The BackPage Weekly | The changing landscape of UK consumer law and what it means for the entire entertainment industry

By Ollie Raggett and Alex Walton

It’s well established that the Advertising Standard Authority (“ASA”) – the UK’s ad regulator – is very happy to publish rulings which are adverse to sports brands, celebrities and other influencers who fail to comply with relevant ad rules contained in the CAP Code.

We have previously discussed in The BackPage Weekly, the ASA’s recent rulings in respect of gambling and the new strong appeal test.  In addition to these rulings, the ASA also maintains a list of influencers who fail to clearly disclose when their social media content is advertising, and various football clubs have been criticised by the ASA for promoting NFTs without the appropriate disclaimers and featuring players below the age of 25 in gambling ads. Although the ASA may make referrals to, and collaborate with, other regulators that have the power to take other action, the typical penalty for non-compliant ads have been limited to such adverse rulings.

However, the consumer law landscape, including the way in which it applies to ad rules, is shifting with the recent publication of the Digital Markets, Competition and Consumers Bill (“DMCCB”). The DMCCB targets not just large technology companies but also any individual or organisation that deals with consumers – whether related to sports or not. 

📢 What does the DMCCB change?

The DMCCB proposes numerous material changes to the UK’s consumer law regime, including:

• Empowering the UK’s principal competition and consumer regulator (the Competition and Markets Authority, or the “CMA”) to directly enforce against breaches of consumer law with fines of up to 10% of global revenue.

• Introducing criminal offences for unfair commercial practices.

• Additional regulation for subscription-based offerings, through clearer up-front information, reminders before auto-renewal and easier exit rights.

• Prohibiting and protecting against fake reviews.

The combination of these factors, especially the enforcement measures, means that the risk profile attached to consumer law is likely to materially increase.

📢 Why should talent and organisations care about the DMCCB?

The advertising rules referred to above flow from legislation designed to protect consumers from unfair trading practices, including misleading actions or omissions. “Advertorials” (i.e, editorial content which contains paid-for advertising) which don’t clearly disclose that such content contains advertising (and thus becomes “astroturfing”) breach the rules.

The DMCCB, as currently drafted, would empower the CMA to issue fines and seek criminal sanctions for those that fail to meet ad disclosure requirements. It remains to be seen whether the CMA would jump straight to such severe penalties, however the door is now open to this for repeated and egregious offenders.

The consequences can also be applied to other aspects of consumer law. For example, sports talent, brands and rights holders that sell to consumers are to be subject to a range of requirements, including around product quality, customer remedies, cancellation rights, terms and conditions and UX flows. Likewise, sports brands and talent that run fan competitions will need to consider more carefully the rules around promotions and associated terms and conditions. Lots of businesses have historically adopted a risk-based approach to compliance with parts of these but failure to comply with the DMCCB could soon result in fines and/or criminal sanctions.

Given the heightened risks, it’s likely that brands will impose stronger ad compliance controls on partnered talent and the risk profile under commercial negotiations may evolve. For example, in an agreement between brands and talent a “direct loss” that the parties may be liable for may soon cover regulatory fines.

📢 What’s next?

The DMCCB is currently progressing through the legislative process which means that precise implementation timelines are unclear. However, it’s expected that the final version of the legislation will be available by Q4 2023. Consequently, talent, brands, agencies and rights holders will soon need to begin a re-review of their compliance with the relevant consumer law obligations sooner rather than later.