Lee Hills, Partner at Mayo Wynne Baxter looks at new guidance from the CMA regarding sharp online selling techniques

Guidance recently issued by the Competition & Markets Authority (CMA) aims to provide businesses with a framework for engaging in responsible selling practices and avoiding unethical sales techniques that can harm consumers.

However, the CMA has indicated in an open letter to industry that it is ready to take enforcement action against the use of misleading online sales tactics, and has urged businesses to urgently review their practices and avoid the risk of prosecution.

Following a survey recently commissioned by the CMA, reference is made to approximately one quarter of participating consumers using online shopping as a means by which to attempt to secure the best available prices for goods and services, with the behaviour of an increasing number of shoppers being driven by the high cost of living.

With the spotlight being shone on internet retailers by consumer protection groups and the recent introduction of online reporting tools enabling consumers to bring their concerns over misleading sales techniques to the immediate attention of the authorities, the clear message from the CMA is that retailers failing to take heed do so at their own peril.

The CMA’s guidance is comprehensive and covers various areas where businesses may employ unfair selling techniques.

The guidance states that businesses need to be proactive in ensuring a fair and transparent selling process to safeguard consumer interests. This includes, amongst other things, proper disclosure of product information, pricing practices and contract terms.

Once crucial area of focus is the use of psychological techniques to manipulate consumers into making purchases. The guidance warns against the use of fear, urgency, or scarcity tactics to pressure consumers into buying products or services. It also recognises the impact of social media and online marketing on consumer behaviour, urging businesses to exercise restraint and ethics in these areas.

Another key element of the guidance is the need for businesses to improve transparency and accountability. The guidance calls for clear and concise communications with consumers about product features, benefits, pricing policies and refund or return policy. It emphasises the need for businesses to provide consumers with access to clear and accurate information about their rights, protections, and legal remedies, when they have been subject to unfair selling practices.

The guidance is a timely response to growing concerns around unethical selling practices, particularly in the wake of the Covid-19 pandemic and the subsequent cost of living crisis. The pandemic has brought about significant changes in consumer behaviour with more people shopping online, increasing their exposure to potentially fraudulent activities and misleading sales techniques.

This new guidance seeks to provide businesses with a framework for building trust, increasing consumer confidence, and promoting responsible selling practices.

This warning shot by the CMA comes in advance of the government’s planned introduction of the Digital Markets Competition and Consumer Bill; legislation intended to reform the UK competition and consumer protection laws which are likely to include increased powers for the CMA and its ability to impose significant financial penalties on businesses independent of the judicial system.

Any business engaged in online selling, particularly where price reduction and time limited offers are promoted should now take the opportunity to review its selling practices and techniques to ensure compliance with the CMA’s recent guidance and legislation which is likely to come into force over the next two years.