How the new Digital Markets, Competition and Consumers Act affects your B2C business

Understanding the importance of the Digital Markets, Competition and Consumers Act (DMCCA)

At the end of May 2024, the UK Parliament passed the Digital Markets, Competition and Consumer (DMCC) Bill. The law is expected to come into force from Autumn 2024 (most likely on a staggered basis, with some changes (e.g. in relation to subscription contracts) not coming in until 2026).

The DMCCA grants new powers to the Competition and Markets Authority (CMA) in relation to businesses that infringe consumer law - the CMA will no longer need to go to court to secure an order for compliance. The Act gives the CMA the power to impose severe penalties for businesses that fail to comply with the regulations - this includes both fines and also the ability to impose "enhanced consumer measures''.

Fines can be substantial (up to £300,000, or 10% of a business’s global annual turnover (whichever is higher)), reflecting the seriousness of the infractions and aiming to deter non-compliance. The Act also includes "enhanced consumer measures", which could require compensation to be paid to consumers or early termination of contracts. This means it is more important than ever for B2C businesses to ensure that they comply with consumer protection laws.

Key changes under the DMCCA

1. Subscriptions: measures are being introduced to stop "subscription traps", where consumers have signed up for paid subscription contracts that they find it difficult to get out of or are unaware that they are locked into:

   • Pre-contract information - for subscription-based contracts, new rules will mean that consumers must be provided with clear information (e.g. about the minimum duration of a subscription) prior to entering a subscription contract.

   • Cooling-off period - the Act introduces a new 14-day ‘renewal cooling-off period’ during which consumers can cancel their subscriptions for any reason without penalty after a renewal. This means there will be other points in the contract (and not just at the start) where the consumer can exit the contract.

   • Easy exit - consumer customers must also be able to exit the subscription via a straightforward process - a customer must be able to notify a business of their intention to exit by “making a clear statement” setting out their decision to bring the contract to an end. This is sometimes referred to as a "cancellation button" - an easy online way to allow consumers to exit the contract.

   • Reminders - businesses must also send reminders in a prescribed form to consumers, reminding them that a free or discounted trial period is coming to an end, or their contract is due for renewal.

2. Transparent pricing: unavoidable hidden fees will need to be included in the initial cost or clearly illustrated at the start of the purchasing journey - the price shown to a consumer must be the total price including any fees, taxes, charges or other payments that the consumer will necessarily incur. This is to ensure consumers are clear from the outset about what they’re spending. This targets businesses that lure customers with a low "headline" rate, but then incrementally add extra charges throughout the transaction process, leading to a significantly higher final price (known as “drip-pricing”).

3. Fake consumer reviews: as another measure to target dark patterns, fake reviews will become a blacklisted practice. Businesses will be prohibited from (i) commissioning fake reviews, (ii) publishing consumer reviews that conceal the fact they have been incentivised, or (iii) publishing consumer reviews or consumer review information (e.g. compiled rankings) in a misleading way. In addition, an obligation will be imposed on businesses to take reasonable and proportionate steps to ensure that the reviews they display do not infringe these requirements.

4. Other areas: the DMCCA doesn’t just cover consumer law. It also introduces new laws relating to digital markets, merger control and competition law. Rules will apply if a business has Strategic Market Status (SMS) - a business will have SMS if they have “substantial and entrenched market power” and “a position of strategic significance” in relation to digital activities linked to the UK. You can read the DMCCA in full here.

Practical steps for your business

The practical specifics of the subscription regime, along with how the CMA will implement its new enforcement powers, will be outlined in forthcoming regulations and guidance which B2C businesses should keep an eye out for. In the meantime, businesses should start to prepare for the new law, including by taking the following steps:

1. Review your B2C subscription process and contracts - practices in relation to subscription-based contracts should be reviewed to ensure that the new rules set out above are followed - this will include ensuring contractual terms are compliant (e.g. auto-renewal clauses), putting in place processes for sending out the required reminders/notices and ensuring there is a "cancellation button" in place.

2. Get ahead of the new rules - e-commerce sellers and platforms should make sure that advertised and listed prices clearly reflect the true costs to the consumer. Additionally, they must implement effective measures to prevent fake reviews.

3. Raise staff awareness - you should ensure that all relevant staff (e.g. those in sales roles) are aware of the risks that infringing consumer law could now pose to your business, and the types of behaviours that must be avoided with B2C sales.

Stay informed

Keep an eye out for forthcoming regulations and guidance from the CMA to ensure full compliance. In the meantime, you can read the DMCCA in full here.

Additionally, remember to align your B2C contracts with the Consumer Rights Act 2015. Find out more here.

Tags: digital markets competition and consumers act, DMCCA, consumer law UK, consumer protection law UK.