June 28, 2022

Volume XII, Number 179

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June 27, 2022

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End of the Five Star Burnt Lasagne?

The Competition and Markets Authority (CMA) published yesterday proposals to protect consumers from fake online reviews and to give full legal status to the CMA’s guidance published earlier this year regarding goods and services supplied via a subscription model.

Under the proposals a new law would be implemented to make it “clearly illegal” to pay for the writing or hosting of fake online reviews with new powers for the CMA to fine businesses up-to 10% of global turnover (or £300,000 in the case of individual traders) for breaches. It would also become an offence to offer to write or commission fake reviews.

Perhaps of most interest is that websites hosting reviews will be expected to take “reasonable steps” to check that those reviews are genuine with business minister Paul Scully hailing the proposals as meaning an end to “visiting a five star reviewed restaurant only to find burnt lasagne”.

However, at this stage no guidance has been provided as to what such “reasonable steps” might entail (nor indeed what “genuine” might mean, one person’s burnt lasagne being another’s well done and crispy) and whilst the proposals have been broadly welcomed by industry and consumer groups concern has also been expressed that any new law should not place unnecessary additional burdens on businesses, particularly in already challenged sectors such as hospitality.

SPB’s consumer law experts also question whether, in light of the provisions of the ASA’s CAP Code and the Consumer Protraction from Unfair Trading Regulations 2008, any new legislation is really necessary; since it is already a breach of the ad rules and consumer law to commission fake reviews. Serious infringement of the legislation is also an existing criminal offence. What is more, the CMA’s proposals will need careful legislative drafting so as to avoid unintended consequences and to dovetail with the Online Safety Bill and the government’s overall digital markets strategy. For example, social media operators and platform providers will resist an obligation to actively monitor their assets for fear of losing the “mere conduit” exemption under E Commerce legislation.

In the subscription world the CMA’s previously announced guidance suggesting businesses give clearer information to consumers at the point of subscription would in effect become mandatory law together with requirements to send pro-active reminders that any free or low cost introductory subscription is due to expire/convert to full price and provide a “straight-forward and cost effective” way for consumers to cancel.

Again, at this stage there is no specific guidance as to what a “straight-forward and cost effective” way might be although based on the earlier guidance it seems safe to assume that the CMA will expect consumers to be able to cancel a subscription in the same manner and with as much ease as their original subscription.

No time-line has been provided for when the new law will enter into force but given this feels like a matter of “when” not “if” businesses likely to be affected by these changes would be well advised to start planning now.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 111
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About this Author

Paul Jinks Commercial Transaction Attorney Squire Patton Boggs Leeds, UK
Director

Paul Jinks has 20 years’ experience of supporting major commercial transactions in both the public and private sector with a particular focus on large-scale IT and outsourcing projects (both first generation and, the re-tendering/re-negotiation of existing arrangements). Paul has supported major transactions across a wide range of industries and sectors, including the outsourcing of critical business functions by FCA-regulated businesses subject to SYSC 8 compliance requirements; and projects involving significant programmes of service transformation and business change.

Paul also...

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Carlton Daniel Intellectual Property Attorney Squire Patton Boggs London, UK
Partner

Carlton Daniel advises on intellectual property rights, commercial contracts and consumer regulatory law. He handles both contentious and non-contentious matters.

Carlton has a particular focus on providing advice to clients in the advertising, marketing and media sectors, and also to businesses operating in the food and drink, retail, automotive and tech sectors.

Intellectual property rights: Carlton has significant experience advising on the exploitation and protection of trade marks, designs, copyright, databases, confidential information and patents. As...

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