1. Summary
A new UK consumer protection regime comes into force on 6 April
2025 through the implementation of the Digital Markets, Competition
and Consumers Act 2024 (Commencement No. 2) Regulations 2025 (SI
2025/272) ("the Regulations"). The
Regulations bring into force Parts 3 and 4 of the Digital Markets,
Competition and Consumers ("DMCC") Act
2024, which update and replace the Consumer Protection from Unfair
Trading Regulations 2008 ("CPRs"), as
well as giving the Competition and Markets Authority
("CMA") new direct enforcement
powers—including the ability to issue fines for companies
that fail to comply with consumer protection laws—thereby
removing the need for the CMA to rely on the courts to enforce the
outcomes of its investigations.
2. Consumer law enforcement
Until now, the CMA's consumer protection powers were predominantly governed by Part 8 of the Enterprise Act 2002, under which the CMA had the power to investigate potential breaches of consumer law, such as unfair contract terms under the Consumer Rights Act 2015, and misleading actions or omissions under the CPRs. If the CMA identified a likely breach of consumer law, it could agree undertakings with businesses to remedy the suspected breach, and apply to court for enforcement orders if companies failed to adhere to the undertakings. However, the CMA did not have the power to make a formal legal finding that a company had breached consumer law, and did not have the power to impose penalties on companies for any such breach.
Part 3 of the DMCC Act introduces two new enforcement regimes for consumer law: one, an enhanced court-based regime, which enables other authorities with consumer protection functions to apply to court for enforcement orders, interim measures, and financial penalties up to 10% of a company's annual worldwide turnover; and two—more significantly—a direct enforcement regime that enables the CMA to determine for itself whether a trader is in breach of consumer law, and impose financial penalties of up to 10% of a company's annual worldwide turnover for the breach.
Under its direct enforcement regime, the CMA can still agree undertakings with firms found to have breached consumer laws, but it will no longer have to apply to court for enforcement if those undertakings are breached. Instead, the CMA may issue its own enforcement notices, and can fine companies up to 5% of their annual worldwide turnover if they fail to comply.
Similarly, if a company fails to respond to an information
notice issued by the CMA, or provides materially false or
misleading information in response, the CMA can impose a fine of 1%
of the company's annual worldwide turnover plus an additional
5% of the company's daily worldwide turnover for every day the
non-compliance continues.
3. New unfair commercial practices regime
In addition to the CMA's new enforcement powers, the DMCC Act repeals and replaces the CPRs, and in doing so introduces new banned practices regarding drip pricing as well as fake and misleading reviews. Banned practices are practices which are specified in Schedule 20 of the DMCC Act as being "in all circumstances considered unfair". Unlike the more general prohibitions on misleading actions and omissions in Part 4 of the DMCC Act, banned practices are not subject to the test whether the practice would cause the average consumer to take a transactional decision they would not otherwise have taken, and are instead prohibited regardless of their immediate impact on consumer behaviour.
Banned practices already existed under the CPRs, including for example "pyramid promotional schemes", fake closing-down sales, and direct advertising to children. The DMCC Act retains the practices banned under the CPRs and adds new prohibitions on drip pricing and fake reviews.
'Drip pricing' refers to the practice of showing only part of an item's price during earlier parts of the consumer journey, revealing additional mandatory elements of the price at or near the end of the purchasing process, by which time the consumer may already feel committed to buying the product. The DMCC Act prohibits this practice, requiring traders to show the consumer the full total (i.e., including all mandatory price elements, though optional extras may be omitted) at the earliest stage that pricing information is displayed.
The DMCC Act also introduces a number of prohibitions relating
to fake or misleading reviews, including banning the submission or
commissioning of fake reviews or concealing that a review was paid
for or otherwise incentivised (e.g., posted in exchange for a free
product). Offering services to provide or procure fake reviews is
also prohibited under the DMCC Act. The new rules do not only
affect the companies to which the reviews relate, but also
third-party platforms which publish consumer reviews; the DMCC Act
requires that such platforms take reasonable and proportionate
steps to prevent the publication of fake reviews and to remove such
reviews if they are published. This formalises the position taken
by the CMA in its investigation into Google's publication of
reviews in January this year, which resulted in Google offering
undertakings to enhance the processes it has in place to prevent,
detect, and remove fake reviews published on its
platform.1
4. Subscription contract rules not in force until
2026
The DMCC Act sets out a framework of new rules for businesses offering subscription contracts2, requiring such businesses to provide certain information to consumers before they enter into the contract (including, for example, information about any auto-renewal mechanism that is in place, charges that apply after any initial trial period, the amount and frequency of payments, and details of how to cancel the subscription), to send reminder notices to consumers notifying them of upcoming renewal payments, and to facilitate the cancellation of subscription contracts in a "straightforward" way. The latter requirement includes an obligation on businesses to allow subscription contracts that are entered into online to also be terminated online, and to provide instructions on how to do so online where a consumer is likely to find them.
These provisions are not brought into force by the Regulations, as more detailed secondary legislation is required to clarify certain aspects of the framework, such as remedies for breach, arrangements for exiting a subscription contract, and the calculation of refunds when consumers cancel within the statutory 14-day "cooling-off" period.
The CMA's consultation of these aspects of the regime closed
on 10 February 2025, and the new rules are expected to come into
force in Spring 2026.
5. Next steps
The CMA has published draft guidance on unfair commercial practices and consumer protection laws more broadly, as well as procedural guidance regarding the CMA's approach to direct enforcement, and has said it intends to publish the final versions of those guidelines before 6 April 2025.3 It has also committed to publishing a "compliance framework" regarding drip pricing later in April, to be followed by more detailed drip pricing guidance on which the CMA will run a consultation in Summer 2025.
The DMCC Act only applies to contracts that were entered into after the regime has come into force. Moreover, the CMA acknowledged in a blog post published on 10 March 20254 that the changes relating to drip pricing and fake reviews are complex, and that the changes needed to ensure compliance will take time for businesses to implement. As a result, the CMA's drip pricing enforcement will initially target only practices which "clearly breach the rules" in line with the published guidance. As regards fake or misleading reviews, the CMA's focus in the first three months of the new regime will be on supporting businesses with their compliance efforts rather than enforcement.
Nevertheless, going forward a breach of UK consumer law could result in the imposition of a significant fine. The Baker Botts team can help businesses navigate these changes and ensure their commercial practices comply with the new rules
Footnotes
1. https://www.gov.uk/government/news/cma-secures-important-changes-from-google-to-tackle-fake-reviews
2. However, certain healthcare and medical contracts as well as contracts for the supply of utilities, financial services, services regulated by Ofcom, leisure activities on a specific date, package holidays and package travel, childcare and school age education, and residential rental accommodation are excluded from the new regime.
3. https://connect.cma.gov.uk/consumer-protection-enforcement-guidance
4. https://competitionandmarkets.blog.gov.uk/2025/03/10/our-new-consumer-enforcement-regime/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
