These practices will be banned outright when the Consumer Protection from Unfair Trading Regulations 2008 (the regulations) come into force in UK law, currently on 26 May 2008. The regulations transpose a European Union Directive, a draft form of these is currently before Parliament. Under the regulations, unfair commercial practices are prohibited.
The regulations define what unfair commercial practices are: 31 practices are banned outright and other practices including misleading actions, misleading omissions, aggressive actions and conduct which is below an acceptable level are also prohibited. The regulations apply before, during and after a contract has been formed. They only apply to business transactions relating to the promotion, sale or supply of products to and from consumers.
An action is likely to be considered misleading where false or untruthful information is given, relating to a product, including its main characteristics or price, and the consumer enters into a transaction, e.g. buys a product, that he would not have otherwise done but for the misleading action. For example, a manufacturer of semi-permanent hair dye claims on the packaging that it removes grey hairs in the over 60s for 8 to 10 weeks. In fact, clinical trials show the product is only effective for a period of 4 to 6 weeks. The product information contains false information as to the main characteristics of the dye and may cause the average consumer to buy that product whereas she would have otherwise purchased a different product. This practice is likely to be a misleading action.
A commercial practice will be seen as a misleading omission if it omits or hides information and as a result, the practice causes or is likely to cause the average consumer to enter into a transaction he would not have otherwise entered into. For example, an electronic toy is sold for children aged between 7 and 10 years old. The product is displayed as “ready to use without adult assistance” but, in fact, batteries need to be inserted and a minor adjustment to the device, suitable only to be performed by adults, needs doing. A 7 to 10-year-old child would be deemed to be an average consumer. The child and/or his parent may not have bought the product but for the advertisements. Therefore, this practice is likely to be deemed a misleading omission.
The OFT and local Trading Standards offices will be responsible for enforcing the regulations in England and Wales. Those bodies can use established means such as liaising with any traders in breach of the regulations to achieve compliance without bringing Court proceedings. The regulations also set out criminal offences for infringement of the regulations which, upon conviction, can lead to up to 2 years in prison. Managers and company officers may be prosecuted if an offence has been committed by a company with their consent, connivance or due to their neglect.
What are the benefits for consumers?
Consumers will see their rights strengthened and simplified. If consumers consider that their rights are infringed, complaints should be made to their local Trading Standards Office.
What do businesses need to do?
Businesses may find the regulations make operating in different European member states easier as they will no longer be subject to unfair competition from unscrupulous traders.
Businesses acting fairly and reasonably towards their customers may not need to change their working practices. They should review existing sales practices with consumers and, in the first instance, check they do not infringe any of the outright bans. As to misleading actions and omissions and aggressive practices, current practices should be analysed to see if they fall foul of the provisions. Relationships with business partners should be reviewed to check that all levels of supply chains comply with the regulations. Staff are likely to need training.
Perhaps the most challenging provisions of the regulations for businesses will be the misleading omissions provisions. English law, in contrast to many continental law systems, does not usually sanction omissions. Businesses will have to be extra vigilant as to what they don’t say as well as what they say to consumers, and, if in doubt, take legal advice on their policies.
Assistant Solicitor, Matthew Arnold & Baldwin
The content of this article is of a general nature and no liability is accepted in connection with it or if any reliance is placed on it.
This was previously featured by The Telegraph Business Club