Consumer protection from unfair trading

Aggressive and unfair trading practices will be targeted by new EU-inspired rules that are due to come into effect next year.

The Consumer Protection from Unfair Trading Regulations are due to be implemented in April as a result of the EU Unfair Commercial Practice Directive. The regulations look likely to have a significant impact on business to consumer (B2C) transactions and will apply to omissions, acts and the general conduct of businesses when  dealing with the typical consumer.

The wide scope and flexible provisions of the Directive mean that the regulations will supersede some of the established (and now outdated legislation) on unfair trading. The aim is to protect consumers by prohibiting deceptive and intimidating sales practices that are unfair but not currently illegal. Importantly the regulations will apply before, during and after a contract is made with the consumer and will apply across all business sectors.

Although the regulations are geared to protect the consumer, they will also benefit honest businesses and will also target unscrupulous and dishonest traders as well as simplifying the existing consumer protection legislation.

Broadly speaking the regulations will introduce three prohibitions (which will be enforced by the Office of Fair Trading and local Trading Standards Departments) to ascertain whether sales techniques are unfair. These prohibitions include: 

1. specific categories of misleading actions and omissions and aggressive commercial practices; 
2. a list of practices that are always deemed to be unfair and will be prohibited in all circumstances with no exceptions;
3. a prohibition on unfair commercial practices.

Aggressive practices and misleading practices

The prohibition on aggressive practices targets those advertisements and other sales methods that encourage consumers to make decisions or purchases that, in the absence of the aggressive practice, they are unlikely to have made. A misleading commercial practice includes an action or omission which contains untruthful information or in some way deceives a typical consumer into taking a transactional decision that he would not have otherwise made. An action will be misleading if it: 

• causes or is likely to cause a typical consumer to confuse a particular product with that of a competitor; or
• causes or is likely to cause a typical consumer to confuse a particular product with that of a competitor; or
• is misleading generally.

Omissions will include:

• material or information which is hidden or omitted and which the typical consumer needs in order to
• decide on whether to undertake a transactional decision;
• material or information which is hidden or omitted and which the typical consumer needs in order to
• decide on whether to undertake a transactional decision;
• failure to identify the commercial intent or reason of the practice; or
• failure to identify the commercial intent or reason of the practice; or
• information that is provided in an unclear, ambiguous or unintelligible manner.
• information that is provided in an unclear,
• ambiguous or unintelligible manner.

Practices that are always deemed to be unfair

The list of practices that are always unfair is substantial but the following are the more salient examples:

• making personal visits to the home of a consumer and ignoring the consumer’s request to leave and/or stay away;
• displaying a quality mark without authorisation;
• falsely claiming that a product can cure illness;
• falsely claiming to be a signatory of a code of conduct;
• falsely stating that a product will be available for a very limited time in order to obtain or encourage an immediate decision; and
• failing to respond to pertinent correspondence in order to dissuade a consumer from exercising his contractual rights.

General prohibitions

The general prohibition serves as a "catch all" provision for those practices not specifically covered by the prohibitions detailed above.

Infringement and Enforcement

Infringement or contravention of the regulations will lead to civil and criminal penalties and the burden of proof will depend on which prohibition has been breached. The general prohibition will require the prosecution to prove that the trader has knowingly or recklessly breached the requirements of professional diligence. A breach of the remaining prohibitions will be strict liability crimes as the fact that the regulations have been breached is enough. The regulations, when breached by a corporate body, provide for the prosecution of the management where they have been breached with the consent of the management or where the offence is attributable to any neglect on the part of the management. The duty of enforcement will fall to the OFT and Trading Standards.

Conclusion

It is clear that the regulations are well overdue in addressing the issue of unscrupulous advertisers and businesses. However, there is likely to be a fine line between advertising being effective and whether it breaches the regulations. In the absence of any clear judicial guidance on the matter, early legal advice will be essential to ensure that even honest businesses are guided through the regulations.

This article was first published in NewsBrief October 2007.