The government is implementing new rules such as making it “clearly illegal” to pay someone to write or host a fake review in a bid to shield the public from rip-offs.
The legislation will provide protection for shoppers’ savings clubs – where consumers can pay for goods and services in instalments throughout the year – which are not currently covered by the Financial Services Compensation Scheme.
Plans also include making it clearly illegal to pay someone to write or host a fake review, so people are not cheated by bogus ratings, and clearer rules for businesses to make it easier for consumers to opt out of subscriptions so they are not stuck paying for things they no longer want.
Under the new rules, businesses must provide clearer information to consumers before they enter a subscription contract, send a reminder that a free trial or low-cost introductory offer is coming to an end and ensure consumers can leave a contract in a “straightforward, cost-effective and timely way”.
The average UK household spends around £900 each year influenced by online reviews and spends £60 on unwanted subscriptions.
Prepayment schemes like Christmas savings clubs will have to fully safeguard customers’ money through insurance or trust accounts.
It means even if the company goes bust, shoppers’ money will still be protected and it aims to prevent issues such as the collapse of Christmas savings club Farepak in 2006, when thousands of customers lost money they had been saving all year to spend on their family Christmas.
To beef up the enforcement of consumer protections, the Competition and Markets Authority (CMA) will be able to directly enforce consumer law, including new powers to fine firms up to 10% of their global turnover for mistreating customers, or up to £300,000 in the case of an individual. This replaces going through a court process which can take years.
Consumer Minister Paul Scully said: ”We’re making sure consumer protections keep pace with a modern, digitised economy.
“No longer will you visit a five star-reviewed restaurant only to find a burnt lasagne or get caught in a subscription in which there’s no end in sight. Consumers deserve better and the majority of businesses out there doing the right thing deserve protection from rogue traders undermining them.”
Citizens Advice director of policy, Matthew, Upton said: “With pressure piling on household budgets, it’s good to see action that’ll make it easier for people to protect their cash.
“The measures to deal with subscription traps are particularly welcome. We hope these will help bring unscrupulous traders to book and stop shoppers being duped by underhand tactics.”
CMA chief executive, Andrea Coscelli, said: “This is an important milestone towards strengthening the CMA’s ability to hold companies to account, promote fair and open markets, and protect UK consumers.
“The CMA stands ready to assist the government to ensure that legislation can be brought forward as quickly as possible, so consumers and businesses can benefit.”
The new measures will apply in England, Scotland and Wales as consumer protection is devolved in Northern Ireland.