New laws to be introduced to ban unavoidable hidden fees to force businesses to be upfront with customers.
New legislation as part of the Digital Markets, Competition and Consumer Bill will make it illegal to reveal fixed mandatory, additional fees to customers later during the hotel booking process, however, additional choices presented to customers during a booking, such as adding breakfast to a hotel stay, have been excluded from an outright ban.
Fake reviews, shop labelling and hidden fees that make shopping more difficult and expensive for consumers will also be targeted head on to clamp down on unfair trading practices.
Following a consultation into consumer transparency and as part of the Digital Markets, Competition and Consumer Bill (DMCC), the Department for Business and Trade will officially add fake reviews to a list of banned business practices, outlaw dripped fees that are unavoidable for consumers and ensure that businesses provide clearer labelling for prices on supermarket shelves.
These measures will be legislated for as part of the DMCC Bill as it progresses through Parliament.
Sneaky hidden fees, or “dripped prices” that are unavoidable will be banned. Drip pricing occurs when consumers are shown an initial price for a good or service while additional fees are revealed (or “dripped”) later in the checkout process.
Research suggests it is widespread and occurs in more than half of providers in the entertainment (54 percent) and hospitality (56 percent) industry, and almost three quarters across transport and communication (72 percent) sectors.
Every year, unavoidable fees cost consumers £2.2 billion, which is why these laws are being designed to ensure online shoppers have a clear idea of what they are spending upfront, to inform them as much as possible and as soon as possible before making purchases.
Kate Nicholls, Chief Executive of UKHospitality, said: “The vast majority of additional fees involved in hospitality bookings are optional and designed to offer customers ways to enhance their experience, such as adding breakfast to a hotel stay.
“We’re pleased the Government has taken on board our feedback and excluded optional extras from an outright ban. This means customers will still be able to upgrade and customise their hospitality experience as they see fit.”
The legislation will also add fake reviews to a list of banned business practices and ensuring platforms hosting reviews check their veracity. This was another key ask from UKHospitality.
“Banning fake reviews is a positive step, given the significant reputation damage and financial impact they can have on businesses. It’s essential that deliberate fake reviews of businesses on third-party platforms are covered by this legislation and we look forward to working with the Government as these plans develop,” Kate Nicholls added.
Minister for Enterprise, Markets and Small Business Kevin Hollinrake said:
From supermarket shelves to digital baskets – modern day shopping provides customers with more choice than ever before. But with that, comes the increased risk of confusion, scams and traps that can easily cost the public more than they had planned.
Today’s announcement demonstrates the clear steps we’re taking as a government to ensure customers can compare purchases with ease, aren’t duped by fake reviews, and have the sting of hidden fees taken away.
Reviews were found to be used by 90% of consumers and contributed to the £224 billion spent in online retail markets in 2022, which is why this government is committed to ensuring that the information available online is accurate and fair.
Working with the Competition and Market’s Authority, new guidance will be created in the coming months to tackle fake reviews which will be added to the list of banned practices, with website hosts held accountable for reviews on their pages.
The Price Marking Order (PMO), a piece of Retained EU Law, will also be reformed now we have taken back control of our laws.
The PMO requires traders to display the final selling price and, where appropriate the final unit price (e.g., price per litre/kilogram) of products in a clear way. The EU’s PMO laws were last updated 20 years ago and no longer reflect modern shopping habits.
We will be working with stakeholders and businesses to create new, simpler and clearer guidance for pricing labels that works best for British businesses and improves the shopping experiences for UK customers. This is expected to be issued in the spring.
Our proposed changes will ensure unit pricing is consistently applied, including to promotions and special offers, helping consumers compare products easily and identify what items represent the best value to them.
Small shops that are currently exempt from the PMO will continue to be exempt from those specific measures.