Members must comply with new digital marketing laws

More than 25 years after the Competition Act 1998, the Digital Markets, Competition and Consumer Act 2024 (DMCC) marks a significant change in business regulation. 

The consumer provisions of the new act came into force on 6 April this year, accompanied by a policy paper from the government entitled Strategic Steer to the Competition and Markets Authority.

The policy paper sets out that that the Competition and Markets Authority (CMA) should use its new direct powers under the legislation to help the economy grow by promoting trust and confidence while deterring poor corporate practices.

Although the legislation applies to all businesses, there are particular implications for those working in property, with the act introducing several specific offences relevant to RICS members.

While this is an extreme and unlikely scenario, the 2024 Act empowers the CMA to take a nuanced view of online advertising and intervene where housebuilders are overly optimistic about, for example, estimated service charges or ground rents.

Such information must be made available at any invitation to purchase, which the DMCC defines as 'a commercial practice involving the provision of information to a consumer (a) which indicates the characteristics of a product and its price, and (b) which enables, or purports to enable, the consumer to decide whether to purchase the product or take another transactional decision in relation to the product'.

In addition, the CMA has been clear that if a business uses modified, edited, retouched, or overly generous computer-generated images that show a property to be significantly better in terms of design or specification than it actually is to attract potential customers, this will be classed as misleading advertising and will be subject to prosecution.

There is no specific guidance in the DMCC regarding auctions at this stage. Therefore, as much transparency as possible is recommended. Clearly, it is not expected that auctioneers estimate a final price, but all deeds must be clearly disclosed alongside the starting price.

The legislation is clear that any mandatory fees and taxes must be included in total property prices. Where the fee is variable and cannot therefore be accurately calculated, the information provided about how these variable fees are to be calculated must enable the consumer to calculate the product's total price.

This information must be set out with as much prominence as the product's headline; for example, where a headline price is displayed on a webpage, information about the variable fees should not be presented in smaller text at the bottom of the page.

The guidance is unclear with regard to stamp duty. However, the CMA is clear that even where it is not possible to estimate tax, purchasers should know that tax must be paid and how this will be calculated.

Therefore, any business that uses customer reviews – including those on third-party sites – must have a compliance policy to police these. Fake reviews will be classed as those that purport to be, but are not, based on a person's genuine experience.

Such a compliance policy must contain a commitment to remove fake reviews together with an assurance that the business will not suppress unfavourable comments. The meaning of a review is in this context broad in scope, and includes texts, speech and graphic representations, such as a star rating.

Moreover, it is important that any reviews for which incentives have been offered, e.g. an offer for those giving reviews to be entered into a prize draw, are clearly identified.

This aspect of the legislation will have an immediate impact on property portals such as Zoopla or Rightmove, which offer such incentives and are likely to be of interest to the CMA.

While the initial focus will be on mass consumer events such as Black Friday which, in part, prompted the introduction of the legislation, the authority will also look, for example, into instances where a boldly coloured banner advert on a website states 'Only three houses remain' or a countdown timer says prices will rise after a certain period of time.

Overlaying the specific offences set out in the 2024 Act, the CMA will be looking at things such as the vulnerability of the target audience. It could, for instance, consider specific sectors such as care homes or mobility-friendly premises to ensure that any claims about ease of access, for example, are verifiable.

Notably, the act extends the definition of 'vulnerable' to include contextual vulnerability – which could be of particular interest to those dealing with customers who have recently experienced bereavement, divorce, financial struggles or other situational stressors – introducing a higher standard of care for traders.

Another issue relevant to the property sector that the CMA will be considering closely is greenwashing. The act includes specific provision for prosecuting businesses that make environmental claims that cannot be verified. While the law for this already existed, the CMA has made it clear that greenwashing is a strategic enforcement priority.

For example, during the consultation period on the legislation, the CMA indicated that posting a picture of what land could look like after remediation will be scrutinised, and businesses will be prosecuted if such imagery is inaccurate.

Moreover, websites will be examined to see how difficult it is for users to unsubscribe from email updates or electronic newsletters, although focus on this is likely to coincide with the act's subscription prohibitions, which are due to come into force in April next year.

The act primarily addresses paid subscriptions and includes a number of restrictions particularly in relation to trial periods, cooling-off periods and notifications to customers regarding cancellation rights.

The new rules have the effect of mandating these periods at specified intervals, to crack down on automatically renewed subscription services which unfairly capture consumers in long, expensive contracts.

The CMA has indicated through guidance that businesses must prioritise this, designing consumer compliance procedures and training staff, including regular training for sales teams and clear procedures for the review of marketing promotions by internal legal teams where possible.

As well as housebuilders, estate agents and online property portals, the act will cover residential surveyors who have their own websites or auctioneers who express pricing by way of a reference to a percentage.

All advertising must either list the exact price or display a simple calculation that can be easily understood by the average consumer, defined in the act as being reasonably well informed, reasonably observant and reasonably circumspect.

The key message for businesses advertising to the general public is that they must now have compliance procedures in place to protect consumers.

While it was best practice for businesses to have consumer compliance policies previously, the new act places a much greater focus on this and the CMA as the primary enforcer has been very clear that it expects all businesses to enact such policies and procedures.

In practice, many businesses previously adopted less-than-compliant policies and procedures, taking a risk-based approach. Given that the risk profile of consumer law breaches has significantly changed, organisations should revise their approach to consumer compliance.