New legislation will help crack down on unscrupulous online trading practices, including fake reviews and subscription traps.
The proposal is part of sweeping new laws unveiled by Business Secretary Kwasi Kwarteng. According to the UK Government, the reforms aim to boost competition and protect UK consumers from being ripped off.
Under the new laws, the Competition and Markets Authority (CMA) will gain new powers to tackle subscription traps and fake reviews.
The new rules on fake reviews will make it automatically illegal to pay someone to write, or host, a fake review. To tackle subscription traps, businesses will need to clarify what consumers are signing up for and allow them to cancel services easily.
The laws also aim to crack down on the tactics some websites use to manipulate customers. These include so-called ‘dark patterns’ that aim to increase how much money people spend.
Also included will be laws against ‘nudges and sludges’ – these aim to control the choices presented to consumers, such as paying to have a product featured highly on a trader’s website or using paid celebrity endorsements. Some businesses also add unnecessary friction to transactions, such as timed checkouts or making it difficult to cancel transactions.
In addition, the proposed legislation will require prepayment schemes to safeguard their customers’ money.
For organisations that use prohibited techniques, the CMA and similar enforcers will have the power to issues fines of up to 10% of the groups’ global turnover, and civil fines for businesses that refuse or give misleading information.
The CMA will also have the power to enforce the new laws directly, rather than having to go through the courts, speeding up the process.
Kwarteng said: “The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them.
“By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”
- Brand phishing attacks | How to spot them and stay safe online
- UK accuses China of “cyber sabotage” for role in Microsoft Exchange attack
- Drone swarms support Royal Marines Commandos in first for Armed Forces
The coronavirus pandemic was a real boon to online retailers. When consumers could no longer visit brick-and-mortar shops, they turned to the internet, while physical retailers had to quickly shift their businesses online.
The end result was an online shopping boom. However, where people are spending money, scammers and unfair business practices are never far behind. In addition, the importance of online shopping has brought retailers under increased scrutiny.
For example, a recent claim has targeted Apple over how it takes commission on app sales, a lawsuit that could see it owing compensation to millions of people in the UK.
Fake reviews have also become a major issue for online consumers. According to Danish consumer review platform Trustpilot, 5.7% of the 39 million written reviews posted to its platform in 2020 were removed for being fake or harmful, almost 2.2 million in total.
Two investigations by Consumer group Which? also showed up the scale of fake reviews – one in 2019 warned that fake reviews for tech products were rife on Amazon. Another from early this year found websites offering five-star reviews for as little as £5, including bulk rates.
While the true scale of most illegal activities can only be guessed at, these all point to a widespread and persistent issue facing online retailers.
The new legislation has been backed Which? –a statement from the group’s Director of Policy and Advocacy, Rocio Concha, read: “It is positive that the government is moving to give the competition and consumer regulator greater powers to take strong enforcement action which will address issues with the current system and help tackle business practices that harm consumers.
“The pandemic has highlighted weaknesses in UK consumer protections that have allowed unscrupulous businesses to exploit customers, while our competition regime has been in need of an update to deal with the challenges of digital markets.
The government must now ensure that these proposals are swiftly implemented, and are underpinned by the right resources at a local and national level, so that consumer protection is strengthened.”