The new Digital Markets, Competition and Consumers Act will bring about changes to consumer law. But what does this mean for small businesses and do we really have to use the full name?

Firstly the Act is thankfully being shortened to (the “DMCC”) but the law it goes about changing is a little more complicated than that. But luckily, the wonderful K&K Legal Consulting has agreed to set out the changes, with small businesses in mind, in a much simpler and easy to understand form. So this is where I hand over to K&K Legal Consulting…

K&K Legal Consulting

Working with small businesses we understand that new laws can appear frustrating, overly complicated and frankly hard to pick out the important points of a lengthy Act. This is why we are here – to pick out the key features that we feel small businesses should be aware of and so here goes.

A Shift In Power for Consumer Law

Something which we feel has been long overdue, especially when it comes to protecting consumers, is the ability for an authority to step in and take action. Previously consumers have felt that in order to enforce their rights they have needed to take action themselves usually by means of court proceedings. This will soon change with powers due to be given to the Competition and Markets Authority (“the CMA”). Essentially what this means for businesses is that the CMA will be given powers allowing them to:

Enforce consumer law;
Investigate alleged infringements;
Serve infringement notices;
Issue penalties and fines – just to name a few

This shift in power, for some businesses, might feel like another consideration and another risk. But it doesn’t need to be. A well run business, which is committed to staying within the realms of the law, has nothing to worry about.

What The Changes Mean for Subscription Contracts

This is something that has felt like it has been on the horizon for a long time, but only now are we seeing more regulation. Subscription contracts – like membership or box subscriptions – are big business with the market estimated to be worth billions of pounds a year. Here’s what you need to know:

There are greater requirements on the information needed to be given pre-contract. This includes the relevant auto renewal obligation, any new or increased charges after any trial or discount, how often payments must be made, how to terminate the subscription, a breakdown of the cost monthly (even if it is a yearly contract) and cooling off rights.
Full pre-contract information, which is separate to the above, must be provided separately including the full identity of the business, when access will be given, full functionality of the content or product, how to complain, consequences of exercising the right to cancel and renewal.
A very clear warning, prior to purchase, that the consumer knows they will be required to make payments under the contract.
If any discounted or trial period is given, a notice prior to the new price coming into effect must be given.
The consumer must receive a written reminder notice prior to auto renewal.
There is a 14 day cooling off period for each renewal. Businesses will have an obligation to inform the consumer, on the day of renewal, about their 14 day cooling off period as well as giving them key information.
Consumers must receive a written acknowledgement of their termination within 24 hours where they cancel online or within 3 working days via other methods.

Addressing Drip Pricing

This is not something that your average reputable business deals in but it is something that the DMCC wanted to address. Essentially, drip pricing is where businesses use deceptively low rates or make an offer look better than it is, price wise. Then when the customer gets to the checkout all of a sudden additional fees are added and the final price is widely different to the offer.

As you can imagine this is something that the government rightly wanted to address. The DMCC will place obligations on businesses to ensure this doesn’t happen and require clear pricing to be shown. This means that businesses will be required, in their headline price, to show all fees which must be paid. This includes booking fees, VAT and other related fees.

Fake Reviews

We all know that this happens a lot causing a lot of confusion to customers. This is something that is especially relevant given the number of customers who now rely on reviews before purchasing. Businesses will therefore be prohibited from:

Submitting fake reviews, including requesting others to do so.
Paying someone to submit a fake review.
Misrepresenting reviews.
Failing to remove or prevent customers from seeing fake reviews.

As you can imagine, especially in respect to the latter, this is not always possible. Businesses rely on third party platforms to assist in removing fake reviews. As such, we are presently awaiting the CMA to issue guidance to provide businesses with some clarity over what steps they can take, and what steps will be enough, to fulfil their obligations under the DMCC in respect of the same.

The CMA does plan to issue guidance in respect of the DMCC but at this stage no date has been given as to when this will be made available. When this consumer law guidance is available we will revisit this blog to reference the same.

Now is the time to get legal ready

If you provide your goods or services to consumers now is the right time to take a look at your legal documents. Remember, when selling to consumers they already have a legal right to be given certain information including their right to the cooling off period when purchasing ‘at a distance’. The DMCC further imposes new obligations on businesses to provide consumers with an outline of consumer laws.

If your terms and conditions or contracts don’t already include this information, it’s important that you work on putting this into place. After all, no one wants to be fined and put their business at risk for future trading. If you need any help with this, or any other area of business law, feel free to get in touch. We can be reached at lawyers@kkbservices.com.

More about K&K Legal Consulting

I’ve been both a customer and an affiliate of K&K Legal Consulting for a while because they offer a vital service to small businesses; their legal shop offers low-cost legal solutions like contract templates (affiliate link) and their knowledge is invaluable.
Not only that, they’re friendly, small business owners too!