerce practices

Online sellers and platforms must ensure transparency in pricing and review authenticity. These areas are expected to be a key focus for the CMA.

• Potential future changes

Businesses should monitor updates to the “blacklist” of unfair practices, as additional rules may target emerging issues such as deceptive design practices.

Proactive steps to ensure compliance

Here’s how your business can prepare for the changes and minimise risks:

1. Audit your practices

• Review your consumer interactions, including pricing transparency, contract terms, and review processes.
• Ensure adverts and product listings display total costs, including fees and taxes.

2. Update contracts and policies

• Revise consumer contracts to include clear pre-contract information and straightforward cancellation terms.
• Strengthen policies on managing consumer reviews, ensuring fake reviews are prevented.

3. Enhance your digital platforms

• Implement measures to prevent fake reviews, such as automated detection tools and verification systems.
• Ensure your website or app complies with transparency rules and avoids manipulative design patterns.

4. Train your staff

• Educate sales, marketing, and customer service teams on the new rules and what constitutes non-compliance.
• Focus on areas like subscription management, transparent pricing, and fair advertising practices.

5. Stay informed

• Keep up to date with CMA guidance and any additions to the “blacklist” of unfair practices.
• Monitor announcements about the implementation timeline for subscription rules.