Fake reviews to be made illegal in online shopping crackdown
As reported by Oliver Wright in The Times, Tuesday 20 July 2021
Commissioning fake reviews of online products and services is to be made illegal in a widescale shake-up of consumer protection laws. Under proposals to be published today, the Competition and Markets Authority would be given powers to fine companies that try to boost sales by commissioning false reviews.
To prevent foreign-based sellers from getting around the rules, websites that host such reviews could also face penalties unless they can demonstrate systems to weed them out.
Ministers are consulting about going further to prohibit commissioning consumer reviews in all circumstances. Such a move would in effect outlaw “influencers” who are paid to endorse products online where it is clear they are being paid or given products for free.
The government is also preparing to make it much more difficult to trap consumers into long-term online subscriptions. Under the plans businesses must give consumers a clear option to buy a non-recurring subscription and companies will have to notify customers clearly in advance of renewal.
Kwasi Kwarteng, the business secretary, said the pandemic had triggered a “drastic change” in shopping habits but consumer law, which was last updated in 2008, had not caught up. “Businesses have innovated in how they are selling goods, services, and digital content to consumers. These innovations are good, and we must ensure these changes are serving consumers’ best interests,” he said.
Firms will be banned from introducing additional costs that are not clearly advertised before a customer has placed products in their online basket.
Research for the CMA suggests that about £23 billion of purchases a year are potentially influenced by online reviews. In 2019 the European Commission calculated that 26 per cent of UK retailers had encountered fake reviews, either seeing their products talked down or those of a competitor praised.
Under the plans, enforcing the rules will pass to the CMA. It will have powers to levy fines of up to 10 per cent of global turnover, and civil fines for businesses who refuse or give misleading information to enforcers. The government is also considering several options — including introducing financial penalties — when firms breach the commitments given to enforcers that they will change their ways.
To speed up processes, the CMA will be able to enforce consumer law rather than having to go through a court process that can take years, meaning consumers will be protected more quickly.
The government is also proposing powers to regulate tech firms such as Apple and Facebook to protect users and other companies who rely upon their platforms. This will include a code of conduct to prevent tech platforms pushing customers into using specific services and ensuring third-party companies that depend on them, such as app makers, are not blocked from doing business with competitors or charged exorbitant commission.