What do the consumer parts of the Digital Markets, Competition and Consumers Act 2024 mean for the technology sector?

The Digital Markets, Competition and Consumers Act 2024 (the “DMCC Act”) finally received Royal Assent on 24 May 2024, over a year after being originally introduced into Parliament.

As explained here, the DMCC Act is a large piece of legislation which covers various areas, including the regulation of digital markets and competition law and merger control, but it also impacts UK consumer protection law in a number of ways. Although the exact date this legislation will come into force hasn't yet been confirmed, and it seems likely that it won’t be implemented all at once, businesses across the technology sector which provide goods, services and/or digital content to (or otherwise interact with) consumers will be impacted and will, therefore, need to start considering the key issues now. Some of those which are likely to be of interest are set out below.

Subscription contracts

One of the main areas the DMCC Act focuses on from a consumer law perspective is “subscription traps”, namely subscriptions where the consumer finds it difficult to extricate themselves from their contract, including those they may have involuntarily or accidentally entered into after an initial free or discounted price period.

Subscriptions are used in numerous ways across the technology sector, whether in connection with the use of software (particularly in relation to SaaS models) or apps, the purchase of cloud storage and computing services (e.g. Apple iCloud) or access to premium features in health/fitness trackers (eg Fitbit) to name but a few. All seem likely to be affected to at least some degree by the new obligations under the DMCC Act, which include:

• pre-contract information – certain “key” information must be provided before the consumer  enters into the subscription and this information must be provided directly in the user interface (UI) ie it cannot be behind a tooltip or otherwise require a consumer to navigate or click to find the information
• renewal reminders – these are to be sent to the subscriber at the end of any free/discounted period and prior to the auto-renewal of a subscription. There are further requirements to send out additional notices as well, the exact details of which depend on the structure of the contract
• cancellation method(s) – subscribers must be given a “straightforward” way of cancelling their subscription. Although the legislation gives no further detail on what is envisaged, it's broadly understood that this will mean having an on platform “cancellation button”. Subscribers will be entitled to cancel using any other method they choose as well, provided they make a “clear statement” to this effect, therefore forcing businesses to set up processes to collect and implement cancellation as a result of these statements
• cooling-off periods – in addition to any contractual rights, subscribers will have a right to cancel their subscription within an initial 14-day period after their contract commences, but also to cancel within the same timeframe following the end of any free/reduced price period and upon any auto-renewal which commits the subscriber to a further period of 12 months or more.

Failure to comply with any of these requirements will allow the consumer to cancel their subscription with immediate effect, at no cost to them. However, further regulations will be required to set out the other consequences of cancellation, including the extent to which a consumer is entitled to a refund where they have received any benefit in the cooling-off period prior to their cancellation. Clearly this is something that many will be following closely. It's also worth noting that it seems unlikely that the provisions set out above will become effective before Spring 2026, therefore giving businesses at least some time to prepare for these changes and consider how they may impact the consumer journey.

Drip pricing

Drip pricing is a practice that involves the idea of subsequently introducing additional fees and charges into the customer journey that weren't included in the initial price advertised to consumers. This means the customer ultimately ends up paying more than they had originally expected to, but are typically too indifferent or time-poor to go through the purchase process again elsewhere.  

In order to try and address this, under the DMCC Act certain information must be included whenever an “invitation to purchase” is made (namely any advertising of the product/service which includes the price), including:

• the requirement to provide a “total” price, which includes any fees/taxes/charges or other payments that the consumer will have to pay when purchasing the product
• the existence of any other mandatory but variable fees, and how these are calculated.

However, it won't catch genuinely optional charges (other than freight, delivery or postal charges, which must be specified). There's also scope for further regulation in this area for fees that are presented as optional when, in fact, they are likely to be unavoidable for most consumers.

Reviews

Fake reviews are an area of concern, with the impact of these on consumers regularly raised in government materials about consumer protection eg the Department for Business and Trade’s April 2023 report on “Estimating the prevalence and impact of fake online reviews”. The DMCC Act has created various specific offences that will now prohibit businesses from:

• submitting a fake consumer review (ie one not based on that person’s genuine experience), or a consumer review that, even if genuine, conceals the fact it has been incentivised
• commissioning someone else to submit or write such a review
• publishing consumer reviews, or “consumer review information” (ie information deriving from/influenced by consumer reviews eg average ratings), in a misleading way eg only publishing positive reviews, or giving greater prominence to them than negative ones
• publishing such reviews or review information on their own platform(s) without taking “reasonable and proportionate” steps to identify and/or remove them.

It seems likely that the new government will continue with the previous plan to work with the Competition and Markets Authority (CMA) to produce further guidance and clarification in this area, including what steps traders will be expected to take to comply with these requirements. This is expected to also involve public consultation before the guidance is finalised, giving businesses the opportunity to help shape and influence how this law may be applied in practice. 

Enforcement

One of the primary headlines relating to the DMCC Act has been the potentially eye-watering level of fines that can be imposed for breaches of this legislation, now set at 10% of global turnover (or £300,000, if higher). However, it's also worth noting that the DMCC Act introduces new “judge and jury” enforcement powers for the CMA, allowing it to both investigate and impose fines on traders directly, rather than going through the courts. Whether the CMA will continue to seek undertakings from those it considers to be in breach of consumer protection legislation as a first step prior to initiating enforcement proceedings, as was the previous practice, remains to be seen. However, this increased exposure and risk to businesses’ finances means it has never been more important for those caught by the DMCC Act to be aware of and understand their obligations in this area, and ensure that they start putting processes and procedures in place in good time before this legislation comes into force.

 Written by Paul Hilder and Katrina Anderson