Insights Consumer law end of year round-up

We take a look back at the key consumer law developments of the past year, and look forward to what’s on the horizon

Key case law: Green v Betfred

What: The seismic High Court judgment in favour of Mr Green, a customer of Betfred who sought recovery of £1.7m in winnings to which he claimed to be entitled. Betfred argued that they were not obliged to pay Mr Green because the winnings arose from a game defect, and the terms of the contract between them (i.e., the customer T&Cs) excluded their liability to him in those circumstances. Betfred lost on each attempt to rely on their contractual exclusions for wins attributable to the defect, and Mr Green recovered his game winnings in full plus interest and costs against Betfred.

Impact: There can no longer be any doubt as to the critical importance of clear drafting, presentation, incorporation and signposting of customer T&Cs. Simply put, if any of these factors are deficient, operators cannot confidently expect to rely on and enforce their T&Cs against customers when things go wrong. As the Betfred case emphatically demonstrated, the consequences of deficient T&Cs can be very costly indeed.

What operators should be doing:

Following the judgment operators should be carefully auditing their processes and taking appropriate steps such as:

  • overhauling their customer T&Cs with the ‘Betfred principles’ in mind;
  • reviewing the player registration journey to ensure that the right information is being given at the right time and with the appropriate prominence;
  • reviewing customer acceptance processes for T&Cs and for individual product terms (particularly when a product is first accessed);
  • producing a plain-English summary of key terms (particularly exclusion and similar terms) which are made clearly known to the player and which the player can easily access at any time; and
  • introducing clear warnings that ‘wins’ will be subject to checks and will not be paid if found to be the result of a fault or defect or any other applicable factors.

 For more, you can read our in-depth analysis here.

Key legislative changes: Omnibus Directive

What: The so-called “Omnibus Directive” (OD) forms one strand of the European Commission’s “New Deal for Consumers” initiative, which strengthens consumer rights and the enforcement of EU consumer protection rules.

Impact: The changes brought about by the OD are complex and wide-ranging, but particular changes that operators should be aware of include:

  • significantly enhanced penalties for consumer law breaches – these will include fines, which under the OD must be up to at least 4% of the business’ annual turnover in the member state(s) where the breach occurred (or €2m where turnover information isn’t available);
  • new rights for consumers to seek redress directly from infringing businesses; and
  • new pre-contract information requirements, including a requirement for businesses to provide pre-contract information about online means of communication (relevant where, for example, online chat functions are provided by operators).

Who is impacted:

  • For operators based in EU countries, the OD (or, rather, the relevant local implementing laws) will be directly applicable.
  • Following Brexit, the UK is not required to implement the new measures. However, UK operators that ‘direct their activities’ (i.e., offer services) to consumers residing in EU countries could still be subject to consumer claims and regulatory action in those EU countries for breach of local OD-implementing laws, and they may therefore be subject to penalties for breach of local implementing laws, including the potentially high fines noted above.

What operators should be doing:

There’s still some time to prepare (Member States were required to transpose the OD changes into their national law by 28 November 2021 and must apply those measures by 28 May 2022) but operators should be readying themselves – particularly those operators that are part of multi-jurisdictional groups, and UK operators who provide gambling services to customers in EU jurisdictions. First steps should include:

  • ensuring that customer T&Cs are compliant with consumer law (this is one of the most likely sources of consumer law breaches by operators); and
  • familiarising themselves with the local implementing legislation in each territory in which they provide services to consumers, with a particular focus on what is deemed to be an unfair contract term in each of those territories (a term that is permissible in one territory could attract a fine in another).

Horizon scan – what’s coming

UK reform:

In July 2021 the UK Government issued a consultation on its proposed reforms to consumer policy, signalling (and reiterating) its clear intention to update and strengthen consumer rights to keep pace with markets, and to strengthen the enforcement of consumer law by individuals and regulators. In October 2021, the CMA responded to the consultation, welcoming its proposals and calling it “perhaps the most important review of … consumer policy in a decade”.

The Government’s proposed reforms would, if implemented, significantly change the consumer protection landscape. Of particular interest to operators will be the proposed strengthening of enforcement, most notably the proposals for the CMA to wield stronger and faster-acting enforcement powers for consumer law infringements – moving away from the current model of enforcement via the courts (which can be slow and costly) towards an administrative model under which the CMA would be able to make authoritative decisions as to whether a breach has (or is likely) to take place, could directly instruct the infringement to stop or order redress/compensation for affected consumers, and could directly issue financial penalties. And those financial penalties are potentially very significant – under the proposals, the CMA would be able to fine businesses up to 10% of global turnover for consumer law infringements.

The consultation is now closed and the Government is analysing the feedback. For now, then, we must wait to see which of the proposed reforms will become law – but there’s no doubt that change is coming, and probably on a significant scale.