The Competition and Markets Authority has made headlines recently after fining three businesses a total of six million pounds for misleading sales tactics. These fines were imposed against the backdrop of an escalating consumer protection enforcement regime following the introduction of the Digital Markets, Competition and Consumers Act 2024 , and serve as a stark warning to businesses employing similar sales tactics.
We previously provided a Digital Markets, Competition and Consumers Act 2024 overview and reported on what consumer-facing businesses need to understand about the Digital Markets, Competition and Consumers Act 2024 . In this article, we take a closer look at the Competition and Markets Authority’s decisions and consider the practical lessons that businesses can take away from them.
As mentioned, the Competition and Markets Authority imposed fines of six million pounds across three businesses for practices including:
misleading customers with time-limited offers that did not end when they said they would;
automatically opting customers into paid-for extras; and
failing to present the total price of memberships, including joining fees, in a clear and timely manner.
While six million pounds is undoubtedly a significant sum, it is worth noting that the penalties were reduced by 40% due to the businesses’ cooperation with the Competition and Markets Authority. All three businesses admitted to breaking the law and agreed to settle the case early.
The message for businesses is therefore clear: breaching consumer protection obligations can result in substantial financial penalties. However, businesses that fail to cooperate with the Competition and Markets Authority may expose themselves to increasingly severe consequences.
These fines are reflective of the Competition and Markets Authority’s increasingly robust approach to breaches of consumer protection laws. In the last 18 months alone, the Competition and Markets Authority has imposed fines of more than £12 million and secured nearly £2.4 million in refunds for customers using its enhanced powers under the Digital Markets, Competition and Consumers Act 2024 . Therefore, now more than ever, it is critical that businesses treat compliance with consumer protection laws as an absolute priority.
Promotions advertised as time-limited should be exactly that. Businesses should not market deals as being time-bound when, in reality, they remain available long after the advertised deadline.
Importantly, it is not just the title of these deals which matters, but also the accompanying messaging and graphics. Use of countdown timers and phrases such as ‘Flash Sale,’ ‘Last Chance’ and similar urgency-driven messaging should be considered carefully and only used when they reflect the true nature of the deal.
Ultimately, businesses must ensure that customers are not pressured into making rushed purchasing decisions through a fear of missing out on ‘time-limited’ deals that are not genuinely time-sensitive.
To mitigate this risk, businesses should review their promotional materials and advertisements before publication to ensure that all time-limited claims are properly substantiated. Regular checks of active promotions can also help ensure that any ‘time-bound deals’ do not remain available for so long that they undermine the time-sensitive nature of a deal.
Optional extras, including add-ons and upcharges, should be treated with care. Businesses must be fully transparent about any such optional extras, and provide customers with clear, accurate and prominent information about the nature and cost of any such extras. It is equally important to ensure that customers understand exactly what is included within the ‘base’ product or service where those optional extras are not selected.
Businesses should obtain customers' express and informed consent before applying any additional charges, including through a genuine opt-in mechanism for optional extras.
For many businesses, this will require auditing the consumer sales journey to identify any aspects which could inadvertently undermine informed customer choice.
Additional fees and charges should be clearly disclosed at the outset of a purchasing journey, and mandatory fees should not be introduced late in the transaction process. A customer should be able to understand the total cost of their purchase without navigating to the latter stages of that transaction process.
To achieve this, businesses should ensure that their pricing information is accurate, prominent, and readily accessible throughout the purchasing journey. Regular reviews of pricing practices, advertising materials and online checkout processes can help businesses identify and address any areas where compliance issues may arise.
These fines serve as a timely reminder that the Competition and Markets Authority is prepared to use its enhanced powers to take decisive action against businesses that fail to comply with consumer protection laws.
Businesses that proactively review and update their end-to-end customer journey, from advertising and promotions to checkout processes and pricing transparency, will be best placed to meet their legal obligations and reduce the risk of enforcement action.
For further guidance and assistance in respect of compliance with consumer protection legislation, please contact our commercial team at Ashfords.
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