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Do you deal with individuals who act outside their business (‘consumers’) e.g. by advertising to consumers or providing packaging which they will see (however far down the supply chain)? If so, says Victoria Barraclough, Solicitor at HBJ Gateley Wareing LLP, read on because the Consumer Protection from Unfair Trading Regulations 2008 (‘Regulations’), which aim to protect consumers from unfair marketing practices, recently came into force.
So what do the Regulations mean for you?
Essentially, you must not engage in the prohibited unfair practices if you sell to consumers. What can’t you do? The following practices are unfair and are prohibited if they cause an ‘average consumer’ to take a different decision than he would have taken had the practice been fair:
1. trading unfairly;
2. misleading actions;
3. misleading omissions; and
4. aggressive commercial practices.
In addition, there are ‘blacklisted’ practices which are unfair and are always prohibited.
General duty not to trade unfairly
A level of skill and care towards consumers which would be expected of a trader acting in accordance with honest market practice or good faith in the telecoms market must be exercised at all times. This is a catch-all for any unfair practice that is not specifically mentioned below.
Misleading actions
A consumer must not be misled through actions e.g. by giving the consumer misleading information, such as claiming that a mobile phone package contains ‘free’ calls when they are only available at additional cost.
Creating confusion with a competitor’s product and failing to honour commitments made in a code of conduct could also be misleading actions.
Misleading omissions
Aggressive commercial practices
Consumers must not be harassed, coerced or subject to undue influence.
‘Blacklisted’ practices
There are 31 ‘blacklisted’ practices. Remember, these are always unfair and always prohibited regardless of whether they change a consumer’s behaviour. They include:
• falsely stating that a product is only available, or on particular terms, for a limited time to elicit an immediate decision and deprive a consumer of sufficient opportunity to make an informed choice;
• displaying a quality mark without authorisation;
• describing a product as ‘free’ (or similar) if the consumer has to pay anything (except the unavoidable costs of responding to an advert and collection/delivery);
• promoting a product similar to another manufacturer’s product so as to deliberately mislead a consumer into believing that the product is made by that other manufacturer when it is not; and
• including in adverts a direct appeal to children to buy products or to persuade adults to buy products for them.
A Criminal Act
Trading Standards and the OFT can bring civil actions against any trader engaging in illegal commercial practices, which can result in enforcement orders requiring the trader to cease those practices.
Most of the Regulations also attract criminal penalties of a fine not exceeding £5,000 (in the Magistrates’ Court) or an unlimited fine and/or up to 2 years in prison (in the Crown Court). Where a trader is a company, both the company and its directors, managers, secretary or similar officers (if the practice is carried on with their connivance, consent or negligence) could be liable. They could, therefore, have direct accountability for the company’s sales and marketing practices.
Negative publicity and loss of business could also flow from any civil or criminal investigation or action.
Therefore, you might wish to review your procedures and put clear policies in place to ensure that your employees understand what unfair commercial practices are and what they may and may not do.
Avoiding prosecution
These Regulations are typical of a long line of legislation which aims to protect consumers, as well as to put individuals (as well as businesses) firmly in the frame for prosecution, and Trading Standards and the OFT are likely to use their new enforcement powers widely.
If you are unfortunate and find yourself under investigation it is vital to seek legal advice early on to put you in the best position and avoid prosecution.
For further information, please contact:
HBJ Gateley Wareing’s Telecoms Team 0121 234 0000
This article is a synopsis of certain recent developments and does not constitute legal advice. If any matter referred to in this article is to be relied upon further advice should be obtained.
HBJ Gateley Wareing LLP © 2009