The landscape of UK consumer rights law is undergoing its largest reform since 1979.
The EU Consumer Rights Directive (2011/83/EU) produced in 2011 is predominantly responsible for the reform and will see both consumers and businesses benefit from more legal rights than ever before.
October 2014 sees the implementation of the Consumer Protection from Unfair Trading (Amendment) Regulations 2014 (the '2014 Regulations'). These regulations amend the existing Consumer Protection from Unfair Trading Regulations 2008 (the '2008 Regulations') to give consumers a direct right against traders who engage in misleading or aggressive commercial practices, which, up until now, could only be enforced by Trading Standards and The Competition and Markets Authority (formally the OFT).
The 2014 Regulations give consumers a new set of rights against businesses which can only seek to increase the already high level of consumer rights actions against UK businesses who deal directly with consumers.
What is the aim of the new legislation?
The 2008 Regulations were introduced in May 2008 and prohibited businesses (by way of criminal sanctions) from engaging in misleading and aggressive commercial practices with consumers. Broadly speaking, this means businesses behaving in a manner which falls below the standard for honest market practice, and which materially affects the consumer's decision as to whether to buy a product or service.
When the original regulations were implemented, many considered that enforcement action would be reserved for rogue traders and retailers with seemingly never ending sales. However, the wide interpretation of 'misleading' commercial practices has meant there have been some surprises along the way.
The aim of the 2014 Regulations is to empower consumers to take their own private civil actions against traders who feel they have engaged in misleading or aggressive commercial practices.
When does it apply and how?
There are three conditions that must be satisfied in order for a consumer to have a successful civil action against a trader;
- the consumer must have entered into a contract with a trader for either
- the sale or supply of a product by the trader
- the sale of goods to the trader
- the consumer makes a payment to a trader for the supply of a product
- the trader engages in a 'prohibited practice'
- the 'prohibited practice' is a significant factor in the consumer's decision to enter into the contract or make the payment
A 'prohibited practice' is defined as a commercial practice that is a misleading action, or is aggressive as per the 2008 Regulations.
If successful, a consumer is entitled to a selection of remedies. They can unwind the transaction; obtain a discount on the product (discounts range from 25% to 100% dependant on the seriousness of the prohibited practice) or be paid damages (including damages for alarm, distress and inconvenience).
Are there any known issues/grey areas/pitfalls lawyers should watch out for?
The previous criminal enforcement action under the 2008 Regulations has highlighted the subjective and broad interpretation of the definition of 'prohibited practices'. By way of example, it is possible that traders could face new civil actions for any of the following:
- providing false information to a consumer (regardless of intention)
- using marketing which creates confusion with other products, trade marks or brands
- running unfair prize promotions on social media (e.g. withdrawing prizes where there has been insufficient interest)
- agreeing to be bound by a code of practice (e.g. that its members will only use wood from sustainable sources), displaying the code logo, but then breaching that commitment
- falsely stating that a product will only be available for a limited time
- using advertorials without making it clear that you have paid for the promotion
- describing a product as 'free' if the consumer has to pay anything other than the unavoidable cost of responding, collecting or paying for delivery
Clearly, this means that it is not just the rogue traders that need to be wary of this new consumer right, but all businesses should have an understanding of the increased importance on providing accurate and honest information to consumers in all business communication and practice.
It remains to be seen how substantial the impact of the 2014 Regulations will be on the increased level of consumer civil actions. However, it is unlikely that the provision of new consumer rights would do anything other than increase such actions especially bearing in mind that the 2014 Regulations are one of many changes with more to come next year, especially with the Consumer Rights Bill on the horizon.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.