What does the new digital markets and consumer law mean for developers of female health and wellbeing apps?

A new digital markets and consumer law is due to come into force in October 2024. The Digital Markets, Competition and Consumers Act 2024 (DMCC Act) ushers in a new era for consumer law and fairness within the digital market. With the global FemTech market forecast to grow to $103 billion by 2030, it will be crucial for women’s health and wellbeing app developers to be proactive and take stock of the new rules, with a view to mitigating the risk of future enforcement action.

We know consumer protection compliance and enforcement is taking an increasingly prominent position in the UK. Last year the Information Commissioner’s Office looked at period and fertility apps to understand how they process personal data and identify whether there is a negative impact on users as a result. While the ICO found no ‘serious compliance issues or evidence of harms’ in this review, the ICO used it as an opportunity to remind all app developers about the importance of ensuring they are meeting all their obligations to be transparent with their users and keep their data safe. That’s not surprising given the incredibly sensitive and personal information involved with using these apps.

We explore some of the key consumer protection issues likely to impact the female health app economy here.

Breaking down the potential impact for women’s health app developers

Subscription contracts

One of the main areas of focus is “subscription traps”. This is a subscription-type contract where a consumer may find it difficult to extricate themselves from their contract. This could apply, for example, before a consumer is required to pay (or pay more) after an initial free or discounted price period, or where the contract automatically renews after a period of time.

In the women’s health and wellbeing sector, subscription contracts are being used in relation to FemTech apps. Flo Health, which recently raised $200m to become Europe’s first FemTech unicorn, has almost five million paid subscribers for its period and fertility tracker and expects its revenues from subscriptions to exceed $200m this year.

Not all subscriptions will be covered by the changes, however. Many, but not all, health-related products and services are specifically excluded, notably those that are provided under prescription by a healthcare professional, such as such as hormone replacement therapy to treat menopause symptoms and some medical devices, including sensor-based glucose monitoring systems. The first task, therefore, will be to establish whether a specific subscription is caught by the new DMCC Act obligations.

Where subscription-based products and services are covered by consumer contracts outside the exclusion, they are likely to be affected to at least some degree.

The DMCC Act sets out new requirements for these contracts:

•    Pre-contract information – certain “key” information must be provided in the UI and importantly mustn't be behind a tooltip or require the consumer to click or take any other action to access it, which will be particularly challenging for mobile and other space limited UIs.

•    Cancellation method(s) – subscribers must be given a “straightforward” way of cancelling their subscription. Currently, there's no specific requirement or further guidance as to how this might be done, although something like a cancel button on the relevant page of the app’s website (as is required in Germany and, more recently, France) may meet these requirements. This could provide a pan-European solution for female health and well-being businesses operating in these jurisdictions. However, the DMCC Act goes further and says that subscribers are also entitled to cancel using other methods provided they make a “clear statement” to this effect. This means that  app developers will need to be prepared to receive and implement cancellation requests through other means, for example, if a consumer contacts customer services.

•    Cooling-off periods – in addition to the existing initial 14-day cooling off period for online contracts (which will continue to apply), consumers will now get a similar right to cancel following the end of any free/reduced price introductory period and upon auto-renewal.

Failure to comply with these requirements will allow the consumer to cancel their subscription with immediate effect, at no cost to them. There's also a specific offence of failure to provide certain information.

The current plan is that the implementation of the subscription regime will be delayed until spring 2026, giving providers of female health apps at least some time to prepare for these changes and consider how they may impact the consumer journey.

Drip pricing

This is an example of a “dark pattern”, where consumers are manipulated or “nudged” into doing things or making choices that may not be in their best interests. “Drip pricing” involves the idea of feeding additional fees and charges into the booking price that weren't included in the initial price advertised to consumers, but with the consumer feeling committed to the purchase by the point these extra amounts are introduced. This practice can see consumers incurring costs that they may not have been willing to accept had they been clear from the outset. 

Under the DMCC Act, certain information must be provided to consumers whenever an “invitation to purchase” is made (broadly any advertising of the product/service which includes the price), including:

•    The requirement to provide a “total” price, which includes any fees/taxes/charges and other payments that the consumer will have to pay when purchasing the product.

•    If it is not possible to calculated variable mandatory fees in advance the existence of any other mandatory but variable fees, and how these are calculated.

It won't catch genuinely optional charges (other than freight, delivery or postal charges, which must be specified), though there is 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.

Fake reviews

The DMCC introduces new so-called blacklisted offences related to fake reviews.

Of particular relevance to providers of women’s health and wellbeing apps that host customer reviews on their website, the DMCC Act will prohibit:

•    Publishing consumer reviews, or information deriving from/influenced by consumer reviews, in a misleading way, eg only publishing positive reviews, or selecting choice parts of the review which are not representative of the whole.

•    Publishing such fake/misleading reviews/review information from others without taking “reasonable and proportionate” steps to identify and/or remove them.

In practice, this means that app developers that host reviews on websites and elsewhere will need to set up processes to perform “reasonable and proportionate checks” to establish if reviews are genuinely submitted by consumers who have had experience of the product or service concerned. Where there's doubt, reviews will need to be removed.

Further use of reviews on websites and moderation policies will need to be reviewed to ensure they do not inadvertently mislead, for example, by only publishing positive reviews. This will include where reviews are used to drive ranking or other products of products and services on a website. Currently, there is significant scope for uncertainty about what “reasonable and proportionate” checks means. The Competition and Markets Authority (CMA) is expected to consult on and produce further guidance and clarification, including what steps traders will be expected to take to comply with these requirements.

Enforcement

The DMCC Act introduces new enforcement powers for the CMA, allowing it to determine directly whether the legislation has been breached without court involvement. Failure to comply can ultimately lead to substantial fines, up to £300,000 or 10% of global turnover, whichever is the higher, with fines of up to £300,000 for individuals also found to be “accessories” to an offence. FemTech companies likely to be caught by the DMCC Act will, therefore, need to be aware of and understand their obligations and ensure that their customer journey is compliant.

Looking ahead

The new Labour government officially confirmed on 9 September 2024 that it would be tabling the legislation required to bring the DMCC Act into effect.

Most of the new consumer protection aspects, including the CMA's new enforcement powers, will come into effect in April 2025. The new subscription regime will come into effect a year later in 2026 which means that any changes you will need to make should be planned in with these timings in mind.  For example, insofar as you have subscriptions with consumers, there will be implications for the sign-up flow and other certain new notices required. Also there will be new compliance requirements in relation to displaying reviews and price information from spring next year.

Supporting you

If you’d like to discuss any of the issues raised here or would like support with getting ready for the new DMCC regime or how your app can better meet your user’s expectations and comply with the ICO’s expectations in relation to data transparency and UK data protection law, contact us.