Digital consumer regulation

Latest developments

The introduction of administrative fines available to regulators in the UK, EU member states and Australia. For example, in the UK, the Digital Markets, Competition and Consumer Bill will introduce fines that can be imposed by the CMA of up to 10% of group annual turnover. In the EU, regulators in each member state can impose varying levels of administrative fines (with at least 4% of group annual turnover being available as a fine in each country).

Auto-renewing subscription contracts – both annual and monthly – are under increasing scrutiny from the CMA, other European and US regulators, and will soon be the subject of legislative rules under the Digital Markets, Competition and Consumer Bill.

The digital environment in which consumers are presented with information and engage with businesses – known as the ‘online choice architecture’ – is under scrutiny in most major markets. In particular, regulators are reviewing the use of strikethrough pricing, countdown clocks and other forms of urgency claims that may pressure consumers to make transactional decisions they otherwise may not have taken.

Summary

Selling to, and interacting with, consumers is becoming increasingly complex. From the way that products/services are described and advertised to the way in which businesses contract with consumers, businesses need to understand the rules that apply to the nature of their offering in each of the countries to which such products/services are directed.

Additionally, the sanctions for failing to comply with consumer law are becoming more punitive. The Omnibus Directive introduced administrative finishing power for consumer regulators across the EU, and the Digital Markets, Competition and Consumer Bill will do the same in the UK (with fines as high as 10% of annual group turnover imposed on non-compliant businesses).

The growing regulatory obligations imposed on businesses, combined with the diverging requirements in different countries and the risk of administrative fines makes understanding and comply with consumer and marketing laws more important than ever.

How could it be relevant for you?

Any business that sells to, otherwise interacts with, consumers, needs to understand and comply with consumer protection laws.

Next steps

Consumer-facing businesses looking to expand into new territories will need to understand the application of mandatory local law to sales made directly to consumers, including the requirements applying to their online customer journeys, the terms and conditions, the post-contract communications and any marketing communications.

*Information is accurate up to 27 November 2023