Lawful disruption: What does the Digital Markets, Competition and Consumers Act 2024 mean for media businesses?

In the first of our lawful disruption series, Paul Hilder sets out what media businesses will need to do to comply with the provisions of the Digital Markets, Competition and Consumers Act 2024 (DMCCA). 

This article focuses on three key areas: 

1. Subscription sales
2. Drip pricing
3. Fake reviews

The new laws on drip pricing and fake reviews are expected to come into force in April 2025, with measures relating to subscription sales to follow in April 2026. The new laws will give consumers greater protections, so media businesses must review their current practices to protect their reputation and avoid fines.

Subscription sales

The Department for Business and Trade estimates that unwanted subscriptions cost UK consumers £1.6 billion a year. The purpose of the new law is to make it easier for consumers to escape so-called “subscription traps” and obtain refunds. 

Subscriptions are used in numerous ways across the media industry, for example in the form of VOD or music streaming platforms, and magazine/newspaper or other content subscriptions. All seem likely to be affected to at least some degree by the new obligations under the DMCCA, which include:

• Pre-contract information – providing certain “key” information (eg, about renewal frequency and payments) before consumers sign up to subscriptions. This information should be easy to understand and presented in a way that draws the consumer’s attention (not hidden away or requiring extra clicks to access). More detailed “full” information must be made available to the consumer separately.
• Renewal reminders – these are to be sent to the subscriber at the end of any free/discounted period and prior to the auto-renewal of a subscription.
• Cancellation method(s) – subscribers must be given a “straightforward” way of cancelling their subscription. Although the legislation gives no further detail on what is envisaged, it is broadly understood that this will mean having some form of “cancellation button” or similar. However, subscribers will also be entitled to cancel using any other method they choose as well, provided they make a “clear statement” to this effect.
• Cooling-off periods – consumers will have a right to cancel their subscription within a 14-day period after the contract commences, but also to cancel within the same timeframe following the end of any free/reduced price period, and upon any auto-renewal which commits the subscriber to a further period of 12 months or more. 

Failure to comply with any of these requirements will allow the consumer to cancel their subscription with immediate effect, at no cost to them. However, further regulations will be required to set out the other consequences of cancellation, including the extent to which a consumer is entitled to a refund where they have received any benefit in the cooling-off period prior to their cancellation.  

Drip pricing

Drip pricing is a sales tactic where a company advertises a base price for a product or service, then gradually reveals additional fees as the purchase process continues. This means the customer ultimately ends up paying more than they had originally expected to, but are typically too indifferent or time-poor to go through the purchase process again elsewhere. 

In order to try and address this, under the DMCAA certain information must be included in any advertising which includes the price, including:

• the requirement to provide a “total” price, which includes any fees/taxes/charges or other payments that the consumer will have to pay when purchasing the product
• the existence of any other mandatory but variable fees, and how these are calculated

Fake reviews

Fake reviews are an area of concern, with the impact of these on consumers regularly raised in Government materials about consumer protection, eg, the Department for Business and Trade’s report “Estimating the prevalence and impact of fake online reviews”.  The DMCCA has created various specific offences that will now prohibit businesses from:

• submitting a fake consumer review (ie, one not based on that person’s genuine experience), or a consumer review that, even if genuine, conceals the fact it has been incentivised
• commissioning someone else to submit or write such a review
• publishing consumer reviews, or “consumer review information” (eg average ratings), in a misleading way – for example.  only publishing positive reviews, or giving greater prominence to them than negative ones
• publishing such reviews or review information on their own platforms

In addition, if you publish reviews on your digital platforms you will need to set up processes to perform “reasonable and proportionate checks” to establish if reviews are genuinely submitted by consumers who have had experience of the product or service concerned. 

Given the clear scope for uncertainty in this area, the Government has recently produced draft guidance about the steps traders will be expected to take to comply with these requirements. However, as this guidance is also subject to public consultation before the guidance is finalised, businesses still have the opportunity to help shape and influence how this law is applied in practice. For further discussion on this draft guidance insofar as it relates to fake reviews, please see our article. 

Enforcement

One of the primary headlines relating to the DMCCA has been the potentially eye-watering level of fines that can be imposed for breaches of this legislation, now set at 10% of global turnover (or £300,000, if higher).  However, it is also worth noting that the DMCCA introduces new “judge and jury” enforcement powers for the CMA, allowing it to both investigate and impose fines on traders directly, rather than going through the courts. Whether the CMA will continue to seek undertakings from those it considers to be in breach of consumer protection legislation as a first step prior to initiating enforcement proceedings, as was the previous practice, remains to be seen.

However, this increased exposure and risk to businesses’ finances means it has never been more important for those caught by the DMCCA to be aware of and understand their obligations in this area, and ensure that they start putting processes and procedures in place in good time before this legislation comes into force. 

Conclusion

The changes that will be introduced will represent a significant disruption to media businesses that rely on revenue generated by subscriptions and customer inertia. It will also change the ways media businesses can advertise their products online. If your business is affected by any of the issues raised in this article, please get in touch. 

Look out for our article in this lawful disruption series on the impact of the DMCCA on the regulation of digital markets by the Competition and Markers Authority and what this means for digital publishers in the context of search advertising.

For more general commentary on these aspects, see our article:

• A new dawn for competition law investigations in the UK
• New year, new competition rules for digital markets in the UK
• CMA announces initial plans for implementing the new digital markets competition regime

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