The UK Competition and Markets Authority (CMA) has published updated guidance on unfair consumer contract terms and notices under the Consumer Rights Act 2015 (CRA) [Unfair contract terms – GOV.UK].

The revised guidance comes when consumer protection is receiving renewed and high-profile regulatory attention following the introduction, in April 2025, of the CMA’s new direct enforcement powers under the Digital Markets, Competition and Consumers Act 2024 [A New Era for Consumer Law and Regulation | Global IP & Technology Law Blog]. For the first time, rather than having to go through the courts, the CMA now has the power to enforce directly breaches of consumer law. The regulator can also unilaterally impose (significant) fines and other penalties where it determines a breach has occurred, as a number of businesses have already found to their cost.

Whilst the CRA and guidance are applicable to any business that deals with consumers, those operating in the retail, sports, media, entertainment and digital/tech sectors are at particular risk, given the extensive use of consumer-facing terms and conditions, subscription arrangements, and online platform terms. All consumer-facing terms and notices  should now be reviewed to ensure compliance with the rules on unfair terms and transparency and updated guidance.

What has changed?

The updated guidance does not change the law: the CRA has now been in force for over a decade and the first version of this guidance was published in July 2015.

However, the refresh simplifies the previous guidance, and takes account of the CMA’s new direct enforcement powers and updates to the relevant case law.

The new CMA guidance also includes an update to its “quick guide” to writing a fair contract for consumers. [Writing a fair contract for customers – GOV.UK]

What are the requirements?

In simple terms, the CRA requires that most terms and conditions contained in contracts with UK-based consumers or specified on notices shown to those consumers should be transparent and not unfair. This requirement applies regardless of the channel through which the sale is made (in-store, online etc.). The requirements also apply whether or not standard terms and conditions are used or contract terms are individually negotiated with a consumer.

Legal test for fairness. Unfair terms are those which: (1) are “contrary to the requirements of good faith”; and (2) cause a significant imbalance in rights and obligations, to the detriment of a consumer.

Legal test for transparency. The test for transparency reflects commonsense: contract terms and notices must be expressed in plain and intelligible language that the average consumer can understand and when in writing, should be legible.

Contract terms and notices should also be given sufficient prominence, so that the average consumer is likely to have been made aware of them in good time before making the decision to buy. This can sometimes be a particular challenge in the online world, where key contract information may be presented to consumers at various points during the customer journey. Traders often wrongly assume that certain information can be dealt with via a lengthy terms and conditions, but too often these are hidden away and the evidence is clear that many consumers are unlikely to ever read them.

At first glance it may seem surprising that these fairness rules do not apply to contract terms which relate to the main subject matter of a consumer contract (such as a description of the goods or services being sold) nor to price payable however, that is because such matters are subject to separate specific regulation under the CRA and related legislation. For example, in the case of pricing there are separate specific obligations to provide consumers with clear up-front information before they make the decision to buy so provided those obligations have been complied with, the CMA will not then concern itself with whether the price is fair or value for money because the consumer has been clearly told early on in the buying process what they will be expected to pay so that they then have the opportunity to decide whether to buy or to shop around for a better deal.

Who is a consumer?

Under the CRA a “consumer” must be an individual person. Companies cannot be a consumer.

The key test is that an individual must be making a purchase for purposes that are “wholly or mainly outside of that individual’s trade, business, craft or profession”. Whilst this will often be obvious to a trader, increasingly there is the risk of uncertainty for digital and creative businesses, as it may not always be immediately apparent whether an individual is purchasing a particular product or service for their own personal use and enjoyment or for use for work. If an individual is not a “consumer”, the seller can use more robust “business to business” (B2B) terms and conditions that are not subject to the CRA’s consumer fairness and transparency requirements.   

The challenge in these circumstances is compounded by the fact that if it is not clear whether an individual is a “consumer”, the burden to prove otherwise falls on the trader.

What are the consequences of getting it wrong?

Any applicable contract term or notice which is found to be unfair will not be binding on the consumer, although any wider contract will still continue in force in every other respect, as far as that is practicable.

Where any term is open to different meanings, the meaning most favourable to the consumer will prevail at court.

However, since the introduction of the CMA’s direct enforcement powers – a new and very real risk is that the CMA may issue fines for non-compliance of up to the higher of 10% of global turnover or £300,000. The regulator can also impose other sanctions, such as to require a trader to refund  consumers and/or to give formal undertakings to remedy non-compliance.

By the end of the first year of having these new powers, the CMA had already opened investigations into 14 business and settled with two, ordered that £760,000 be refunded to consumers and imposed fines for non-compliance totalling £4.7m. These figures were published in April 2026 and so do not take account of a number of high-profile fines and consumer refund obligations imposed since then.

Is the CMA always right?

A word of caution, whilst the updated guidance is helpful in understanding the CMA’s view, the regulator is frequently seen as over-zealous in its interpretation and enforcement of consumer law. The CMA’s overly-aggressive approach can be seen in the recent High Court case the CMA brought against Emma Mattresses. The CMA issued sector specific discount and reference pricing principles for selling mattresses online which included a requirement for online retailers to make at least 1:2 sales of all products before claiming there had been a discount off the price. The CMA sought to formally impose this requirement on Emma Mattresses through the court when it declined to voluntarily accept this requirement, the judge however rejected the CMA’s approach as well-intentioned, but overly protective.

Consequently, the CMA has temporarily withdrawn these pricing principles whilst it considers this judgment [Withdrawn] Mattresses: online pricing principles – GOV.UK. The case is a sage reminder that the regulator’s view does not ultimately constitute the law.

Why does this matter now?

The CMA has put businesses on notice that it intends to continue to focus its enforcement activities on areas of essential spend where consumers feel the pinch most and on practices that are widespread and cause significant harm. The CMA’s message to businesses is to prioritise compliance on the following areas:

Areas of particular risk in the retail, sports, media, entertainment and digital/tech sectors

The updated guidance contains many examples of consumer terms and notices which are at risk of being held to be unfair to consumers or which the CMA recommends could be redrafted to the reduce the risk of unfairness. These examples are often found in contract terms and notices used by businesses in the retail, sports, media, entertainment and digital/tech sectors.

Particular caution is advised for any business which began offering its products or services on a purely B2B basis, before moving into the business to consumer (B2C) market. Many contract terms typically seen in B2B contracts will not be acceptable if used in a B2C setting. Therefore, businesses should not assume they can simply use existing B2B terms when expanding  into consumer sales.  

Specific examples falling into this category and covered in the guidance include:

  • contract term: provisions which lock a consumer into a contract for longer than a consumer would reasonably expect or which require the giving of excessive notice in order to terminate. Focus on this area will increase in the coming months when new rules on consumer subscription contracts are due to come into force;
  • liability: exclusions or limitations on liability which seek to absolve a trader of any liability for problems or which go beyond what is reasonable to protect a trader’s legitimate interests. The risk is heighted for any such exclusions or limitations which use “legalease” which the average consumer is unlikely to fully understand;
  • unilateral variation: traders reserving the right to make unilateral changes to their products, services and/or terms and conditions which have an adverse impact on consumers, particularly if consumers will not receive proper notice of any such changes and/or have the ability to terminate without cost if they do not wish to accept;
  • refunds and pre-payments: terms which seek to limit the obligation of traders to make refunds if a contract is ended early or which allow a trader to retain the full value of any pre-payment if a contract is ended early due to the consumer’s fault if in reality, the actual loss and damage (including loss of profit) which the trader will suffer in those circumstances is much less. 

Squire Patton Boogs specialises in consumer law issues. If you would like a review of your terms and notices for compliance with consumer law, need to push back on regulator enforcement or see non-compliant competitors operating in the market, please get in touch. For more information contact partner Carlton Daniel.