Digital Markets, Competition and Consumers Bill (Twelfth sitting)

Debate between Richard Thomson and Seema Malhotra

Committee stage
Tuesday 4th July 2023 Public Bill Committees

[Seema Malhotra]

I am pleased to speak to amendment 116, tabled by my hon. Friend the Member for Pontypridd and me. I will also touch on amendment 125, tabled by my hon. Friend the Member for Bermondsey and Old Southwark. They are similar provisions, and he will want to make his own arguments for amendment 125.

Amendment 116 adds the practice of commissioning fake reviews, offering to provide the service of writing fake reviews, and displaying consumer reviews without taking reasonable steps to verify their accuracy to the list of unfair commercial practices. Amendment 125 would similarly add fake reviews to the list of banned practices. We support both the amendments, but I will speak to amendment 116 in more detail, as it provides a more comprehensive legislative basis for banning fake reviews, and was recommended by the consumer group Which?.

When the Bill was published, the Government announced with much fanfare that they would introduce provisions banning the unfair commercial practice of fake reviews. However, nowhere in the Bill is there any measure that bans fake reviews. The supposed banning of fake reviews can be found in clause 234, which gives the Secretary of State the power to add to the list of banned practices. Unless the Minister corrects me, all we have is a promise from the Government that at some point in the future—beyond 2025—fake reviews might be banned. As Which? said during the Committee’s evidence sessions,

“We do not think that we should wait. Clearly, fake reviews are harmful, so the buying, selling and hosting of fake reviews should be included in schedule 18.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 13, Q16.]

It was not just consumer groups that expressed that sentiment; the British Retail Consortium also stated:

“We are concerned about fake reviews. We support the banning of them. We wish that what the Government propose for them was on the face of the Bill.”––[Official Report, Digital Markets, Competition and Consumers Public Bill Committee, 13 June 2023; c. 49, Q78.]

I would be grateful for the Minister’s explanation of why the Government have left a ban out of primary legislation. One view is that the Government intended to include a ban, but ran out of time. Well, we have time to catch up during the passage of the Bill. Retail and consumer groups consider this measure very much noticeable by its absence, and it is important and significant that we address it during the passage of the Bill.

I have no doubt that the Minister will stress the need for further work and consultation on the issue. If so, perhaps he could also reflect on the considerable evidence of consumer detriment caused by fake reviews. Which? research from 2020 found that consumers are far more than twice as likely to buy poor-quality products that have been boosted by fake reviews. That affects the Minister’s constituents, mine, and those of every Member of this Committee.

As the CMA has noted, the average UK household spends £900 a year as a result of being influenced by online reviews. That demonstrates how significant the financial damage of fake reviews can be. In the Department for Business and Trade’s research from April this year, 11% to 15% of reviews in the category that it assessed were fake. That is the Government’s own research. The evidence is clear: action on fake reviews is needed now to protect consumers from their negative consequences. I would go so far as to say that the Opposition are doing the Government a favour by introducing these amendments. We have done the Government’s work for them.

I urge the Minister to support the amendments. Perhaps he will want to bring forward his own, as the Government are known to take good ideas when they see them, many of which they take from the Opposition. We understand that there has been significant dysfunction in Government, which may have got in the way of their doing the work that the country needs them to do. I therefore urge the Minister to support the amendments. He may also want to bring forward his own amendments at a future stage of the Bill or in the other place. I jest, with good reason, but we are not precious; we just want the right thing to be done. I hope that in his response, the Minister will confirm what action the Government will take during the passage of the Bill.

[Richard Thomson]

I very much support amendment 116, to the extent that I withdrew my attempt at an amendment that would have countered fake reviews. It is clear that fake reviews are a matter of real concern, not just for reputable companies, but for consumers, who like to rely on customer feedback before making some of their most important financial choices. Schedule 18 defines and sets out unfair practices, and it is only right that fake reviews be added to them. We again come back to the fundamental principle that if a market is to work effectively and efficiently, people need access to timely and accurate information. That goal of having accurate information in the marketplace is subverted considerably when fake information and misinformation are allowed to abound.

--- Later in debate ---

[Seema Malhotra]

Under clause 224, as the Minister says, the consumer will be able to enforce their right to redress relating to unfair commercial practices, subject to conditions, including that they have entered into a relevant contract, that the trader has engaged in a prohibited practice, that the prohibited practice was a significant factor in the consumer’s decision to make payment, and that the product concerned is not of an excluded type. Those are important provisions, including in the context of our debate about greenwashing. That is why it is important that we take forward the issues we have debated. None the less, we welcome the clause and these important provisions.

Question put and agreed to.

Clause 224 accordingly ordered to stand part of the Bill.

Clause 225

Rights of redress: further provision

[Richard Thomson]

I beg to move amendment 67, in clause 225, page 152, line 30, at end insert—

“(4A) The Secretary of State must by regulations make any further provision necessary to ensure that the rights of redress available under this Chapter are equivalent to, and not lesser than, those available under the Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277).”

This amendment seeks to ensure that the “Consumer Rights to Redress” that will be set out through secondary legislation cannot offer a reduced level of the protection than the Consumer Protection from Unfair Trading Regulations 2008.

[Richard Thomson]

As the explanatory statement sets out, amendment 67 seeks to ensure that the consumer rights to redress introduced through secondary legislation by Ministers cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. That statutory instrument was effectively the successor to the Trade Descriptions Act 1968 and was designed to implement the unfair commercial practices directive as part of a common set of European minimum standards for consumer protection. Consumers, not just in Europe but throughout the UK, have benefited immensely from those protections. It is important as a point of principle that as legislation is repealed or evolves, there should be no inadvertent reduction in baseline consumer protections. There should be a reduction in consumer protections only where the Government deliberately choose to do so and we have an open debate.

The amendment is very much about ensuring that nothing slips down the drain inadvertently in terms of consumer protection. If the Government are not minded to accept it, what existing protections will they unwittingly let fall by the wayside? The amendment would capture the baseline level of protection through future secondary legislation. I look forward to the Minister’s remarks.

[Seema Malhotra]

I am pleased to speak to amendment 114, which stands in my name and that of my hon. Friend the Member for Pontypridd. I will also make reference to amendment 67, tabled by the hon. Member for Gordon.

Amendment 114 would require that the Secretary of State prepare and lay before Parliament a report on the merits of introducing a consumer right to individual and collective redress through secondary legislation, as is the case in EU member states. Amendment 67 would ensure that the consumer rights to redress set out in secondary legislation cannot offer less protection than the Consumer Protection from Unfair Trading Regulations 2008. We support the principle of amendment 67, which would have a similar effect to amendment 114 by ensuring a more robust consumer right to redress.

More specifically on amendment 114, I refer the Minister to the written evidence of Which?, which notes that

“the Bill states that ‘Consumer Rights to Redress’ may be provided for in future secondary legislation, so it will give the Secretary of State powers to amend these rights. These rights are fundamentally important, as they include payment of damages when a trader misleads a consumer. We want assurances that they will not be downgraded as a result of this process, and a commitment from the Government to strengthen redress procedures when these new regulations are drafted.”

Amendment 114 would require a commitment from the Government to report on doing that, aiding the process of strengthening redress procedures when new regulations are drafted. I urge the Government to support amendments 114 and 67, and to ensure that consumer rights to redress are as strong as they can be, particularly in an increasingly digital economy.

[Kevin Hollinrake]

Amendments 67 and 114 deal with consumers’ private rights to redress. I agree with the hon. Members for Feltham and Heston and for Gordon that it is vital that consumers have robust private rights of redress.

Amendment 67 would limit changes by regulation to the consumer rights of redress to those that are equivalent to the remedies in the CPRs—the Consumer Protection from Unfair Trading Regulations 2008. The Bill includes powers to amend rights of redress. That could include how such rights are exercised; the powers could also be used to make those rights clearer and simpler. Those would be positive changes for consumers that might not meet the test of equivalence to the current regulations that the amendment would impose. We would like to retain the ability to exceed the existing private redress provisions, if appropriate, which may encourage more consumers to make use of these rights. The first regulations made using the power will be to create the new regime to replace the current private redress provisions in the CPRs. Accordingly, those regulations will be subject to parliamentary approval via the affirmative procedure, thereby providing for appropriate parliamentary oversight of use of the power.

I turn to amendment 114. The courts already have the power to make an enforcement order against an infringer, or to accept undertakings from them to provide redress to affected consumers, through the measures in part 3. Enforcers can also accept undertakings from infringers to provide redress to affected consumers. For example, in 2021 the CMA secured an undertaking from Teletext Holidays to pay over £7 million in outstanding refunds from package travel trips cancelled due to covid-19.

The Bill will make the power to require enhanced consumer measures directly available to the CMA. Consumers also already have individual private rights of redress. In the “Reforming competition and consumer policy” consultation, we consulted on whether to introduce a right for consumers to bring collective redress. Responses were mixed, with concerns raised about unintended consequences such as the creation of a claims culture and inadvertently disincentivising the bringing of proceedings by consumer groups.

The hon. Member for Feltham and Heston referred to the EU situation. The outcome, however, is similar to the desired situation under the EU’s directive on collective redress, which requires member states to designate entities, such as consumer organisations, that can bring actions for collective redress on consumers’ behalf. The EU does not mandate that member states introduce direct rights for individual consumers to bring an action for collective redress.

We will keep the evidence under review, but our priority is to embed the CMA direct enforcement regime and understand the impact that it makes. On that basis, I hope that hon. Members will not press their amendments.

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations 2021

Debate between Richard Thomson and Seema Malhotra

Wednesday 27th October 2021 General Committees

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

[Richard Thomson (Gordon) (SNP)]