July 21, 2023
The CMA has called on the retailer to change its selling practices, which could be putting unfair pressure on consumers to make quick or impulsive purchases.
Following its investigation into Emma Sleep’s online sales tactics, the CMA has issued a consultation letter detailing its concerns that the use of practices including ‘urgency’ claims and discount offers are misleading consumers. The CMA has asked Emma Sleep to change its practices to ensure that consumers are not unfairly pressured into making quick purchases on their website.
Findings from the investigation – countdown clocks and misleading ‘discounts’
The CMA found that the retailer’s use of countdown clocks and claims that a product is in high demand could mislead consumers and result in a breach of consumer protection law. The CMA also considered that discount claims did not accurately reflect the actual savings that consumers made.
The use of ‘was/now’ pricing to highlight the previous, higher price of a product compared to its current, reduced price appeared to be frequently used across the retailer’s website, whilst only a small number of products were in fact sold at the previous, higher price. The CMA therefore considered this meant the ‘discount’ did not represent a genuine saving.
Alongside the discounts, Emma Sleep also frequently uses countdown clocks. Whilst the CMA noted the value this tool brings for consumers where genuine sales are being offered, it found that Emma Sleep would often replace sales quickly after countdown timers had ended. On some occasions the CMA noted that further sales would be advertised within 24 hours of a countdown timer ending. As a result, consumers may have been misled into making rushed purchases for fear of missing out on a sale.
The CMA has written to Emma Sleep outlining the ways in which it can address the CMA’s concerns, including by no longer using misleading countdown clocks and discount offers. The retailer now has the opportunity to respond to the CMA’s concerns and avoid court action by signing undertakings to change its online sales tactics.
This investigation is part of the CMA’s broader consumer enforcement programme focused on tackling harmful online sales practices and ‘online choice architecture’, particularly around the use of misleading urgency, scarcity, and price reduction claims (see our article here for more).
All direct-to-consumer online businesses should be paying careful attention to the CMA’s focus in this area, and reviewing the helpful CMA guidance which includes many examples of non-compliance (see here).
Compliance with consumer law is particularly important given the incoming Digital Markets, Competition and Consumer (DMCC) Bill, which is expected to come into force early next year – see our helpful DMCC tracker page here. Once enacted, the DMCC will give the CMA significant new enforcement powers, including the ability to impose fines of up to 10% annual global turnover (including that of parent/subsidiary companies) – see our summary of the incoming consumer law aspects of the DMCC here.