CMA consumer enforcement post-DMCC

In line with its open letter of 29 March 2023, the CMA further underlined its focus on misleading marketing claims.

The CMA identified issues with the following types of claims:

1. Scarcity (or ‘urgency’) claims;

2. Popularity claims;

3. Best-seller claims;

4. Top-rated merchant claims; and

5. New release claims.

For claims referring to sales figures, Wowcher is required to disclose the relevant time period to which that statement relates, i.e. “Over [x] sold in July 2024” or “[x] bought in the last 24 hours”. These claims must also accurately reflect the number of products that have been refunded following a consumer cancelling or rejecting their order/purchase.

Scarcity and Popularity Claims

An ‘urgency’ or ‘scarcity’ claim is one which indicates or otherwise implies that an item has low remaining stock, limited availability, is at risk or selling out and/or there is a need for a consumer to act quickly to purchase before the item runs out. Similarly, ‘popularity’ claims suggest an item is popular, that other consumers are buying it, or that the total sales or rate of sales is high.

Some examples of these claims used by Wowcher include:

• “I’m popular!”
• “Over [x] sold!”
• “[x] others have already bought this deal today!”
• “Selling fast!”

In relation to scarcity claims, Wowcher is required to explain (i) what their original stock levels were; (ii) what their remaining stock levels are; and (iii) the rate of sales and how recently these have taken place. Scarcity claims are not permitted where Wowcher knows or has reasonable grounds to expect that an item will be restocked within 7 days of the last unit being sold, and/or where an item is not expected to run out of stock within the next 7 days. In calculating whether stock is likely to run out, the total remaining stock should be divided by the average daily sales from the previous 7 days.

For popularity claims, Wowcher is required to demonstrate (i) their sales figures; (ii) the rate of sales and how recently these took place; and (iii) the relative popularity of the deal and/or product as compared to other similar deals and/or products over a recent time period. No popularity claims are permitted where a product or deal has not been sold in the last 7 days.

Best-seller and Top-rated Merchant Claims

Wowcher is permitted to make claims which compare products (e.g. “best seller”) or merchants (e.g. “top-rated merchant"), subject to the following requirements:

New release claims

Marketing claims indicating the release of a new item or product, such as ‘New deal today’, must only be shown on the first day the item is available for purchase from Wowcher.

The CMA required specific undertakings from Wowcher in relation to the correct use and implementation of its timers appearing on its online sale platforms.

In particular, the CMA took issue with:

• “Deals refresh” timer;
• “Countdown” timers, including those specific to particular deals, products and categories of deals or products; and
• “Checkout” timers.

The CMA’s principal concern was that the use of these timers could mislead customers or give them a false impression that they must act fast to avoid missing out on deals.

Each of these timers are considered in turn below:

Deals refresh timers

The deals refresh timer relates to a countdown clock displayed on Wowcher’s website and app. This was a permanent feature, which indicated that all of the offers presented to consumer’s might no longer be available once the timer refreshed.

Given the potential consumer harm, the CMA required Wowcher to remove the deals refresh timer permanently.

Countdown timers

As well as a general obligation to ensure that these timers are not misleading, Wowcher is required to ensure its countdown timers clearly and prominently display (including by way of font, text size and language used) which deal, product or category of deal or product the timer relates to.

These timers must also expressly state what characteristic will change after it runs out. Crucially, Wowcher must not use timers where products, deals and/or categories of products or deals will continue to be offered on substantially the same terms immediately or shortly after the timer runs out, including where these are likely to be restocked quickly.

For deal and product specific timers, Wowcher has agreed to include these only on pages which are directly relevant to the deal or product to which the timer relates.

Checkout timers

Wowcher also made use of countdown clocks in its checkout pages which included text equivalent to 'this price may increase if you buy later’.
In utilising these types of timers, Wowcher has agreed to ensure that:

• product(s) subject to checkout timers are reserved at the price advertised when added to a consumer’s basket until the checkout timer expires;
• the timers are of a duration that is sufficient to ensure consumers are not given a false impression that they must act quickly to avoid missing out, having regard to the nature of the product(s) in question; and
• all timers prominently specify that the product(s) is reserved for the duration of the checkout timer.

The CMA has required Wowcher to adopt various internal and external policies to ensure its does not in any way restrict consumers from exercising their statutory rights.

For its internal policies, Wowcher must review and update its customer service documents and associated staff training programs to ensure compliance with consumer protection law. These must be regularly reviewed (at least annually) and amended where necessary to maintain compliance.

In terms of its external dealings with consumers and merchants, Wowcher must ensure that:

1. consumers are expressly informed, prior to completing a purchase, that a separate contract arises between the consumer and the merchant once a voucher is redeemed;

2. contractual obligations are placed on merchants to comply with applicable consumer protection laws, including a customer’s right to cancel and refund rights;

3. consumers are assisted in exercising their statutory rights from merchants by, for example, Wowcher liaising with merchants to resolve complaints or issuing refunds at a merchant’s reasonable request;

4. consumer’s cancellation rights for unredeemed vouchers are honoured within 14 days of their purchase. Reimbursement must be made without undue delay, and in any event, by no later than 14 days after the day Wowcher is informed of the cancellation; and

5. contractual clauses permit Wowcher to issue, in its sole discretion, refunds to consumers where a merchant fails either to respond to Wowcher’s request for information and/or deliver the product or service to the consumer.

Customers must be informed that they can choose between a cash and credit refund. Customers must also be told the period for which the credit refund is valid. The minimum validity periods of credit refunds are set out as follows:

The CMA raised concerns over Wowcher’s use of pre-ticked boxes to enrol consumers in its VIP membership scheme.

Wowcher has agreed to remove (and will not reinstate) the pre-ticked VIP membership box on its online sale platforms. Wowcher will now require express consumer consent to join its VIP membership, and they have undertaken to provide explicit details about the cost, benefits, and duration (including auto-renewal details). Where customers purchase a membership after making an initial product purchase, Wowcher will clearly communicate that the VIP membership is optional.

Wowcher has also committed to provide credit refunds to customers who signed up to a VIP membership package by means of the pre-ticked box and have not already accepted a full refund. The credit refunds will be valid for no less than 12 months, and customers will have the option to exchange the credit refund for cash. Where customers choose to convert their credit into cash, Wowcher has undertaken to make payment within 14 days from the date that they are provided with the customer’s payment details.

In practice, over 870,000 customers are eligible for a refund leading to an estimated payout exceeding £4 million.