The DMCC's Impact on Online Reviews
What's changing?
The Digital Markets, Competition and Consumers Act 2024 (DMCC) represents a significant shift in the regulatory landscape for businesses publishing online reviews.
Previously, the regulatory framework was less stringent, and businesses had limited obligations regarding the monitoring and verification of online reviews.
The DMCC prohibits the submission or commissioning of fake reviews, publishing reviews in misleading ways, or concealing incentivised reviews. Businesses are now required to take "reasonable and proportionate steps" to verify the authenticity of reviews and prevent fraudulent ones. This change is aimed at protecting consumers and ensuring fair competition among businesses.
Which businesses are impacted?
The DMCC applies to "traders", which generally speaking, will include any person or entity acting for business purposes. In other words, the Act's application is very broad and will apply to most (if not all) businesses.
The consequences of non-compliance
Under the DMCC, the Competition and Markets Authority (CMA) gain a raft of new powers and businesses will need to implement robust review verification processes and may face significant fines for non-compliance. Additionally, the DMCC opens the door to private enforcement, allowing individuals to seek damages for losses incurred due to breaches of the Act.
What do businesses need to do?
Here are key steps businesses can take to align with the new regulations:
- Review and Update Policies: Conduct a thorough review of current practices, especially those related to online reviews and consumer interactions. Update policies to meet the authenticity and transparency requirements of the DMCC.
- Implement Verification Processes: Establish robust verification processes to authenticate the legitimacy of consumer reviews and prevent fraudulent activities.
- Educate Staff and Stakeholders: Provide comprehensive training for staff on the DMCC 's requirements. Ensure that all stakeholders understand the importance of compliance and the consequences of non-compliance.
- Monitor and Audit Regularly: Set up regular monitoring and auditing mechanisms to ensure ongoing adherence to the DMCC. This will help in identifying and rectifying any potential issues proactively.
- Stay Informed: Keep abreast of any updates or guidance provided by the CMA to stay compliant with evolving regulations.
- Engage with Legal Experts: Consumer aspects of the DMCC are not yet in force and will be implemented through secondary legislation. The government announced on 9 September 2024 that the new consumer enforcement regime, including the CMA's direct enforcement powers, and the updated unfair commercial practices regime will commence in April 2025. The CMA plans to publish guidance on these new rules in late 2024 or early 2025. This will also cover specific rules around online reviews and moderation obligations. We will be keeping abreast of these changes and can advise on how to best navigate the DMCC and its implications for your business.
By taking these proactive measures, businesses can not only avoid the significant penalties associated with non-compliance but also enhance their reputation and help build consumer trust in the ever evolving digital marketplace.
Contact us to discuss any of the points raised here or for guidance on staying ahead of the upcoming consumer law amendments introduced by the Act. For more on the changes to consumer law as a result of the DMCC, see our articles on drip pricing and subscriptions.
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