New rules aimed at clamping down on fake reviews and subscription traps announced by the Government.
Money is a little tighter for all of us at the moment.
The price we pay at the checkout, combined with a higher tax burden, means that we all need to be a little more cautious about how and where we spend our disposable cash.
Unfortunately, it’s all too easy for shoppers to be duped into making bad decisions, splashing out on products which turn out to be of a much lower quality than we expect or being caught up in deals that are far too difficult to get out of.
What’s more, even when bad behaviour by businesses is exposed, it can prove problematic for the regulators to act decisively.
It’s because of this situation that the Government is putting forward new rules, intended to give shoppers real protection against dodgy business practices.
So what are these new rules? And how likely are they to make a difference to regular shoppers like you and me?
Fake reviews
When we shop online, it makes sense for us to read reviews of the product we are buying, so that we have a better idea of whether we are likely to get value for money.
These reviews can be powerful too ‒ if you see a product has a two-star rating, are you honestly likely to buy it? I know I wouldn’t.
It goes the other way too; products with a five-star rating are always going to be more alluring to shoppers.
The trouble is that these rating systems are open to abuse, with a whole industry providing fake reviews emerging.
We’ve highlighted in the past the way that shoppers using sites like Amazon and eBay have been ‘overwhelmed’ by misleading reviews, resulting in them buying substandard goods.
The Government has pledged to tackle this by consulting on a new law that will prohibit commissioning someone to write or submit a fake review, hosting reviews without taking “reasonable steps” to ensure they are genuine, and banning advertising fake review writing services.
Subscription traps
A second element to the proposed new rules cover subscriptions, specifically those which are excessively difficult to get out of.
Signing up for a new subscription, whether it’s for a magazine, a regular delivery or an online service, is incredibly simple these days.
But there are concerns that some suppliers put unnecessary hurdles in the way of those looking to cancel that subscription.
The new rules will force firms to provide clearer information at the outset, issue reminders that free trials or low-cost introductory offers are coming to an end, and then “ensure consumers can exit a contract in a straightforward, cost-effective and timely way”.
Stronger powers
Finally, the new rules also include beefier powers for the Competition & Markets Authority (CMA).
The Government has proposed allowing the competition regulator to impose direct fines on firms under its jurisdiction of up to 10% of their global turnover, should they be found to have mistreated customers.
I’ve written before about the handcuffs that the CMA currently operates under, where it is unable to directly levy fines against the firms that it knows are letting customers down.
Instead, it has to go through the time and expense of the court system in order to hold businesses to account. And because of that added process, there are times when it simply cannot do its job properly.
We saw a perfect example of this last year when the CMA felt compelled to drop a case against airlines, who it believed were failing to meet their obligations on refunds, as it could not justify how long it would take and the incurred costs.
This is an insane situation, where a regulator is denied the teeth it needs in order to function properly.
Proof will be in the pudding
There is some real cause for optimism in these proposed new rules in my view, particularly when it comes to the CMA. However, as always, it’s too early to make too many conclusions.
For example, we will need to see what the actual rules in the legislation look like before we can be confident in how effective they will be in cutting out dodgy reviews and tackling subscription traps.
It’s all too easy for these to be watered down, to the point that they are ineffective in really addressing the issue.
Given the cost of living crisis, and the fact that many people will be looking to ditch subscriptions that they perhaps no longer make full use of, it really would be a positive for the Government to focus on getting strong new rules in place as soon as possible.
Perhaps the most important area of the new rules lies in the greater powers for the CMA.
There’s no question that some businesses have pushed their luck when it comes to existing competition legislation, knowing that the CMA faced a difficult and protracted process in order to clamp down on them.
If we can see a stronger, beefier CMA flexing its muscles then that may cause these would-be rogue firms to think twice. And ultimately we will all benefit as a result.