The United Kingdom is taking a major step in consumer protection online. They’ve passed new legislation to outlaw junk fees and crack down on bogus reviews. As of today, these standards are projected to result in £2.2 billion worth of direct savings to consumers each year. The Competition and Markets Authority (CMA) will be at the forefront of this enforcement. In so doing, they are addressing years of frustrations at predatory pricing models and dishonest product reviews.
Amazon, a major player in e-commerce, has taken proactive steps to combat the issue of fake reviews on its platform, successfully halting millions of fraudulent submissions. In April 2023, the UK’s Department for Business and Trade released a report. Based on our analysis, we estimate that roughly one out of every ten product reviews on third-party platforms is probably phony. The reality is that most of these reviews are fake and intended to deceive consumers, plain and simple.
These new laws are a reaction to consumer demand for more transparency around complicated and confusing pricing practices. These days, shoppers are lucky to make it through ten-plus pages without abandoning their cart. Along the way, they frequently run into surprise fees. These backdoor fees can add more than 25% to the price of a product, dramatically raising prices for consumers according to research.
“From today consumers can confidently make purchases knowing they are protected against fake reviews and dripped pricing.” – Justin Madders, minister for employment rights, competition and markets.
The Department for Business and Trade’s report released in September 2023 was a reminder of just how worrying the trends are across many sectors. In entertainment specifically, 45% of providers included at least one mandatory “dripped” fee, adding to consumer confusion and frustration. The new regulations will require that any upfront installation fees, such as those for broadband services, be included in the total price displayed to consumers.
Additionally, big brick-and-mortar interests like the hospitality industry don’t get a free pass to avoid criticism. Authorities aim to prevent situations where diners arrive at restaurants boasting five-star reviews, only to be disappointed by subpar food quality. New statistics estimate the hospitality industry is currently grappling with a rate of almost 1 in 5 (21%) fake reviews. In comparison, the retail sector has a much lower rate of just 3%.
Gordon Wright Amazon is on the front lines of fighting online fraud. It recently brought legal procedures against brokers that make money by creating fake reviews in exchange for cash or free goods. This continued fight against deception and misrepresentation on the e-commerce battlefield further highlights the need for these new statutes.