The government is to hand the competition regulator new powers to tackle subscription traps and fake reviews to protect online consumers.

Business secretary Kwasi Kwarteng said the government would change the law to ensure that prepayment schemes like Christmas savings clubs have to safeguard customers’ money.

The consumer catfishes behind bogus online ratings will also be targeted by rules that make it automatically illegal to pay someone to write, or host, a fake review.

The Government is also clamping down on subscription traps by requiring businesses to make it clear exactly what consumers are signing up for and letting them cancel easily.

For the used car and home improvement sectors, where consumers often make large, important one-off purchases, the government will make it mandatory for businesses to take part in arbitration or mediation where disputes arise over a transaction.

This is aimed at avoiding court involvement and levelling the playing field for businesses and consumers.

The reforms will also help regulators stamp out other tactics used to dupe online shoppers.

These include ‘dark patterns’ that manipulate consumers into spending more than they wanted to, and ‘sludges’, negative nudges such as when businesses pay to have their product feature highly on a trader’s website while hiding the fact they paid for it.

The proposals come in the new consultation on Reforming Competition and Consumer Policy, which is aimed at giving the Competition and Markets Authority enhanced powers to tackle consumer rip-offs and bad business practices.

Tough penalties for non-compliance are being put forward, with new powers for the CMA and similar enforcers to hit unscrupulous traders who breach consumer law with fines of up to 10 per cent of their global turnover, and civil fines for businesses who refuse or give misleading information to enforcers.

Business Secretary Kwasi Kwarteng said: “The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them.

“By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”

The Government is also considering several options – including introducing financial penalties – when firms breach the commitments given to enforcers that they will change their ways.

To speed up processes, the CMA will also be able to enforce consumer law directly rather than having to go through a court process that can take many months or even years .

The measures will also enable the CMA to:

-Disqualify company directors who make false declarations to the regulator
accept voluntary binding commitments from businesses at any stage in its investigations, rather than having to wait till the end - leading to quicker outcomes and reduced costs for both businesses and the regulator

-Block a wider range of harmful mergers, including so-called ‘killer acquisitions’ where big businesses snap up prospective rivals before they can launch new services or products

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