CMA launches investigation into online reviews amidst increased online shopping during lockdown

United Kingdom

As the UK comes to the end of its 10th week of lockdown, radical change has taken place in the operation of daily life. The green shoots of post lockdown life are beginning to show, with shops set to re-open in coming weeks. However, with the increased reliance on online shopping over the past 10 weeks, and this trend likely to continue for some time, last week the Competition and Markets Authority (“CMA”) launched an investigation into fake and misleading online reviews.

The CMA’s focus on this area is not new. In 2015 the CMA launched investigations into online reviews in the UK before bringing its work to a wider global audience through its Presidency of the International Consumer Protection and Enforcement Network in 2015/2016. The initial scope of the CMA’s work, which continued into 2017, focused on fake reviews, failure to publish negative reviews, and undisclosed paid-for endorsements. Building on its more recent work over the past year on the sale of fake and misleading reviews through social media platforms, the new investigation has a different focus, principally aimed at:

  • suspicious reviews relating, for example, to an unlikely range of services;

  • presentation of reviews, and whether this is being manipulated; and

  • reviews involving payments or incentives.

The CMA’s investigation is targeted at undisclosed “major” websites, looking to establish whether these websites are taking sufficient measures to protect consumers. In particular, the CMA will be investigating whether any websites are breaching consumer law. This will include the Consumer Protection from Unfair Trading Regulations 2008 (“CPUTR”), which (amongst other things) prohibits traders from falsely representing (or failing to provide) material information to consumers, which then causes (or is likely to cause) a consumer to proceed with a purchasing decision that they would not have otherwise taken.

Likely next steps

The first phase of the CMA’s investigation will predominantly focus on information gathering, with information provided voluntarily or through the exercise of the CMA’s investigation powers to obtain information and documents. This will usually involve the CMA writing directly to the websites concerned with specific information requests. If the CMA finds what it considers to be wrongdoing, it will then likely take enforcement action either requiring undertakings in respect of future practices, or obtaining an enforcement order mandating change through the courts.

There is also the risk of unlimited fines (if a court finds that the CPUTR have been breached) and the imposition of a redress scheme to address any harm suffered by consumers (either through voluntary undertakings or a court order).

Comment

This is the latest CMA consumer investigation launched by the CMA responding to the increasing public outcry over “fake news”. Given the extent of the CMA’s work in this area to-date, we would expect the CMA to be looking for changes in practice and to be taking a robust stance against the websites that it has in its sights.

Online reviews are a key area of focus not just in the UK, but also across Europe with further changes on the horizon through the so-called Omnibus Directive, which will be in force by May 2022 (EU 2019/2161). The impact of these changes remains to be seen in the UK, with continued uncertainty as to the UK’s relationship with the EU on consumer law matters following the expiry of the implementation period. What is clear is that regardless of the arrangements in place, businesses operating in the UK will continue to be under careful scrutiny in their engagement with consumers, given the CMA’s current consumer powers in the UK will remain unaffected by Brexit.

CMS has unparalleled expertise of successfully advising clients in CMA consumer investigations and enforcement actions. For assistance with the CMA’s new investigation or any other consumer law issue, please do not hesitate to contact one of our specialists.