A plan to crack down on online rip-offs including making it illegal for people to write or host fake reviews has been outlined by the government.
The proposals would see bigger fines for firms that trick consumers into spending more than they want to online.
Businesses offering subscriptions would also be required to make clear exactly what consumers are signing up for and allow them to cancel easily.
Consumer champion Which? said the plans should be “swiftly implemented”.
Rocio Concha, Which? director of policy and advocacy, said the pandemic had highlighted weaknesses in consumer protections that allowed “unscrupulous businesses to exploit customers”.
Under the government’s proposals, regulators would receive help to stamp out tactics used to manipulate people browsing for goods and services online.
This includes punishing businesses that trick consumers into spending more than they want to, and “negative nudges” – when businesses pay to have their product feature highly on a trader’s website while hiding the fact they paid for it.
The government said it would also get tough on prepayment schemes such as Christmas savings clubs – where customers choose Christmas hampers and vouchers months in advance, and then make regular payments towards the goods over the course of the year.
Under the plans such schemes would have to safeguard customers’ money in future. The aim is to prevent scandals such as Farepak, which saw tens of thousands of people lose all they had saved for Christmas when the company went bust in 2006.
For the used car and home improvement sectors where consumers often make big one-off purchases, the government will make it mandatory for businesses to take part in arbitration or mediation where disputes arise over a transaction, so that consumer gripes are not dragged through the courts.
‘Cowboy builders aren’t welcome’
Business Secretary Kwasi Kwarteng said the government was “giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal”.
Consumer and small business minister Paul Scully added: “When consumers part with their hard-earned cash, they’ve got every right to expect they’ll get their money’s worth. Cowboy builders aren’t welcome in 21st century Britain.”
The government’s proposals are part of a new consultation on reforming competition and consumer policy to give the Competition and Markets Authority (CMA) enhanced powers to tackle consumer rip-offs and bad business practices.
The government said there would be tougher penalties for those who break the law, with new powers for the CMA to issue fines of up to 10% of a firm’s global turnover.
Other punishments which the CMA could enforce include disqualifying company directors who make false declarations to the regulator and being able to block so-called “killer acquisitions”, where big businesses snap up prospective rivals before they can launch new services or products.
The CMA will be able to enforce consumer law directly, rather than having to go through a court process, the government said.
The watchdog will also be required produce regular “state of competition” reports under the plans to look at the vibrancy of competition in the UK’s markets.
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Writing fake online reviews could be made illegal
