Urgently Misleading: the CMA secures undertakings from Wowcher and £4 million of customer refunds

When does a selling practice create a false sense of urgency that is considered misleading by the Competition and Markets Authority (CMA)?

The question

When does a selling practice create a false sense of urgency that is considered misleading by the Competition and Markets Authority (CMA)?

The key takeaway

Special care must be taken with marketing claims around stock levels and a product's popularity. The use of countdown timers on websites are particularly risky, as they can easily create a false sense of urgency that consumers have to act quickly to avoid missing an offer. Get this wrong and you will be in breach not just of the CAP Code, but also the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which are soon to be revoked and restated, with some amendments, under the Digital Markets, Competition and Consumers Act 2024 (DMCCA).

The background

Late last year, the CMA launched an investigation into Wowcher's selling practices. The investigation falls within the CMA’s well-publicised agenda for tackling harmful online selling practices and dark patterns, including urgency and price reductions claims - aka its "Online Choice Architecture" awareness campaign.

The focus of this investigation was on the use of timers and marketing practices that create a sense of urgency in customers. Countdown timers and claims that particular products were "Running Out!" and "In High Demand!" were at the centre of the CMA’s investigation. The CMA stated it was concerned by the high number of products in a promotion which remained available for sale at the same or similar price even after the countdown timer had reached zero. 

Separately, Wowcher had been signing consumers up to a paid-for "VIP membership" via a pre-ticked box that the CMA was concerned did not necessarily result in consumers realising that they were signing up to it.  In November 2023, the CMA wrote to Wowcher, setting out its concerns and urging the firm to change its practices to avoid court action. As a result, Wowcher signed formal undertakings in July 2024 and agreed to provide refund credits to more than 870,000 customers who signed up to its paid-for VIP membership without fully being aware of exactly what they were agreeing to at the time.

The development

There are four key takeaways from the outcome of this investigation:

• countdown timers: any countdown timer should specify to which deal it applies and how the deal will change once the timer concludes. Timers shall not be used if the deal will continue to be offered on the same or similar terms shortly after the conclusion of the countdown; 
• marketing claims: claims should not give consumers the false impression that they must act quickly in order to benefit from a particular deal or simply in order to be able to purchase the product at all. Claims made regarding stock scarcity and popularity should reflect the correct and up to date sales figures (including taking into account refunds processed) and stock levels;
• comparison claims: when making a claim that draws comparisons between products or merchants, such as "Best Seller" or "Top Rated", the nature of the comparison must be disclosed. Moreover, only the top 10% of items should be listed as "tops" in their category;
• paid-for membership: when paid-for memberships are offered after the initial transaction, it must be clear to consumers that the initial transaction has been completed and that the membership is optional. As ever, pre-ticked boxes are likely to be problematic.

Why is this important?

The consumer elements of the DMCCA look like they will come into force in April 2025. This will give the CMA new direct powers to levy fines against businesses who breach consumer regulation. As online choice architecture remains one of the hot topics for the CMA, it's a fair bet that this is likely to be one of its first targets for its new fining powers.

Any practical tips?

While businesses need to be careful about any representation made on their websites, stock availability and other messaging around urgency of buying remains a highly sensitive area and one which is clearly a target for the CMA.  The Wowcher investigation is a timely reminder that any urgency claims (e.g. countdown clocks) need to be handled with extreme care, as do any online practices which impact the transactional mind of the consumer – including paid-for memberships which may not be presented as transparently as they should be.