The DMCC Bill: how will it impact your business?

If you run your business online, you may have been eagerly following the Digital Markets, Competition & Consumers (DMCC) Bill as it made its way through parliament. On 23 May 2024, UK parliament passed the bill – with it expected to come into force in autumn this year.

But what is the DMCC Bill and how could it affect your business? If you rely on online reviews to advertise your products or use drip pricing as part of your retail strategy, keep reading for a breakdown of all the changes small business owners need to know.

Digital Markets, Competition and Consumers Bill – what does it tackle?

Much of the DMCC Bill has been designed to prevent larger digital platforms gaining a monopoly of the market share. Nevertheless, it still comes with changes that could affect your small business.

The main part of the DMCC Bill small businesses need to focus on is surrounding consumer protection. If you run an online shop, the government’s plan to ban hidden fees and crack down on fake reviews is something to be aware of.

In this article we’ll cover a few topics highlighted in the bill itself.

1. Fake online reviews

Many customers rely on product reviews to make informed decisions before they buy. The CMA knows this too, which is why they’re cracking down on fake and misleading reviews.

This includes:

commissioning fake reviews
not mentioning (or hiding) when reviews have been incentivised
publishing reviews in a misleading way

We know that online reviews can really make or break your small business, so make sure you check out our guides on encouraging Google reviews and managing fake reviews.

2. Drip pricing

Drip pricing is a strategy where a business shows a lower price than what a customer will end up paying. As the customer moves through the purchase process, the actual cost gets higher as additional fees, charges, or taxes are added on.

An example of this can be when buying from an online shop, as shipping fees or payment processing fees are added at the checkout. Other common examples include travel and hospitality, where you may be charged a booking fee for booking online. Whatever the industry, it’s found that hidden fees cost consumers £2.2 billion every year (Gov.uk).

However, the DMCC Bill will require the total price of a product (including fees, taxes, and any other charges) to be calculated and shown in advance. If this can’t be calculated, the platform will at least need to inform the customer that such fees are coming.

These new changes make sure that customers fully understand their purchase costs before they commit to anything.

3. Subscription traps

Subscription models can be great for customer retention, but can also be another way consumers get caught out. Things like automatic renewals and free trials coming to end can cause unexpected fees.

If you offer subscription services in your business, you’ll need to provide customers with pre-contract information to make sure they understand their contract. You’ll also need to notify customers when any free trials or discounted price offers are coming to an end.

The CMA have long been investigating auto-renewal contracts, so you’ll also need to make sure that it’s simple to exit a subscription contract. Customers are now able to exit these contracts by “making a clear statement”.

4. Consumer savings schemes

Consumer savings schemes, which allow customers to make payments in order to save for goods purchased at a later date, are also set to change under the new bill.

An example of a consumer savings scheme is encouraging customers to make frequent payments over the course of a year, with the understanding that the money is there to spend at a specific time – Christmas being a popular driving force for some of these schemes.

However, until recently this has been risky due to a lack of regulations, meaning customers risk losing their money if the business becomes insolvent.

But customers using these schemes now have more protection, as the DMCC Bill means that any businesses who operate in this space will need the appropriate insurance to protect customers’ money.

DMCC Bill for larger businesses

While consumers will receive more protection, the bill also seeks to create a more level playing field for businesses in the digital market – especially those going up against large digital platforms.

Large digital platforms with significant market power will be deemed as having ‘strategic market status’ (or SMS). Many of the DMCC Bill’s changes will focus on these SMS businesses – who will be monitored by the Competition and Markets Authority (CMA).

The CMA will now require SMS businesses to notify them of certain acquisitions to make sure they’re not gaining full control of the market.

The chief executive of the CMA, Sarah Cardell, says: “Digital markets offer huge benefits, but only if competition enables businesses of all shapes and sizes the opportunity to succeed.

“This bill is a legal framework fit for the digital age. It will establish a tailored, evidenced-based and proportionate approach to regulating the largest and most powerful digital firms to ensure effective competition that benefits everyone.”

Luckily small business owners need not worry, as only the largest digital platforms in the UK will be deemed to have SMS.

What happens if you don’t comply with the DMCC Bill?

Whether you’re a small business or a large one, it will still be a legal requirement to follow the regulations laid out in the DMCC Bill. If found to have broken any of these consumer laws, you risk being fined up to 10 per cent of your global turnover.

The DMCC Bill gained royal assent on 23 May so changes are heading your way soon. While no specific dates have been announced, it’s expected these laws will come into effect in autumn 2024.

You can keep up to date with the DMCC Bill on the UK parliament website.

What do you think of the changes brought by the DMCC Bill? Will they affect your business operations? Let us know in the comments below.

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