An oucher for Wowcher - what are the key takeaways for businesses from the CMA's investigation into the flash sales website?

The CMA’s investigation into selling practices employed by deal of the day website Wowcher ended recently with Wowcher signing undertakings regarding its future conduct.

The investigation is a salutary reminder to businesses of the reputational risks and costs that can flow from breaches of consumer protection law. Wowcher’s undertakings to the CMA also provide useful reminders to businesses of the marketing and selling practices the CMA is likely to view as breaching consumer protection law.

Background to the investigation

In March 2023, the CMA published an open letter to UK businesses containing a list of urgency or price reduction claim features that the CMA considered infringed consumer protection law. These were urgency or price reduction claims that:

• included untrue or deceptive information, even if the words used were true when taken literally (misleading actions)
• did not clearly state important information consumers would require to decide whether to make a purchase (misleading omissions)
• unfairly pressurised consumers to make purchases (aggressive practices)
• stated falsely that a product was available for a limited time, or would only be available on specified terms for a limited time, prompting consumers to make a quick decision, preventing them from making properly informed choices (a practice that is always considered unfair)
• were designed to be likely to unfairly harm consumers’ ability to make informed decisions (a breach of the obligation of professional diligence)

Shortly after publishing the open letter, the CMA announced its investigation into Wowcher’s compliance with consumer protection law.

The investigation

In November 2023 the CMA wrote to Wowcher detailing possible breaches of consumer protection law in relation to Wowcher’s use of countdown timers and urgency claims. The CMA requested that Wowcher change its online sales practices because claims such as “In high demand” gave the impression that the products in question would no longer be available either at a particular price or at all, when this was not always the case. The effect of the “In high demand” claims was to rush consumers into making purchases, especially where these claims were combined with countdown timers. The CMA’s notice also raised concerns about Wowcher’s use of hidden charges and pre-ticked boxes which might cause consumers to make purchases they might not otherwise have made.

The undertakings

The CMA gave Wowcher the opportunity to avoid enforcement action through the courts by signing undertakings that it would make changes to its sales tactics. Wowcher did so, and the undertakings can be viewed here. Key points include:

1. Countdown timers/checkout timers – Wowcher undertook to ensure that countdown timers do not give a false impression to consumers that they should act quickly to avoid missing out and not otherwise be misleading. Any deal or product-specific countdown timers should be clear, clearly specify the deals and products they relate to and clearly set out the elements of the deals that will change when the timers expire. Checkout timers should also last long enough so that consumers are not given the misleading impression that they must act quickly to avoid missing out.
2. Marketing claims – Wowcher undertook not to make claims giving consumers the incorrect impression that they had to act quickly to avoid missing out, and not to make claims that were otherwise misleading. Any marketing claims should be clear, prominently define any limitations or qualifications of the marketing statement that are material and where marketing statements concern either the scarcity or popularity of a product or refer to sales figures, provide certain information to support those claims.
3. Consumers and their statutory rights – Wowcher gave undertakings in relation to consumers’ statutory rights, for example:

• to ensure that consumers are told before completing a purchase that in redeeming a voucher a separate contract will be formed between them and the end product/service provider;
• to contractually oblige sellers to comply with consumer protection laws such as rights to cancel and rights to refunds; and
• to offer a refund of credit rather than cash only where consumers are given certain information. Wowcher also undertook not to issue credit refunds (rather than cash refunds) in certain circumstances.

4. VIP membership – Wowcher undertook only to offer VIP membership to consumers with their express consent (rather than by pre-populated tick boxes), making the price, benefits and duration of VIP membership available clearly and prominently. Additionally, Wowcher agreed to refund consumers who had accepted VIP membership only because they failed to untick pre-ticked boxes.
5. Reporting - Wowcher undertook to report in writing to the CMA explaining the changes Wowcher made to implement the undertakings and providing certain information regarding refunds. It also agreed to report to the CMA periodically, justifying the use of each new countdown timer and marketing claim.

Comment

The CMA’s investigation is likely to have required Wowcher to commit significant resources and incur expenses both in responding to the CMA’s concerns and then implementing and reporting on the changes necessitated by the signing of the undertakings. The process has shined an undoubtedly unwelcome spotlight on Wowcher’s sales practices and exposed the brand to scrutiny and the risk of negative trade and press publicity.

Businesses carrying out online sales as part of their overall sales strategy should avoid falling into the trap of trying to manipulate consumers into making purchases by creating a false sense of urgency or creating a false impression of the availability of a particular product. When using countdown timers and marketing claims, businesses would be well advised to follow Wowcher’s undertakings to the CMA.

When the Digital Markets, Competition and Consumers Act comes into force businesses that breach consumer protection law are at risk of fines of up to 10% of global turnover, or fines of up to 5% of global turnover for any failure to comply with undertakings given to the CMA. So now is the time for businesses to implement learnings from the CMA investigation into Wowcher and the undertakings Wowcher signed.