Advertising and marketing

Horizon scanning

Consumer law enforcement: draft guidance on the DMCCA

What's happening
From Spring 2025, the Digital Markets, Competition and Consumers Act 2024 (DMCCA) will introduce sweeping changes to the enforcement of consumer protection law, including that the CMA will be bestowed with new powers to take direct enforcement action against organisations in breach.

Given the possible consequences of a breach –
a fine of up to £30k (or 10% of global annual turnover if greater) – the CMA has produced detailed draft guidance on its enforcement procedure. The guidance covers each stage of an investigation and the potential penalties, ie how the DMCCA will work in practice.

The investigation process will be split up into:

pre-launch – the CMA will make enquiries and undertake research before deciding to pursue a case. A notice will be published when an investigation has commenced

Provisional Infringement Notices (PINs) – the CMA will serve a PIN on a party involved in the infringement, who may inspect the CMA's file (excluding certain documents) to develop a defence
information-gathering powers – may be used in the pre-launch phase or during the investigation, to ensure parties provide relevant information. A written information notice will be served and non-compliance with this can result in monetary penalties
representations – parties to make written or oral representations (at a hearing) or both
final decision – the CMA will serve a Final Infringement Notice (FIN) to a party that has engaged in, is, or is likely to engage in infringement of the DMCCA or is an accessory to the infringement. The FIN will set out the grounds for the CMA's findings, any further justifications, and the appropriate remedies and/or penalties.

Potential consequences of an investigation include:

undertakings – the breaching party may voluntarily enter into undertakings with the CMA, as is the case now, to make changes prior to a FIN. Only under limited circumstances can the CMA then issue a FIN
settlements – the breaching party may decide to make an admission of conduct, agree to change its practices, and comply with any FIN if issued. If the CMA decides to accept, the investigation process will be streamlined, and the party will agree not to appeal any FIN

Enhanced Consumer Measures (ECMs) – it is proposed that three measures – redress, compliance, and choice – could be used. For example, the party may offer compensation to an impacted consumer, implement compliance measures, and disclose details of the infringement to the public so that consumers can make informed decisions
Online Interface Notices (OIN) – issued by the CMA in relation to the websites, applications, or other digital contents of the breaching party or a related third-party, and require the removal of content, access restriction, warning display, etc

penalties – the framework for determining penalties is set out in the guidance; the overall level of harm and culpability will be the starting point for calculating penalties – a fixed sum or percentage of UK turnover (whichever is highest). The CMA will consider any aggravating or mitigating factors.

Why does is matter?
The guidance follows the CMA's consumer law enforcement process from cradle to grave and offers some clarity on how the DMCCA will be enforced. This should give assurance to companies with questions around the new era of direct consumer law enforcement under the CMA. The CMA has carried out a consultation on the draft guidance, which is expected to be published in final form ahead of the implementation date of the DMCCA.

What action should you take?
Businesses should:

read the draft guidance and familiarise themselves with details of the enforcement procedures, and review for any changes in the final version once published
consider the risk of potential investigations by the CMA and prepare for a range of eventualities, from providing information and making representations, to giving undertakings, agreeing settlements, and paying (potentially sizeable) penalties.

Key dates
April 2025: Anticipated date for commencement of the new consumer enforcement regime under the DMCCA.

Oliver Bray
Partner
+44 7981 232447
oliver.bray@rpclegal.com

Hettie Homewood
Senior Associate
+44 7759 524371
hettie.homewood@rpclegal.com

Lewis Manning
Associate
+44 7821 636371
lewis.manning@rpclegal.com

Recent developments

Roundup of the ASA's recent “green claims” rulings

The ASA's careful monitoring of green claims used by businesses to promote their environmental credentials, has resulted in a continuing trend of upheld rulings against an ever-expanding portfolio of sectors.

Aviation industry
The aviation industry has been put under the spotlight by regulators around the world, given its significant impact on the environment, including two recent ASA rulings:

London Luton Airport (LLA) – ads supporting the proposed expansion of LLA, featuring the headline claim "If we miss our environmental limits, our expansion will be stopped in its tracks" were held to have omitted "significant information" about LLA's total greenhouse gas emissions (including emissions that will be caused by the additional air traffic)

Virgin Atlantic – a radio ad that claimed that Virgin had become "the world's first airline to fly transatlantic on 100% sustainable aviation fuel" was held to be misleading. The phrase "100% sustainable aviation fuel" – used widely in the industry to mean 100% of the fuel used was sustainable – would not be understood by consumers correctly (ie it could be understood to mean that there was no negative environmental impact at all).

It is anticipated that a recent consultation by the Civil Aviation Authority (CAA) on draft principles for consumer environmental information, will lead to clearer guidance for airlines and travel agents. It will aim to ensure that consumers can make informed choices in relation to advertised flights, through access to “relevant, accurate, understandable, comparable and accessible information.”

Heating and insulation products
Following a two-year investigation, the CMA published new guidance to assist UK businesses in the green heating and insulation sector with marketing their products. The guidance applies both to those selling heating and insulation products for home use (eg heat pumps, biomass boilers, solar thermal panels etc) and any related services, including marketing, selling, design, installation, servicing and maintenance of the products.

The key takeaways are as follows:

businesses must not create a false or deceptive impression of a product or service, which may affect the purchasing decision of a consumer
upfront marketing strategies should be used (any claims, information and quotes about the business should be accurate and complete), allowing consumers to make informed purchasing choices

headline price information should be presented accurately, comprehensively, honestly, and clearly when referring to government funding access and special deals on product bundles
claims about a product must be well-explained, realistic, unexaggerated, and supported by evidence.

Worcester Bosch, a household boiler brand, was targeted by the CMA in relation to its claim that buying the brand's boiler would "future-proof" consumers' heating systems and reduce their carbon footprint. Voluntary undertakings were given by the brand, which agreed to change its marketing strategy and revise its marketing material, as well as to request that its network of accredited installers and third-party retailers revise any non-compliant marketing materials.

Historic environmental performance
A Wessex Water TV ad focused on its efforts to upgrade the existing infrastructure through various green initiatives; "separating rainwater from sewage", "treating wastewater naturally using wetlands", and "monitoring changes to water quality".

The ASA criticised the ad for failing to disclose material information on its historic environmental behaviour. Wessex Water had received an EPA rating of two (out of a potential four) stars in 2021 and 2022, which identified the company as being "significantly below target" for serious sewage and water supply pollution incidents (ie intermittently discharging sewage into the environment).

The ASA was concerned that images of green water sources and wetlands, along with the phrase "a better way for our waterways is already underway", implied that Wessex Water had already actively improved its green credentials, rather than just taking steps to reduce environmental damage. This was contrary to its poor historic behaviour.

Practical tips
Businesses should be careful not to mislead consumers on their wider environmental impact, by including all material information in the ad itself. Even narrow claims may imply a wider sustainability claim, and representation can be by imagery and colours, not just by words. Where material, marketing campaigns may need to disclose historic poor environmental performance if their omission would give a misleading impression of the business's green credentials.

To stay ahead of the regulators, businesses should monitor green claims rulings, commentary and guidance from both the ASA and the CMA, and work with their marketing teams to put compliance measures in place, for example requiring legal input from the start of every ad campaign.

Oliver Bray
Partner
+44 7981 232447
oliver.bray@rpclegal.com

Hettie Homewood
Senior Associate
+44 7759 524371
hettie.homewood@rpclegal.com

Lewis Manning
Associate
+44 7821 636371
lewis.manning@rpclegal.com

Recent developments

EU legal agenda: IAB Europe's guiding principles for marketing and advertising

IAB Europe, the EU's largest advertising and digital marketing industry association representing over 5,500 companies, has published new guiding principles for the 2024-2029 EU legal agenda. Through the principles, the IAB aims to influence EU policy across the advertising industry, which saw approximately $144.6bn of spending across Europe in 2023.

The new guiding principles
The guiding principles focus on creating an inclusive, safe and innovative digital Europe. To achieve this, IAB Europe calls on regulators and policymakers to:

1. value consumer benefits of advertising – digital ads provide a wide choice of products and services at competitive prices for consumers

2. recognise the role of advertising in economic recovery and growth – digital advertising gives startups and small-to-medium businesses access to cost-effective marketing to find new customers and expand to other markets. It also provides digital advertising-related employment

3. promote choice and diversity in digital advertising services – respecting the freedom to conduct business creates an open, vibrant and innovative market for ad services

4. enable efforts to increase trust and confidence in digital advertising – recognise that use of data is essential in delivering online ad services, and build confidence amongst EU consumers by raising awareness of the safeguards and controls in place

5. ensure stable and predictable regulation – focus on effective implementation of existing laws on digital advertising first, before implementing new policy

6. encourage innovation in privacy protection – recognise the risk-based approach to data under the GDPR, and encourage collaboration for new solutions to protect data in digital advertising

7. join up and coordinate ad-related policy areas – collaborate to ensure that all areas of policy (eg consumer protection, data protection, online safety) are well-coordinated and implemented in harmony. New EU-level policies must be "evidence-based, targeted and

proportionate" and subject to a "competitiveness check" to ensure that wider impacts are positive and balanced

8. engage all ecosystem players – collaboration between advertisers, agencies, intermediaries, platforms, technology vendors, publishers, and digital services providers ensures all players are engaged

9. increase opportunities for collaborative industry initiatives – to raise standards and promote transparency.

The IAB emphasised the particular importance of:

inclusivity – particularly in relation to maintaining choice and diversity in digital advertising services, and engagement with stakeholders and industry-wide initiatives
safety – through increased privacy protection, and public trust through robust, fair and harmonised regulation
innovation and growth – encouraging the critical role of advertising in economic growth to the region, market coordination, and delivering consumer benefits
transparency – the commitment of IAB Europe members to adhere to practices that promote transparency and build consumer trust.

Why is this important?
IAB Europe, with support from national advertising bureaus, influences the policies that shape working practice, industry standards and technology across the EU. It is anticipated that the principles will ensure that the interests of IAB Europe's members are reflected in future legislation. Organisations in the digital advertising space should look to make full use of their memberships to organisations such as IAB Europe and to contribute to these guiding principles where this may shape regulators' approach to future regulatory developments.

Oliver Bray
Partner
+44 7981 232447
oliver.bray@rpclegal.com

Hettie Homewood
Senior Associate
+44 7759 524371
hettie.homewood@rpclegal.com

Lewis Manning
Associate
+44 7821 636371
lewis.manning@rpclegal.com

Recent developments

Misleading online choice architecture: lessons from Wowcher and Simba Sleep

Online retailers should have in mind the CMA's Online Choice Architecture awareness campaign; a fight against selling practices on websites that cause harm to consumers. As seen in recent investigations, certain existing marketing tactics may be in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), soon to be revoked and restated under the Digital Markets, Competition and Consumers Act 2024 (DMCCA).

Recent investigations by the CMA
Simba Sleep
Simba, an online mattress company, agreed undertakings following an investigation that commenced in December 2023. The CMA was focused on Simba's website creating a false sense of urgency in consumers via the use of countdown clocks and limited time price discounts.

To show compliance with the CPRs, Simba has given undertakings that it will ensure that:

any countdown clocks used on its websites are clear and specify prominently the exact products the countdown applies to
the countdown clocks do not give a misleading impression that consumers must act quickly, or the price of the product will revert to the pre-sale price, if this is not the case (for example, where the clock resets when it reaches zero)
only genuine "was" prices are used, ie a sufficient volume of the product has been sold at that price previously.

In contrast, a competitor company, Emma Sleep, failed to reach an agreement with the CMA and is therefore facing court action. This recent scrutiny of traders in the online mattress selling sector led to the CMA publishing new guidance, to clarify the discount and reference pricing principles for online mattress sales.

Wowcher
In addition to the misleading use of countdown clocks as above, the CMA was also concerned about Wowcher's various marketing claims. This included promoting stock scarcity ("Running Out!") and product popularity ("In High Demand!") to again make consumers believe that they need to purchase immediately to get a good deal. To avoid giving a false impression, the CMA said these claims should reflect correct and up to date stock levels and sales figures (taking into account refunds processed). Further, the nature of any comparison claims against competitor products

(ie "Best Seller" or "Top Rated") should be clearly disclosed, with only the top 10% of items being listed as "tops" in their category.

Another interesting outcome of the Wowcher investigation related to the registration of customers for a "VIP membership" via a pre-ticked box. The CMA found that consumers were not necessarily aware of exactly what they were signing up to at the time. As a result, Wowcher promised to provide refund credits to more than 870,000 customers as part of the agreed undertakings – a total refund of around £4m.

What actions should you take?
Businesses selling their products online should carefully review their selling practices and take any necessary steps to ensure compliance with the CPRs. Any "urgency" messaging should be used sparingly and with great care. Countdown clocks should not be used if the product will be offered on the same or similar terms at the end of the countdown.

Any other tactics that encourage immediate and/or time-pressured spending risk CMA scrutiny. Businesses should always clearly communicate any time limits for promotions and keep records of supporting evidence such as "was" prices, stock levels, sales figures, etc. as appropriate.

Online Choice Architecture will continue to be a hot topic for the CMA, and businesses in breach are likely to be targeted. Given the CMA's new direct enforcement and fining powers under the DMCCA, regulatory developments should be followed closely and shared with the relevant internal departments (ie marketing and web teams).

Oliver Bray
Partner
+44 7981 232447
oliver.bray@rpclegal.com

Hettie Homewood
Senior Associate
+44 7759 524371
hettie.homewood@rpclegal.com

Lewis Manning
Associate
+44 7821 636371
lewis.manning@rpclegal.com

Snapshots Winter 2024

A roundup of key legal developments for the modern commercial lawyer.

RPC's Snapshots seeks to cover everything the commercial lawyer needs to know from the previous quarter, aiming to address all the major changes affecting commercial law, from the key cases to data, digital, consumer and advertising developments.

Explore the Winter 2024 edition