On Tuesday, a new piece of legislation will be introduced in the House of Commons in the UK. It will attempt to boost digital competition, clamp down on subscription traps, and fight fake reviews. The legislation promises to bring benefits for both businesses and consumers and boost the credibility of the digital economy.
Under the new rules, the Competition and Markets Authority (CMA) will be the entity that metes out sanctions on the rule breakers. It’s expected that the measures will save consumers a huge £1.6 billion per year by being able to get out of subscriptions they never wanted in the first place.
The penalties for breaking the rules are as follows:
- Breaching consumer protection laws, of up to 10% of global annual turnover for businesses or up to £300,000 in the case of an individual;
- Breaching undertakings given to the CMA, with penalties worth up to 5% of a business’ annual global turnover or up to £150,000 for an individual, and additional daily penalties for continued non-compliance; and
- Non-compliance with an information notice, concealing evidence or providing false information, with penalties worth up to 1% of a business’ annual global turnover or up to £30,000 for an individual, and additional daily penalties for continued non-compliance.
“This bill is a pivotal step to make markets in the UK work better for consumers, businesses and support economic growth,” said Rocio Concha from the consumer group Which? “Whether it’s fake reviews by dishonest businesses or people getting trapped in unwanted and costly subscriptions, our consumer protections are overdue an upgrade. Which? has long campaigned for stronger powers for the Competition and Markets Authority, including tough enforcement and the ability to fine firms that break the law directly.”
One of the problems with legislative approaches is that the language can be a bit wishy-washy. What is a “subscription trap” precisely? Well according to the announcement, these are subscriptions that are purposefully made difficult to cancel. Under the new rules, businesses will need to provide clearer information about the subscription contract. Presumably, consumers who encounter bad practices can complain to the CMA who will go after the business.
The new bill also targets fake reviews. It will be illegal to commission someone to write or submit a fake review. It will also be illegal to offer or advertise fake review services. Businesses that do host reviews on their website will have to take reasonable steps to ensure that the reviews are legitimate.
Finally, the bill has identified the excessive dominance a small number of tech firms have over consumers and businesses in the UK. The new bill will allow for targeted interventions. This will open new paths for start-ups and small businesses to render their services so they’re not kept out by big tech companies.
If this bill passes into law, it’ll be quite interesting to see how well it’s enforced. The CMA will enforce this legislation so we’ll have to see how it does. Regulators can be a bit hit or miss, take Ofcom, it has done some good work but can also be too lenient. It made it easier for people to switch mobile providers but didn’t take punitive measures when the One Touch Switch deadline was missed.
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