The UK has cracked down on hidden charges and false product reviews worth £2.2 billion, introducing new consumer protection laws to ensure fairer online transactions.
A recent government report revealed that 21% of holiday and hospitality providers included at least one mandatory ‘dripped’ fee, estimated to cost consumers £2.2 billion annually. Under new consumer protection laws, these sneaky fees are set to be banned from today.
Hidden charges refer to unexpected fees or costs that are not disclosed upfront.
These can include bank fees, interest rates, late payment penalties, and more.
According to a study, 75% of consumers are unaware of hidden charges on their credit cards.
In the US alone, hidden charges amount to $15 billion annually.
To avoid these charges, it's essential to read fine print, understand terms and conditions, and ask questions before making a purchase or signing a contract.
Mandatory Fees: The Hidden Costs of Online Transactions
Businesses, including travel websites, ticket agencies, and food delivery apps, will now be required to include any mandatory fees in the headline price. Research has found that these fees can be as high as 25% of the product price. To avoid confusing consumers, businesses must clearly disclose all applicable fees upfront.
Mandatory fees are charges imposed by institutions, such as universities, governments, or service providers, that are required to be paid by individuals or businesses.
These fees can cover costs like tuition, registration, licensing, or membership dues.
According to a report, the average student pays around $1,200 in mandatory fees per semester.
In some countries, mandatory fees fund public services like healthcare and education.
Understanding these fees is crucial for individuals and businesses to manage their finances effectively.
Fake Reviews: A Growing Problem
A report by the Department for Business and Trade in September 2023 found that 45% of providers in the entertainment sector included at least one mandatory ‘dripped’ fee. The figures were 21% for the holiday and hospitality sector, and 3% for retail, excluding delivery charges. Furthermore, consumers often have to navigate multiple website pages before completing a purchase, with some facing additional optional purchases and mandatory fees.
Fake reviews can significantly influence a consumer's purchasing decision, but they also erode trust in online marketplaces and businesses.
According to a study, 85% of consumers trust online reviews as much as personal recommendations.
However, fake reviews can be identified through red flags such as generic or repetitive language, lack of specific details, and an unusually high rating.
Businesses can combat fake reviews by implementing robust review moderation policies and encouraging genuine customer feedback.
The New Laws: A Shift Towards Transparency
Under the new requirements, a one-time installation fee for broadband must be included in the total price. Any administration or booking fees on ticket websites must also be clearly flagged upfront. While these changes aim to protect consumers from fake reviews and dripped pricing, they do not cover unavoidable fees such as airline seats and luggage upgrades.
A Crackdown on Fake Reviews
The value of positive online reviews has spawned a small industry in generating glowing endorsements of products and services. These now face a crackdown, enforced by the Competition and Markets Authority. Research published by the Department for Business and Trade in April 2023 found that at least one in 10 product reviews on third-party e-commerce platforms are likely to be fake.
The Benefits of Transparency
The new laws will prevent consumers from being misled by fake reviews, ensuring they receive the quality promised. It will also reduce the chances of ordering a product that never turns up or does not resemble the marketing materials, despite glowing reviews. Amazon has successfully stopped millions of fake reviews from being posted on its platform.
A New Era for Online Transactions
The new consumer protection laws mark an important step towards fairer online transactions. By requiring businesses to clearly disclose fees and preventing fake reviews, these laws aim to give consumers more power and control over their hard-earned cash.
- theguardian.com | UK bans £2.2bn ‘sneaky’ fees and fake reviews for online products
