To help enhance the enforcement of consumer protections, the Competitions and Markets Authority (CMA) will have enhanced powers to tackle rip-offs and bad business practices.
The competition watchdog will also be able to directly enforce consumer law, including new powers to fine firms up to 10% of their global turnover for mistreating customers, replacing a court process that can take years.
According to the Government, the average UK household spends about £900 a year, influenced by online reviews.
Fake reviews will be tackled by consulting on a new law against commissioning someone to write or submit a fake review.
Also, the law will be against hosting consumer reviews without taking reasonable steps to check they are genuine and offering or advertising to submit, commission or facilitate fake reviews.
In terms of the consequences of breaking this new legislation, the CMA will be able to award compensation to consumers and directly impose financial penalties.
This can be for breaking consumer protection laws, with penalties worth up to 10% of global annual turnover for businesses or up to £300,000 in the case of the individual.
Commencement date to be confirmed
The legal changes will come into effect on a commencement date following parliamentary approval.
Consumer and small business minister Paul Scully said: “We have some of the best pubs, restaurants and cafés in the world and customers rightly expect to be able to trust reviews they read before visiting.
“I know our great hospitality businesses that are doing the right thing will be behind this move to improve transparency to protect their reputations from the few dodgy firms doing their sector down.”
The measures will apply in England, Scotland and Wales. Consumer protection is devolved in Northern Ireland.
UKHospitality chief executive Kate Nicholls welcomed the moves, which she hoped would create a more level playing field for businesses and consumers however, she said the devil would be in the detail of the new law.
She added: “In particular, we recognise that enhanced powers for the CMA will help stamp out the practice of fake reviews, which do irreparable damage to businesses.
“We therefore believe it is imperative that online review platforms be required to act and remove malicious and false reviews where appropriate.
“As ever, the devil will be in the detail and so we will be actively engaging in the consultation process in order that consumers are safeguarded without placing any further unnecessary burdens on businesses.”
The trade body boss went on to call for the new powers from the CMA to not unfairly punish businesses.
Nicholls said: “As 70% of hospitality businesses are small and medium enterprises (SMEs), that a clear right of appeal is put in place that is accessible to operators big and small.
“Fairness for both businesses and consumers, particularly when it comes to offering refunds, will be crucial and any new measures must also be made in the context of a sector facing an onslaught of challenges after a difficult two years.
“Soaring costs, chronic staff shortages and plunging consumer confidence continue to affect the sector, which needs ongoing support if it is to play its full role in the UK’s recovery.”
The CMA chief executive Andrea Coscelli said the announcement was an “important milestone towards strengthening the CMA’s ability to hold companies to account, promote fair and open markets and protect UK consumers”.
In October last year, analysis from review site TripAdvisor claimed it had identified 3.6% of review submissions in 2020 as fake, with the majority being rejected before they were posted.
The website, which has previously been criticised by pub operators for reasons such as people using fake names and the ability for people to post reviews without having to prove evidence of using the venue.
TripAdvisor’s 2021 Review Transparency Report analysed a full year of data on reviews submitted by global travellers.
It found last year, more than 2m reviews were rejected or removed for not complying with the platform’s community standards.