| Legal updates | Treating customers fairly - Unfair commercial practices directive

Treating customers fairly - Unfair commercial practices directive

09 June 2008

The Consumer Protection from Unfair Trading Regulations 2008 primary objective is to harmonise consumer protection law across the EU by clamping down on unfair sales and marketing practices between businesses and consumers.

General prohibition

The general prohibition on unfair commercial practices states that a commercial practice will be unfair if:

• It contravenes the requirements of professional diligence (i.e. honest practice and behaviour and/or compliance the principle of good faith); AND
• It materially distorts or is likely to materially distort the economic behaviour of the typical consumer with regard to the product (i.e. to impair the consumer's ability to make an informed decision)
• It is important to note that the standard of “professional diligence” is an objective one. As such, it does not make allowances (or permit businesses a defence) for widespread poor practice in a particular sector.

Misleading commercial practices

Misleading commercial practices will include actions which give false information relating to any matters including:

• The main characteristics of the product
• The risks of the product
• The after-sales service and/or customer assistance
• The results to be expected from using the product.

Furthermore, they will cover information which, although factually correct, still deceives or is likely to deceive the average consumer, is likely to create confusion with a competitors products (or trade marks), or which fails to comply with the commitments contained in a code of conduct to which the business is a signatory. However, any of the misleading commercial practices set out above must also satisfy the following test to constitute an offence: "is the practice likely to cause the average consumer to take a transactional decision he would not have taken otherwise?

Misleading ommissions

Practices which omit “material information” or provide material information in a manner which is unclear and ambiguous, and as a result cause or are likely to cause the average consumer to take a transactional decision he would otherwise not have taken will be misleading. Material information is defined as information which:

• The average consumer needs according to the context to make an informed transactional decision
• Is required under EU law, e.g. information required under the Distance Selling Regulations
• Relates to “invitations to purchase” including the main characteristics of a product, the identity of the trader,
  the price, etc.

Aggressive commercial practices

Commercial practices are aggressive if:

• They significantly impair or are likely to significantly impair an average consumer's freedom of choice through the use of harassment, coercion or undue influence; AND
• Such harassment, coercion or undue influence causes the consumer to take a transactional decision that he would not have taken otherwise.

In determining whether a commercial practice uses harassment, coercion or undue influence account shall be taken of, amongst other things, its timing, location, nature or persistence, the use of threatening language, the exploitation of a
situation, etc.

Blacklist

A blacklist of 31 inherently unfair practices is set out in Schedule 1 to the Regulations. These practices are deemed so serious that they are prohibited in all circumstances. A copy of the Regulations (with a list of the 31 exemptions at Schedule 1) can be found at: http://www.opsi.gov.uk/si/si2008/pdf/uksi_20081277_en.pdf

Offences and penalties

Enforcement for breach of the Regulations lies with the OFT and Trading Standards. A person convicted of breaching the Regulations may be liable for a fine of up to £5,000 in the Magistrates Court and to an unlimited fine and/or imprisonment for up to two years on conviction in the Crown Court. Offences may also be committed by officers of a company if the company offence has been committed with the consent or connivance of an officer of that body or it was attributable to that
person's neglect.

Liability is generally strict, subject to the defence of due diligence. However, if a trader engages in a commercial practice branded unfair under the “general prohibition” he will be guilty of an offence only if he knowingly or recklessly engaged in
the practice.

The business protection from misleading marketing regulations 2008

The Marketing Regulations replace the Control of Misleading Advertisements Regulations. Their aim is to ensure that protection for businesses is not eroded by the repeal of certain legislation (i.e. the Trade Descriptions Act 1968) which protects both consumers and businesses. The Marketing Regulations will:

• Prohibit misleading indications by traders and set out the conditions under which comparative indications will be permitted
• Make it a strict liability criminal offence for a trader to give a misleading indication
• Place a duty to enforce the Marketing Regulations on the OFT and Trading Standards
• Give enforcers the power to investigate whether there has been a breach of the Marketing Regulations
• Place a duty on OFCOM to consider certain complaints about misleading indications and comparative indications which are not permitted.

A copy of the Marketing Regulations can be found at: http://www.opsi.gov.uk/si/si2008/draft/pdf/ukdsi_9780110811475_en.pdf

---

Are any of the issues in this article giving you a headache? If so, we want to know

Name *
Email *
Telephone
Comments*
I agree to Shoosmiths holding information about me in accordance with its privacy policy.* To subscribe to our news updates click here.

 

Email this page

Search the site

Enter the keywords below to search:

Search

Related links

aI("text= Compliance, regulatory & risk;showmenu=;url=/services/business/compliance/51.htm;padding=3;itemwidth=150;itemheight=28");aI("text= Commercial;showmenu=;url=/services/business/commercial/77.htm;padding=3;itemwidth=150;itemheight=28");

Get in touch

Philip Ryan

Associate
T: 08700 86 8652
I: +44 (0)1604 54 8652
E: philip.ryan@shoosmiths.co.uk