New regulations to protect consumers from unfair, misleading or aggressive selling practices came 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 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 CPRs apply to business- to-consumer transactions and apply to conduct before, during and after the contract is made.
They 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.
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 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:
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.
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.
Thirty-one practices are 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:
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 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 in the UK. The Government has said it 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.
Member states that have chosen not to grant consumers a direct right of action, however, have been criticised by the European Parliament, which on 13th January 2009 adopted a resolution demanding such states change their laws.
Global Term : Contacts_Marketing_and_Advertising