The Competition and Markets Authority (CMA) has today set out its “red lines” for businesses (including broadband and mobile providers) that make use of “price reduction” and “urgency claims” when selling their products and services to UK consumers. People are also being encouraged to report online rip-offs via a new form.
The goal of this new ‘Online Rip-off Tip-off‘ campaign is to help consumers to “spot and avoid misleading online sales tactics“, and to report businesses which engage in misleading tactics. These include: pressure selling, hidden charges, subscription traps and fake reviews. These tactics are often “designed to mislead and push people to part with their cash online.”
The CMA clarifies that such claims do have a legitimate place “when they alert consumers to genuine special offers or provide helpful information about current selling conditions“, but too often they can also be used to mislead or put unfair pressure on consumers in the UK. “Such claims may be illegal under the CPRs, harm consumers by distorting their behaviour, and put fair-dealing businesses at a disadvantage,” said the CMA.
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In terms of broadband ISPs and mobile operators, the issues around “urgency claims” (e.g. “only X products left at this price”) aren’t really relevant as that’s simply not something the industry generally uses or needs. But the CMA’s issues with “price reduction” claims are much more relevant, as we see a lot of questionable promotions cropping up.
For example, a comparison price may be considered misleading by the CMA when they no longer reflect the usual price (i.e. the time that the product was sold at the higher price is short compared to the time at the promotional price) or very few packages were actually sold at that price. Prices that flip-flop too often or offers where the product has been sold at lower prices since the comparison price was charged may also be viewed as misleading.
CMA’s Red Lines
In particular, it is our view that businesses are likely to distort consumer behaviour and infringe the CPRs if their urgency claims or price reduction claims:
• Contain information that is untrue or that is deceptive even if the words used are literally true (misleading actions – regulation 5);
• Fail to state clearly any important information the consumer needs at that time to decide whether they wish to proceed (misleading omissions – regulation 6);
• Put unfair pressure on consumers to complete transactions (aggressive practices – regulation 7);
• Falsely state that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice (a practice banned in paragraph 7 of Schedule 1 to the CPRs); and/or
• Are structured in such a way that is likely to unfairly impair the consumer’s ability to take informed decisions (contravening professional diligence – regulation 3).
The CMA has outlined all of this, including plenty of practical examples, as part of their Open Letter to UK businesses today (consumers should also read this as it’s very informative). We’d strongly urge broadband and mobile providers to give that a read too, lest they find themselves in hot water further down the line. “The CMA is actively monitoring this area, and therefore we urge you to review your practices urgently to ensure they are compliant,” said the competition regulator.
George Lusty, CMA’s Senior Director for Consumer Protection, said:
“Now more than ever, every penny counts and the CMA is concerned that some businesses are using underhand tactics designed to part shoppers from their cash. This poll is just the tip of the iceberg as we believe the true number of victims of these rip-offs is much higher as they are often extremely difficult to spot.
That’s why businesses using urgency and price reduction claims need to consult the CMA’s new advice. It outlines what businesses need to do when designing their online shopping experiences to be sure they comply with the law.”
We should stress that the CMA’s advice and campaign is being targeted at businesses across the UK, although we do perceive some of it as having direct relevance to consumer telecoms too, and hence why we’ve reported on it today. But if you don’t fancy reading through the full Open Letter, then you can always just skip to a summary of the examples, as this is highly informative.
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I’ll believe they’re clamping down when I see it. Poor practice has been commonplace across consumer telecoms for years, with little improvement. Even if things are reported, the CMA will point to Ofcom, Ofcom will wring their hands and do nothing, in the same way they have achieved nothing on unduly long minimum terms, onerous early termination fees, in-contract price rises, unfair calculation of price rises, or dubious bundle selling.
If they are actually not doing anything to stop the criminally greedy mid contract hikes then they are just posturing to justify their taxpayer funded salary to do nothing
Behind the times with this. I understand some of these protections have been available in some European countries for at least a decade (Poland is an example)
Not really, this refers to a “don’t forget we’re here” campaign by the CMA, to encourage compliance, nothing to do with new rules. The UK has had amongst the best consumer protection laws in the world for a very long time, although there’s a continual need to enforce them and to publicise them, offset by a need to not be too heavy handed.
Wow, a government regulator actually trying to do something useful for consumers instead of the industry being regulated.
Still need to see any action but it’s a start.
The last time I had the misfortune to phone vm to get a better deal, the lies I was told where incredible, the biggest being no price rises till April 2024, but if it does I can leave. They said that the previous year too, I assumed they made an honest mistake but found out it was intentional deception.
Fibre broadband for sale? Which is actually hybrid FTTC. Technically isn’t a lot of ADSL from the exchange ‘fibre’ as it will use optical backhaul?
If they want to start protecting the public then maybe only FTTP and FTTB for multi dwellings should be the ONLY services allowed to carry the fibre monika.
FTTC should only be allowed to be sold as fast BB and ADSL as standard BB with no fibre on the ad.
After their very recent flip-flop in favour of the Microsoft acquisition of Activision-Blizzard-King, I don’t have any faith in the CMA enforcing fair competition for businesses or what’s ultimately in the best interest of consumers.