Under the new regime, direct enforcement powers will be handed to the Competition and Markets Authority (CMA), which will have the power to investigate and sanction businesses that breach consumer protection laws.

This represents a significant shift from the current position, where aggrieved consumers and regulators must seek recourse for consumer protection law violations through a slow and costly courts process.

The CMA’s consumer protection powers will be brought up to the fairly hefty level of those it already uses to investigate competition law infringements – a sobering thought for businesses engaged in selling goods, services and digital content to consumers in the UK.

Convoluted system of enforcement

Consider the following scenario. It is the last evening of your holiday in the Western Isles and you realise you have forgotten to get your mother a gift. You remember seeing an advert for a local artisan perfume that captures the essence of the Western Isles – “McReekie’s Mist” – that is locally and sustainably-produced and is the perfect solution.

You do not have time to find a shop locally that sells it, so order a bottle online from a company – “Aff the Shelf” – that specialises in Scottish artisan designer gifts, at a very reasonable price.

Six weeks later, despite numerous assurances by email and webchat with unidentified personnel at Aff the Shelf, you still have not received the gift. On further research, you discover that Aff the Shelf, a company widely complained about, is registered in a small Pacific Island state, and that McReekie’s Mist is manufactured in South America by a corporation with a dubious human rights record using potentially carcinogenic compounds that most definitely are not sustainably or locally produced.

An unlikely scenario perhaps, but for this one you could substitute many common consumer experiences where their rights are breached. Confronted by a situation like this, you might be motivated to complain about Aff the Shelf’s conduct to the Citizens Advice consumer service, who will pass your report to Trading Standards, who may or may not decide to investigate.

If the complaint is upheld, Trading Standards will need to apply to the courts to secure an order against the company to stop the infringing conduct. This system means that enforcers only pursue the most serious cases, and bad behaviour may go unpunished.

You could also bring a claim yourself, but this would be expensive, time-consuming and stressful.

New direct enforcement powers under the DMCCA

Under the DMCCA, Aff the Shelf could be investigated by the CMA, which could culminate in significant civil penalties, including fines of up to 10 per cent of turnover or £300,000 (whichever is higher) and the business being prevented from trading online in the UK, without any need for the CMA to go to court.

The CMA could also make an order directing Aff the Shelf to remove content from, or modify content on or access to, a website or other online interface. If Aff the Shelf did not oblige, the CMA could direct its request to the party hosting the website.

A CMA consumer investigation will follow the same process currently used to investigate competition law violations, opening the door to a range of new procedural risks for parties subject to a consumer investigation.

For example, where a business has agreed steps with the CMA to rectify its consumer rights-breaching behaviour, the CMA can impose a penalty of the higher of up to five per cent of the business’ global annual turnover or £150,000 for breaching this undertaking.

The CMA can also issue fines of the higher of up to one per cent of a business’s global annual turnover or £30,000 for providing false or misleading information to the CMA during an investigation, or failing to respond to an information notice.

The CMA can impose additional daily penalties for continued non-compliance in either of the above cases, as well as fining individuals up to £30,000.

Will the reforms make a difference?

The CMA will prioritise cases with the highest impact, but the more significant risks should make companies engaged in commercial practices connected with the UK think carefully about their approach to consumer protection.

The most significant consumer protection rules are covered by the CMA’s new direct powers, and the DMCCA also updates the law on prohibited unfair commercial practices, including a new banned practice relating to fake consumer reviews and prohibition of “drip pricing” unavoidable fees.

There are also new protections for consumers in relation to subscription and saving scheme contracts.

It is possible that CMA enforcement activity will encourage litigation by consumers on consumer law issues, taking the UK closer to a US-style class action model in this area, although the government has rejected calls to include breaches of consumer legislation within the scope of opt-out collective proceedings (meaning anyone affected is automatically included in any legal claim for redress) which applies in respect of competition law infringements.

Melanie Martin and Laura Whyatt are both partners and Tom Hanson is a senior associate at Dentons