Consumer Protection from Unfair Trading Regulations: an OUT-LAW
guide
This guide is based on UK law. It was last updated on 14th
April 2008.
New regulations to protect consumers from unfair, misleading or
aggressive selling practices are due to come into force on 26th May
2008.
The Consumer Protection from Unfair Trading Regulations 2008
(the CPRs) implement the EU Unfair Commercial Practices
Directive. They introduce a general prohibition against
unfair commercial practices, specific prohibitions against
misleading and aggressive practices and a blacklist of 31 practices
that will be deemed unfair in all circumstances.
The Government has also taken the opportunity to streamline and
consolidate current consumer protection legislation in the UK. The
regulations amend the Consumer Protection Act and the Trades
Description Act (amongst others) and revoke and replace the Control
of Misleading Advertisements Regulations.
The draft regulations were laid before Parliament on 3rd March
2008 and the final version is expected to be published shortly.
Who is affected?
The CPRs apply to business- to-consumer transactions and apply
to conduct before, during and after the contract is made.
They will also affect business-to-business practices closely
connected to consumers. A trader supplying food products to a
supermarket, for instance, will need to ensure its labelling
complies with the CPRs.
In some circumstances, they could apply to a
consumer-to-business transaction. If a consumer sells a car to a
second hand car dealer, for example, the dealer would have to abide
by the CPRs.
Unfair commercial practices
The general prohibition simply states that unfair commercial
practices are prohibited. The wording is deliberately wide to catch
any unfair practices that may be developed in the future.
A practice is unfair if it fails to meet the standard of
"professional diligence" (the standard of skill and care that would
reasonably be expected of a trader in its field of activity) and it
materially impairs an average consumer's ability to make an
informed decision, causing him to make a decision he would not
otherwise have made.
In most cases, the average consumer will be taken to be
reasonably well-informed, reasonably observant and circumspect. But
where a trading practice is specifically targeted at a particular
consumer group, the average consumer will be the average member of
that group.
And if a clearly identifiable group of consumers is particularly
vulnerable to a trading practice (because of age, infirmity or
credulity) in a way a trader could reasonably be expected to
foresee, and the practice is likely materially to distort decisions
made only by that group, the benchmark will be the average member
of that group.
For example, the hard of hearing might be particularly
vulnerable to a trader's advertisement claiming that a telephone is
"hearing aid compatible".
Misleading actions and omissions
Misleading acts and omissions are unfair commercial practices.
In each case, the action or omission must cause or be likely to
cause the average consumer to take a different decision.
A misleading action contains false information or in some way
deceives (or is likely to deceive) the average customer. Examples
include:
- providing misleading information about the main
characteristics, availability or origin of a product, or false
information about the trader himself (e.g. qualifications or
awards);
- marketing a product in such a way that creates confusion with a
competitor's products (e.g. by using a similar brand name or logo);
and
- agreeing to be bound by a code of practice that contains a firm
commitment (e.g. that its members will only use wood from
sustainable sources), displaying the code logo, but breaching that
commitment.
Misleading omissions are made when a trader omits or hides
material information, provides it in an unclear, unintelligible,
ambiguous or untimely manner, or fails to make it clear he has a
commercial intent. What is material will depend on the
circumstances, but it is generally defined as information the
average consumer needs to make an informed decision.
Limitations of space or time and whether the trader has taken
other steps to convey the information (such as stating "terms and
conditions apply" and where they can be found) will be taken into
account as part of the context.
When a trader makes an "invitation to purchase" (e.g. by
including an order form in a press advertisement, or a page on a
website enabling consumers to place an order) the regulations
specify the material information that must be included unless that
information is apparent from the context.
Aggressive practices
A commercial practice is aggressive if it significantly impairs
(or is likely to significantly impair) the average consumer's
freedom of choice by the use of harassment, coercion (including
physical force) or undue influence and so causes or is likely to
cause him to take a different decision.
Undue influence results from a trader exploiting a position of
power, even without using or threatening physical force.
The blacklist
Thirty-one practices will be deemed to be unfair in all
circumstances. A trader carrying out any one of these will have
breached the CPRs, whether or not it had any effect on the average
consumer.
In addition to pyramid promotion schemes, bogus sales and
"doorstepping" consumers at home, the blacklist includes:
- "Bait advertising" - advertising products at a specified price
without disclosing that the trader has reasonable grounds to
believe he may not be able to supply them or their equivalent at
that price for a reasonable period or in reasonable
quantities.
- "Bait and switch" – inviting consumers to buy one product but
then trying to persuade them to buy a different one – e.g. by
refusing to show them the original item, or to take orders or make
delivery arrangements, or by showing a defective sample.
- Falsely stating a product will only be available (or available
on certain terms) for a very limited time to persuade the consumer
to make an immediate decision.
- Using "advertorials" (editorial comment to promote a product)
without making it clear that the trader has paid for the
promotion.
- Passing on materially inaccurate market information to persuade
the consumer to buy on less favourable terms than normal market
conditions.
- Claiming to offer a competition or prize promotion without
awarding the prizes described or a reasonable equivalent.
- Describing a product as "free", "without charge" or similar, if
the consumer has to pay anything other than the unavoidable cost of
responding, collecting or paying for delivery of the item. There
has been some debate about whether this will affect standard "buy
one get one free" offers. See: Retailers can
lawfully offer BOGOF deals, says Commission official, OUT-LAW
News, 02/04/2008
- Making persistent and unwanted solicitations by telephone, fax,
email or similar, except in circumstances and to the extent
justified to enforce a contractual obligation (e.g. legitimate debt
collection).
- Requiring a consumer claiming on an insurance policy to produce
irrelevant documents, or deliberately failing to respond to
correspondence to dissuade the consumer from pursuing his
contractual rights.
- Including in an advertisement a direct encouragement to
children to buy advertised products or persuade their parents or
other adults to buy advertised products for them.
Enforcement
Local Authority Trading Standards Services (TSS), the Office of
Fair Trading (OFT) and (in Northern Ireland) the Department of
Enterprise, Trade and Investment have a duty to enforce the CPRs,
using the "most appropriate means".
These range from informal regulatory (or self-regulatory)
procedures to a civil action for an enforcement order, and, in the
worst cases, criminal proceedings.
At the lower end of the scale, enforcers can refer complaints to
existing regulatory bodies to be dealt with under their own codes
of practice. An obvious example would be the Advertising Standards
Authority, which regulates the content of advertisements, sales
promotions and direct marketing in the UK.
Criminal prosecutions can only be brought by the OFT, the TSS
and, in Northern Ireland, the Department of Enterprise, Trade and
Investment. Breaches of the general prohibition will require proof
that the trader acted knowingly or recklessly. Other breaches do
not require any proof of a specific state of mind.
Defences to criminal charges include that the offence was caused
by something or someone beyond the trader's control, provided the
trader can show it took all reasonable precautions and exercised
due diligence.
A company found guilty of an offence could face an unlimited
fine. An officer or manager of the company who consents to (or acts
negligently in relation to) the offence can be found personally
liable and fined or sentenced for up to two years in
prison.
Consumers affected by a breach of the regulations do not have
the right to bring a claim for compensation. But the Government
will be looking into whether such a right should be introduced and
the Law Commission plans to consider the question in its next work
programme.
Contact: Richard Parkinson (richard.parkinson@pinsentmasons.com
/ 0161 234 8434)
See:
See also:
