UK bill could protect consumers from ‘subscription traps’ and fake reviews
The UK’s Competition and Markets Authority (CMA) has introduced a new bill that would give it the power slap the biggest tech companies with a fine worth billions if they don’t comply with its rules. It’s a multi-faceted bill that’s aimed at protecting consumers and encouraging competition, and it will allow the CMA to directly enforce the law instead of having to go through the court.
If the bill passes, the agency’s Digital Markets Unit (DMU) will be able to enforce a set of rules on how companies it deems to have “strategic market status” in key digital services have to operate. The CMA didn’t name any specific company in its announcement, but the DMU will most likely identify Google, Apple and Amazon as organizations with strategic market status.
The DMU could require them to be more transparent on how their app store review systems work or to open up their data to rivals — in Google’s case, it could be a rival search engine. If these companies fail to abide by the new rules, the DMU could fine them up to 10 percent of their global turnover. Apple, for example, earned around $283 billion in revenue for 2022, so that could translate to a massive fine worth $28.3 billion.
In addition to giving CMA the ability to set rules for tech giants, the new bill will also address the problem with “subscription traps,” which is costing UK consumers £1.6 billion (US$2 billion) a year. Its new rules will require businesses, not just the biggest tech companies, to provide customers with clearer information before they start a subscription. Companies will also be required to send customers notifications if their free or low-cost trial is coming to an end and before their subscription auto-renews. Plus, companies will have to provide customers an easy way to unsubscribe. In the US, the Federal Trade Commission proposed a similar rule back in March that would make it as easy to cancel subscriptions as it is to sign up. The proposal is also still waiting for approval before it can be implemented.
Another concern the bill will address is fake reviews. The new rules are expected to prohibit companies from commissioning the composition and submission of fake reviews and from posting reviews without taking steps to ensure that they’re genuine. Further, the rules would make it illegal to offer or to advertise submitting, commissioning and facilitating fake reviews.
Sarah Cardell, Chief Executive of the CMA, said in a statement:
“The new powers in this bill help the CMA take swift, decisive action to tackle rip offs, protecting consumers whether they are shopping online or on the high street. The new fining powers will provide an important deterrent to businesses seeking to take advantage of people while also ensuring fair dealing businesses can thrive.
The bill will also strengthen the Digital Markets Unit, helping to ensure digital markets remain competitive and continue to benefit people, business, and the UK economy. We welcome its introduction to parliament and look forward to it progressing.”