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New legislation has been introduced to put an end to online fake reviews and subscription traps that costs more than £1bn a year.

The measures will help ensure businesses and consumers are protected from rip-offs and can reap the full benefits of the digital economy with confidence.

Businesses that breach consumer rights will come under the spotlight with the far-reaching new rules that provide extra power for the Competition and Markets Authority (CMA).

In competitive markets, firms strive to give consumers the best products, most choice, and lowest possible prices. The Bill will provide the CMA with stronger tools to investigate competition problems and take faster, more effective action, including where companies collude to bump-up prices at the expense of UK consumers.

Business and Trade Minister Kevin Hollinrake said: “Smartphones and online shopping have profoundly changed the landscape for businesses, consumers and the foundations of a modern thriving economy, which now lie in strong consumer choice, confidence and competition.

“From abuse of power by tech giants, to fake reviews, scams and rip-offs like being caught in a subscription trap – consumers deserve better.”

The CMA will be able to directly enforce consumer law rather than go through lengthy court processes. The reforms will also heighten the consequences for wrongdoers as the CMA and the courts will have the power to impose penalties of up to 10 per cent of global turnover for breaching consumer law.

The Bill will also enable the Government to ban the practice of facilitating fake reviews or advertising consumer reviews without taking reasonable steps to check they are genuine. New rules will ensure consumers can exit subscriptions in a straightforward, cost-effective, and timely way and require that businesses issue a reminder to consumers when a free trial or introductory offer is coming to an end.

This will help deliver one of the Government’s five priorities to grow the economy by increasing consumer choice and confidence in the products they buy and services they use.

As part of the Digital Markets, Competition and Consumers Bill, a Digital Markets Unit (DMU) within the CMA will be given new powers to tackle the excessive dominance that a small number of tech companies have held over consumers and businesses in the UK. This market dominance has stifled innovation and growth across the economy, holding back start-ups and smaller firms from accessing markets and consumers.

 

The government’s new digital regime will give the DMU powers to ensure that businesses and consumers are not unfairly disadvantaged by the biggest players, allowing them access to dynamic and thriving digital markets that will ultimately support our economy to grow. If a firm is deemed to have strategic market status in key digital services, the DMU will be able to step in to set tailored rules on how they behave and operate.

The DMU will also be able to tackle the root causes of competition issues in digital markets by carrying out targeted interventions, opening up new paths for start-ups or smaller firms that have previously struggled to grow and compete in these markets.

Firms may be told to give customers greater flexibility when purchasing products online and to break down restrictive technical barriers that block users from using products on different devices and systems. The new regime will drive innovation across the entire economy, maintain and further the UK as an attractive tech destination for international investment, and make the digital economy a fairer place for businesses and customers.

Paul Scully, Minister for Tech and the Digital Economy said: “The announcement shows we are proudly pro-growth and pro-innovation across the board in the tech sector, seeking to open up new opportunities for all firms, however small or large they are, while empowering consumers.”

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