Who: The UK Competition and Markets Authority
Where: United Kingdom
When: 29 March 2023
Law stated as at: 18 April 2023
What happened:
The UK’s consumer protection authority, the CMA, has unveiled the next stage of its Online Choice Architecture project that aims to tackle potentially harmful online selling practices.
On 29 March 2023, the CMA published an open letter to online businesses (including online retailers, marketplaces and intermediaries) relating to the use of urgency claims and price reduction claims. The CMA defines urgency claims as any “scarcity, popularity, ‘act fast’ or time limited” claims presented to consumers online and price reduction claims as any “discount or special offer price that refers to a higher comparison price”. The purpose of the letter is to help online businesses understand and comply with their existing obligations under consumer protection law when presenting such urgency and price reduction claims online. The CMA provides a non-exhaustive list of examples of claims that may contravene consumer law on the basis they are misleading or put unfair pressure on consumers to act quickly.
The letter summarises that an urgency or price reduction claim is likely to infringe the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) if it:
- contains information that is untrue or that is deceptive even if the words used are literally true (this may constitute a misleading action under the CPRs);
- fails to state clearly any important information consumers need at that time to decide whether they wish to proceed (this may constitute a misleading omission under the CPRs);
- puts unfair pressure on consumers to complete transactions (this may constitute an aggressive practice under the CPRs);
- falsely states 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 encourage an immediate decision and limit the opportunity to make an informed choice (a blacklisted practice under the CPRs); or
- is formed in a way which is likely to weaken the consumer’s ability to make informed decisions (this may constitute a practice that contravenes professional diligence).
Misleading or unfair urgency claims
In its open letter, the CMA sets out examples of misleading urgency claims that risk infringing consumer protection law. These include:
- time-limited promotions where the promotion continues beyond the time limit or a new deal that is substantially the same as the old one is offered straight after;
- checkout timers which are untrue (for example, as the timer restarts when the time runs down or when a consumer refreshes the page);
- warnings on stock levels that are untrue (that is, where, in reality, there is no stock shortage or even if stock was low, the business would be obtaining new stock shortly);
- claims which create a false sense of urgency (for example, a claim that states that 10 people are looking at the product but, in reality, stock levels are high); and/or
- false claims relating to demand (that is, indications relating to the number of consumers that have bought a product where such numbers relate to a different time period or product).
Misleading or unfair price reduction claims
The letter also provides examples of unfair price reduction claims that risk infringing consumer protection law. These include discount claims where the higher “reference” or “was” price does not accurately reflect the usual price because:
- the time the product was sold at the higher reference price is short when compared to the time sold at the discounted price;
- very few items were sold at the higher price;
- the price of the product has been “flip-flopping”;
- the product was sold at lower prices since the reference price was charged;
- the product was sold at the reference price only for a very short period of time (i.e. the price hike was short-lived); and/or
- the reference price was used a long time ago.
Price reduction claims are also said to be misleading where the claim omits or hides significant information the consumer needs to know upfront (for example, any conditions that are attached to the price reduction).
To support its letter, the CMA has also published a blog and a series of videos to emphasise the harm urgency and price reduction claims can cause when they mislead or unfairly pressure consumers. The CMA encourages online businesses to check all online practices; ensure staff with responsibility for these types of claims understand the legal requirements; and keep records to evidence that urgency and price reduction claims used are genuine.
Why this matters:
In addition to the publications addressed to businesses and recent investigations, the CMA has also urged consumers to report online “rip-offs” via a new online reporting form. This activity of the CMA highlights its increased focus in the area of harmful and misleading online selling tactics and the importance for businesses to ensure that marketing claims are legitimate and can be supported by evidence. The examples provided in the letter are a reminder of the practices businesses should avoid to prevent a breach of existing law and prevent harm to consumers by misleading on price or putting unfair pressure on them.
