The Competition and Markets Authority (CMA), the UK's competition and consumer protection authority, has requested all online business involved in selling to consumers in the UK to review its sales practices following recent investigations it has carried out.
Sales practices that put unfair pressure on, or mislead consumers, are deemed unlawful. The CMA has published an open letter which provides examples of unlawful sales practices.
Businesses that implement unlawful sales practices will be deemed to have breached UK consumer law with the following consequences:
- Potential investigation by the CMA which could lead to reputational damage
- Receive a court claim from the CMA
- The CMA may take enforcement action under current consumer protection legislation (i.e. the Consumer Protection from Unfair Trading Regulations 2008 (CPRs))
- The CMA may be granted additional enforcement powers if new law comes into force (e.g. as proposed by the Digital Markets, Competition and Consumers Bill)
- Regulatory bodies such as the Advertising Standard Agency and Trading Standard may also take action
- Private rights of action available to consumers who are misled in breach of the CPRs
The CMA has recently investigated a number of retailers' online sales practices, including urgency claims and tactics implemented by Wowcher and Emma Sleep.
We have summarised the position on urgency claims below.
Urgency claims
An urgency claim creates a sense of urgency and can pressure shoppers into buying a product or service more quickly than they otherwise would, see table below for examples.
False or misleading urgency claims which pressurise consumers into making a purchase are unlawful, as they can put unfair pressure on consumers and cause harm by changing their behaviour. These kinds of tactics also place compliant businesses at a disadvantage.
The table below sets out examples of urgency claims and when the urgency claim would be deemed unlawful.
| Example of urgency claim | Unlawful urgency claims |
|---|---|
|
Countdown clocks which indicate when a sale or special deal will end, e.g. 'five hours until the sale ends'. |
|
|
Countdown timers which give consumers a specified amount of time to make their purchase, e.g. 'you have three minutes'. |
If the timers restart when the webpage is refreshed or when the time runs out (i.e. the consumer has more time to take advantage of the offer). |
|
Scarcity claims which alert consumers to low stock levels, e.g., 'only five left' and 'selling fast!'. |
If the business has high stock levels or has ordered more stock. |
|
Popularity claims which let consumers know how many items have been sold, e.g. 'five people are viewing this now' and 'nine sold in the last 12 hours'. |
If the business did not e.g. sell the number of units claimed within the time specified or if the claim refers to the views or sales of a different product (rather than the product the consumer is interested in). |
Legal requirements for urgency claims
Urgency claims are more likely to be deemed lawful if they:
- Contain information that is true
- Clearly state important information the consumer needs to decide whether they wish to proceed with the purchase
- Do not put unfair pressure on consumers to complete transactions
- Do not falsely state that an item is only available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision
- Are structured in such a way that is likely to aid the consumer's ability to take informed decisions
Next steps
- Review CMA's letter – review the CMA's open letter to understand the legal requirements and the types of sales practices which would be deemed unlawful
- Review of sales practices – review the online sales practices deployed across your consumer-facing online activities, including advertisements (e.g. marketing emails, display, search results), webpages, apps and pop-ups (e.g. home page, search results, product details, basket, payment) to ensure they are lawful. Any non-compliant urgency claims (or any other unlawful sales practices) should be amended or removed
- Training – ensure your staff and contractors responsible for the design, approval or use of urgency claims understand the legal requirements and comply with them
- Approval – ensure you have implemented appropriate safeguards and clearance processes so you do not present unfair or misleading claims to consumers
- Evidence – have evidence to substantiate the urgency claims that you make online and keep adequate records to show that these claims genuinely reflect selling conditions
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.