CONSUMER LAW: An Introduction

Overview 

These are interesting times for consumer-facing businesses. Regulatory divergence between the UK and its European counterparts is starting to emerge, creating additional regulatory burdens. Consumer buying habits and technologies are evolving and changing in ways not foreseen by legislators. New products such as non-fungible tokens, wearable health devices, and novel foods, the regulation of which may cut across multiple regulatory regimes, are flooding the markets, whilst issues such as online choice architecture and “greenwashing” continue to attract the attention of regulators. At the same time, regulators are operating on ever-tightening budgets, whilst criminals are finding new ways to target ever more vulnerable consumers.

Last year saw a significant overhaul of consumer protection, with the Digital Markets and Competition Act 2024 (DMCCA) receiving royal assent earlier this year. It is expected that 2025 will see the Competition and Markets Authority (CMA) test its new powers under the DMCCA, which also enables regulators (including Trading Standards) to secure fines against non-compliant businesses in the civil courts.

Legislative Landscape 

Key provisions of the much-discussed Retained EU Law (Revocation and Reform) Act 2023 (REULA) came into force at the end of 2023, and more are due to kick in shortly. This will have implications for the way retained EU law (as of December 2023, called “assimilated law”) is applied by the courts. A number of key provisions of REULA are due to come into force in October 2024, including the domestic reference procedure provided for under Section 6A of the EU (Withdrawal) Act 2018 (as amended by REULA). The higher courts, which include the Supreme Court and, in England and Wales, the Court of Appeal, will have to apply a different test when considering whether to depart from assimilated case law, thereby potentially leading to further divergence between the EU and the UK.

At the same time, the consumer enforcement provisions of the DMCCA are due to come into force in April 2025. In addition to giving fining powers to the CMA, the DMCCA has revoked and replaced the Consumer Protection from Unfair Trading Regulations 2008 ("the 2008 Regulations”), and provides for a higher level of consumer protection. This includes adding to the list of banned practices (previously contained in Schedule 1 of the 2008 Regulations). Fake reviews and drip pricing are now expressly prohibited. Moreover, consumers have been granted express rights in relation to subscriptions. The DMCCA strengthens precontract information requirements for subscription contracts, requires consumers to be nudged before any auto-renewal and makes it easier to exit subscription contracts.

Four Prime Ministers since the Online Harms White Paper was first published, the Online Safety Act 2023 (OSA) received royal assent in October last year. It deals with thorny subjects such as the responsibility of social media platforms to tackle illegal content, the use of age verification measures and the promotion of harmful content in social media algorithms. For online service providers operating in the EU as well as the UK, the increasingly divergent regulatory landscape will be difficult to navigate, not least because the EU Digital Services Act, the DMCCA and OSA, whilst addressing largely the same subject matter, differ in several key respects. For instance, whilst OSA’s scope is generally narrower, the obligations it imposes on providers are significantly more stringent (these include the obligation on all, rather than just the largest, services providers to carry out illegal content risk assessments and mitigate any identified risks). Further uncertainty stems from OSA preserving much of the detail for secondary legislation, guidance and codes of practice, such that the full extent of OSA’s regulatory burden may be difficult to assess for some time to come.

These digital marketing reforms are part of a wider ongoing conversation about online choice architecture and “dark patterns” (deceptive or manipulative digital design techniques). Hidden advertising on social media, including by influencers, remains a hot topic globally, with the CMA publishing guidance on this issue last year. Further attention has been drawn to online choice architecture by the CMA’s papers published in 2022, guidance on the subject published jointly with the Information Commissioner’s Office and the CMA’s enforcement action against (amongst others) Wowcher, Emma Sleep and Amazon.

Greenwashing 

Greenwashing remains another area of considerable interest to regulators, businesses and consumers, in the UK and more widely. Greenwashing refers in broad terms to the making of unsubstantiated and possibly misleading claims in relation to a product or a company’s environmental credentials. Consumers are increasingly interested in sustainable and environmentally friendly products, which provides a significant incentive to businesses to market products in this way. One difficulty is that the terms used in such claims – eg, “natural”, “ethical”, “eco-friendly” or “sustainable” – are often ambiguous, generic or vague. To tackle this, in March 2023 the European Commission published its proposal for a Green Claims Directive, which would require businesses to ensure that voluntary environmental claims are scientifically proven. In the UK, green claims are regulated under existing consumer legislation and have been an area of particular focus for regulators – including the CMA, the Financial Conduct Authority (FCA), the Advertising Standards Authority (ASA) and trading standards – in recent years. In September 2021, the CMA published a Green Claims Code to assist businesses making green claims to comply with consumer protection law. In 2022, it started monitoring compliance, starting with the fast fashion sector. It has now expanded its work into “fast moving consumer goods”, which are essential household items such as food and drink, cleaning products, toiletries and personal care items, and has published guidance for businesses on marketing green heating and insulation products. The CMA has secured a number of undertakings, including from ASOS, Boohoo and George at Asda, and most recently Worcester Bosch, in relation to “green claims” made about their products. Other investigations will no doubt follow. ASA has also published guidance on green claims and upheld a number of complaints relating to such claims.

Enhanced Consumer Enforcement Powers 

The civil enforcement regime under Part 8 of the Enterprise Act 2002 (“Part 8”) required the CMA to enforce consumer law through the courts, which resulted in many infringements being dealt with by way of undertakings from non-compliant businesses. This is likely to change with the CMA’s acquisition of new powers under the DMCCA, not only to decide whether consumer law has been breached but to impose fines as high as 10% of a non-compliant trader’s global annual turnover. We are likely to see an increase in enforcement activity.

The DMCCA also amends Part 8, enabling enforcers (including Trading Standards) to seek fines from the courts.

Criminal Enforcement Trends 

As energy prices and the cost of living continue to increase, so too do the opportunities presented to unscrupulous traders seeking to take advantage of consumers. Particular examples are the home improvement sector, where consumers are faced with price increases arising from contractor shortages, supply chain issues and increased materials costs, energy-related fraud – in respect of which there continue to be a large number of large-scale fraud prosecutions – and dangerous e-scooters.

Product Safety 

The government is currently considering responses to its consultation on product safety regulation, which took place in 2023. The consultation proposals, if taken forward, would result in significant divergence from EU law. In the EU, the General Product Safety Directive will be replaced in December 2024 by a new General Product Safety Regulation which is intended to modernise the existing framework to address new challenges created by digital markets. The Grenfell Inquiry second phase report has now been published and has recommended significant further changes to the regulation of construction products, including the creation of a single regulator for the construction industry.

Conclusion

The year 2025 will be an important one for consumer law. The CMA will be using its new administrative powers, which is likely to lead to an increase in consumer enforcement. It will be important to stay abreast of legal developments and how these might impact specific sectors and businesses. Those operating in the EU as well as the UK will have the challenging task of keeping an eye on divergence between the two regimes.