Online businesses have been warned that it could soon be illegal to write or host fake reviews, while those who trick customers into spending more than they want could be hit with big fines.
These are just two of what the Government has called “an arsenal of planned reforms to shield the public from rip-offs” in a new shake-up of consumer rights.
The Government will also change the law so prepayment schemes like Christmas savings clubs have to safeguard customers’ money, protecting consumers’ cash as they save for the holidays.
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. This means both sides will not get dragged through the courts and levels the playing field for decent businesses who are doing the right thing.
With Covid pandemic boosting the subscriptions market, the Government is also clamping down on consumer traps by requiring businesses to make it clear exactly what customers are signing up for and letting them cancel easily, to ensure people can spend their hard-earned cash with confidence.
The consumer catfishes behind bogus online ratings will also be targeted by rules that make it automatically illegal to pay someone to write, or host, a fake review.
The Government says it will also help regulators stamp out other dodgy tactics used to dupe online shoppers. These include ‘dark patterns’ that manipulate consumers into spending more than they wanted to, and ‘sludges’, negative nudges such as when businesses pay to have their product feature highly on a trader’s website while hiding the fact they paid for it.
Business Secretary Kwasi Kwarteng said: “The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them.
“By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”
The proposals come in the new consultation on Reforming Competition and Consumer Policy, which delivers on the Government’s manifesto commitment to “give the Competition & Markets Authority enhanced powers to tackle consumer rip-offs and bad business practices”.
Tough penalties for non-compliance are being put forward, with new powers for the CMA and similar enforcers to hit unscrupulous traders who breach consumer law with fines of up to 10% of their global turnover, and civil fines for businesses who refuse or give misleading information to enforcers.
The Government is also considering several options – including introducing financial penalties – when firms breach the commitments given to enforcers that they will change their ways.
To speed up processes, the CMA will also be able to enforce consumer law directly rather than having to go through a court process that can take many months or even years – meaning consumers are protected more quickly.
Which? director of policy and advocacy Rocio Concha said: “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.”
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