Online retailer Appliances Direct has been fined a staggering £1.2m by the Competition and Markets Authority (CMA), after being accused of “misleading customers”, with the company’s owner hitting back that he had “no idea how the fine was calculated”.
An investigation into Appliances Direct was launched following the introduction of the new Digital Markets, Competition and Consumers Act 2024, which brought in new rules to combat things like fake reviews, drip pricing and misleading time-limited offers.
Following its investigation, Appliances Direct has been accused of trying to fool customers with time-limited offers that did not end when they said they would, as well as automatically opting customers into paid-for extras.
Specifically, the CMA found that customers were being automatically opted into one or both of its “Remove & Recycle Your Old Appliance” or “Installation on Delivery” services without being made aware.
Under consumer law, the CMA says that businesses must get customers’ express agreement before charging them for optional extras. Pre-ticked boxes and other forms of automatic opt-in are expressly forbidden under the new rules.
This case follows the CMA imposing a fine of £720k on appliance retailer Marks Electrical earlier this year, on the basis it had also been opting-in customers for extra services or products.
Additionally, Appliances Direct also used pop-up countdown banners on some product pages which claimed that discounts of £10 to £25 were available for a limited time. However, the CMA observed the same discount codes appeared repeatedly over many days, meaning customers could have been unfairly pressured into buying an appliance.
Appliances Direct has also been ordered to contact affected customers to refund the misleading add-ons, with the CMA saying that the total cost of returned payments will be “around £432,000”. This averages at around £25 per customer, with the CMA adding that impacted consumers do not need to take any action themselves.
Hayley Fletcher, senior director for consumer protection at the CMA, said: “Whether buying a new sofa, a washing machine, or joining a gym, people should see genuine, accurate prices and offers – and decide for themselves whether they want optional extras. At a time when many households are carefully managing their budgets, people shouldn’t lose out because of misleading sales tactics. The time is up for this kind of behaviour. Businesses must treat their customers fairly and make sure they comply with the law – or risk hefty fines.”
The CMA also said that Appliances Direct “engaged constructively” throughout the process. As it admitted to breaking the law and agreeing to settle its case early, the retailer has received a 40% reduction to its fine.
However, Nick Glynne, founder of Buy It Direct Group, Appliances Direct’s parent company, said he had “no idea how the CMA calculated” the fine.
Discussing the fine on LinkedIn, he said Appliances Direct had been offered an £800,000 discount if it accepted the settlement terms and agreed not to appeal, despite being advised it had “a strong case to reduce both the fine and redress”.
He went so far as to accuse the CMA of doing “exactly what it accused us of: pressuring us to accept its time-limited offer”.
Glynne continued: “Under its new powers, the CMA can investigate, reach its own findings and impose enormous penalties without first proving its case before an independent court. Yes, there is a right of appeal, but appeals can be ruinously expensive. When one body is investigator, prosecutor, judge and jury, it needs an exceptional commitment to fairness, restraint and proportionality. That is not what we experienced.
“Our controls were not adequate. But is this fine proportionate to the harm? In comparison, the average fine for corporate manslaughter is around £500,000. All this while we fight the battle of our lives against an unprecedented wave of competition from Chinese traders, alongside rising employment costs, taxes and regulation.”
Glynne also admitted the company was “wrong not to expire our discount codes,” but added that the discounts were “genuine” and claimed Appliances Direct had “received no customer complaints”.
Similarly, Glynne said it was a “mistake” to automatically opt-in customers to certain services. However, he also claimed that “most” customers did opt-out of their own volition, and that when the automatic service was removed, “take-up barely changed”.
According to Glynne, Appliances Direct changed its website “as soon as we were alerted that we were in breach of the regulations”, and that CMA began a full formal investigation, instead of simply imposing “a fair fine”. Responding to comments of the post, Glynne added that he felt the CMA had “backed us into a corner with a discount”, and that the whole episode felt to him “like a Soviet-style show trial of the 1930s”.