The Digital Markets, Competition and Consumers Act was passed into law in May this year, slightly under the radar of the impending election. The ‘Consumer’ bit of the Act is clearly underappreciated but has the potential to be a quiet revolution for petrol retailers, warns David Emery a senior associate at law firm Winckworth Sherwood.
Large parts of the Act have been drafted to modernise consumer protection standards and enforcement, and which apply directly to petrol retailers and other businesses alike.
The Act’s intention is to:
- · Grant the Competition and Markets Authority (CMA) greater powers to investigate digital firms with significant market power.
- · Protect consumers against ‘subscription traps’, requiring businesses to provide clearer pre-contract information and simpler termination rights.
- · Give the CMA direct authority to enforce against businesses violating certain consumer protection laws.
- · Replace and modernise the old Consumer Protection from Unfair Trading Regulations.
The government has stated that most consumer-related changes will take effect in 2025.
Prudent retailers should be aware of the schedule of “practices which are in all circumstances considered unfair” including material inaccuracies in descriptions, describing something as free when it is not, and falsely stating a product is available in limited numbers or for a “limited time only”. These provisions from the regulations are being retained wholesale but with some significant amendments.
In practical terms, you will need to think about how your advertising presents information to customers. It will probably not do to advertise a “99p Car Wash” when the mandatory extra costs of shampoo, wax etc are only made apparent elsewhere or later.
The Bill also invites the trader to (pre-) interpret consumer psychology. For forecourt operators, this may be especially difficult given the customer has already driven into the forecourt and will have had limited information presented to them at speed and through a car window, but which should nonetheless not be misleading. This extends to goods sold within the petrol forecourt store.
It would also be sensible to carry out a review of your sales and marketing practices (end-to end), considering the updates to the Act and to unfair practices as it might be expected that some of the matters already prohibited by the regulations will be under increased scrutiny by the beefed-up CMA. You should note that as a trader you remain responsible for approving the actions undertaken via online platforms you use to advertise or promote your business.
The Act also gives the Department of Trade the power to add new blacklisted ‘unfair practices’ if needed.
Another headline area to consider is that traders will need to consider the ‘situational vulnerability’ of consumers to unfair trading practices. Previously under the regulations, this was limited to identifiable classes or groups of consumers, for example, the elderly or unwell. This now also includes a group of consumers being “vulnerable to a practice because of the product to which it relates”, or otherwise being “particularly vulnerable” due to the “circumstances they are in”.
Much of this will fall outside the scope of a typical petrol retailer. However, this could be potentially relevant if your forecourt store sells alcohol or sells gambling products such as lottery tickets or scratch cards. Could an argument be made of sales being aimed at a vulnerable class?
Enforcement is usually left to local trading standards. Most consumers do not have a direct claim against an infringing trader. The Act now empowers the CMA to undertake sectoral investigations into unfair practices, with the promise of more money and staff to come. The CMA will, among other things, be able to seek penalties of up to £300,000 or 10% of turnover should a trader be found to be infringing.
It would pay dividends to watch what the CMA reports and publishes over the coming months and years.
There is still some time for readers to consider and review the likely impact of the Act on their businesses. Much of this will involve taking a common-sense approach and ensuring that already high standards are being maintained. Indeed, many readers will be well versed in dealing with vulnerable customers and already undertake responsible and fair promotions. However, the fundamental point is to understand the entire ‘consumer journey’, from initial advertising to point of sale and even post-sale services.
David Emery a senior associate specialising in commercial contracts and regulation at Winckworth Sherwood. If you have any questions on this article or would like to discuss the implications of the new Act on your business, please do contact him at demery@wslaw.co.uk
This column is from legal practitioners Winckworth Sherwood LL. Neither of Winckworth Sherwood or Forecourt Trader shall be liable for any decision or action taken on the basis of it. Nothing in this column constitutes legal advice or gives rise to a solicitor/client relationship. Specialist legal advice should be taken in relation to specific circumstances.
