Don’t miss this deal!?

Don’t miss this deal!?

Recent action by the CMA is a reminder for all businesses about the care which should be taken with online sales practices.

The UK Competition and Markets Authority (CMA) will take enforcement action in appropriate cases in relation to a variety of different aspects of consumer protection law. The Digital Markets, Competition & Consumers Act recently received Royal assent and the changes will include the ability to impose fines – of up to 10% of global turnover – where consumer protection law is breached, underlining how seriously such matters are to be treated.

Among the areas which the CMA will investigate are:

  • Online tactics to pressure website users to take particular action, such as a rushed decision in the face of a false sense of urgency through the use of countdown timers.
  • Suggestions of scarcity, such as a limited number of places left at a particular price.
  • Invitations for free trial subscriptions that switch into costly monthly subscriptions if consumers fail to cancel within a set timeframe, often concealed in the small print.
  • Drip pricing, i.e. where an enticing headline price is advertised but then additional charges and fees are added, thereby making it more difficult to compare the prices charged by one retailer with the prices charged by another.
  • Publishing fake reviews, or not publishing negative reviews (or making them less prominent).
  • Making unsubstantiated green claims.

One recent example of enforcement action by the CMA has been its investigation into some of the online sales practices by the group of companies which includes Emma Sleep UK Ltd (Emma Group). The CMA was concerned by the retailer’s use of countdown timers to create unfair pressure and misleading discount claims which did not accord with the actual savings made by consumers. The CMA wrote to Emma Group in July 2023 seeking undertakings to change their online sales practices, but no undertakings were provided that were sufficient to address the CMA’s concerns. The CMA has now issued a letter of claim warning Emma Group that it will commence court action if they do not commit to making changes without unnecessary delay.

With the increasing investigatory powers of the CMA, such enforcement action is only likely to become more commonplace. Businesses and directors should therefore be mindful than ever of the rules applying to online consumer sales – not only to ensure that they comply with the law and reduce the risk of investigation by the authorities, but also because it helps to build consumer trust and brand loyalty, which ultimately is likely to make good commercial sense.

If you have any questions about this article or online advertising more generally, please contract FSP’s Commercial & Technology team.