Thursday, July 29

Government to tackle’subscription traps’, ban fake reviews and safeguard Christmas savings cash as it unveils new consumer protections


What new consumer protections are in the pipeline?

Little detail has been published so far, though more should emerge on Tuesday when the full consultation document is published – we’ll update this story when it is. But here are some of the proposals the Government has said it will consult on:

  • Changing the law so that Christmas savings clubs have to safeguard customers’ money. This will seek to protect savers in the event a scheme collapses (as happened in 2006 when approximately 120,000 customers lost a combined total of £40 million in the Farepak collapse).
  • Strengthening the legal requirements for subscription contracts. Firms will be required to provide clearer information at sign-up including around auto-renewals. They’ll also have to introduce reminders for customers when the contract is set to renew and make it easier to cancel.
  • Making it illegal to pay someone to write, or host, a fake review. It’s not yet clear exactly how these rules will work in practice – but the Government says they’ll target “bogus online ratings”.
  • Helping regulators curb “dodgy tactics” used to dupe online shoppers. The Government says such tactics include “dark patterns”, which manipulate consumers into spending more than they wanted to; “sludges”, where businesses pay to have their product feature highly on a retailer’s website while hiding the fact they paid for it; and ” drip pricing”, where traders use an appealing headline price to entice customers, then load on additional, unavoidable charges before you reach check-out.
  • Making arbitration or mediation mandatory for firms in the used car and home improvement sectors. Where disputes between consumers and firms arise, this should mean avoiding lengthy court proceedings and so lead to speedier resolutions.
  • Giving new and beefed-up powers to the competition watchdog. For example, the CMA will be able to impose fixed penalties of up to 5% of annual turnover on firms that fail to comply with its investigations, plus fine unscrupulous traders who breach consumer law up to 10% of turnover. The watchdog will also be able to enforce consumer law directly rather than go through a court process, block a wider range of harmful company mergers and disqualify company directors if they lie to it.

The measures above are all being consulted on, so we don’t yet know if they’ll all happen or if some could change, and we don’t yet have a date for when the rules could actually change – though the consultation won’ t end until October. We’ll continue to follow these proposals and will cover further developments.





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