The government will clamp down on fake reviews and subscription traps under new measures outlined on Wednesday by the competition watchdog.
The rules, including making it “clearly illegal” to pay someone to write a fake review, will give the Competitions and Markets Authority (CMA) greater powers to crack down directly on rogue traders.
Clearer regulations making it easier for consumers to opt out of subscriptions they no longer want will also be introduced, and prepayment schemes like Christmas savings clubs will also have to safeguard customers’ money through insurance or trust accounts.
The proposed legislation will provide protection for shoppers’ savings clubs – where consumers can pay for goods and services in instalments throughout the year – which are not currently covered by the Financial Services Compensation Scheme.
That means even if the company goes bust, shoppers’ money will still be protected in an effort to prevent issues such as the collapse of Christmas savings club Farepak in 2006, when thousands of customers were unable to pay for festive gifts.
Fake reviews will be tackled by consultation on a new law against commissioning someone to write or submit a fake review, hosting consumer reviews without taking reasonable steps to check they are genuine and offering or advertising to submit, commission or facilitate fake reviews.
‘Subscription traps’ in which businesses make it difficult to exit a contract will also be stopped. Under new rules, businesses must provide clearer information to consumers before they enter a subscription contract, send a reminder that a free trial or low-cost introductory offer is coming to an end and ensure consumers can leave a contract in a “straightforward, cost-effective and timely way”.
Instead of going to court, the CMA will be able to award compensation to consumers and directly impose financial penalties worth up to 10% of global annual turnover for businesses or up to £300,000 in the case of an individual.
Consumer Minister Paul Scully said: “We’re making sure consumer protections keep pace with a modern, digitised economy.
“No longer will you visit a five star-reviewed restaurant only to find a burnt lasagne or get caught in a subscription in which there’s no end in sight.
“Consumers deserve better and the majority of businesses out there doing the right thing deserve protection from rogue traders undermining them.”
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