Consumer Protection from Unfair Trading Regulations 2008 - Olswang

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On 26 May 2008 two new sets of regulations will come into force in the UK, the first of which protects consumers from unfair, misleading and aggressive commercial practices and the second of which protects businesses from misleading advertising and regulates comparative advertising. The new regime aims to harmonize and replace existing laws and will apply to both online and offline businesses. Breaches of the new regulations could result in criminal sanctions and businesses are advised to review their existing practices to ensure that they do not fall foul of the new regime. The Consumer Protection from Unfair Trading Regulations 2008 ("Consumer Regulations") will regulate commercial practices between businesses and consumers, whilst the Business Protection from Misleading Marketing Regulations 2008 ("Business Regulations") will regulate business-to-business commercial practices and also introduce requirements around comparative advertising. THE CONSUMER REGULATIONS The Consumer Regulations apply across all business sectors. They contain a general prohibition on "unfair commercial practices" before, during or after transactions. They also prohibit traders from misleading consumers and from using aggressive commercial practices. In addition, there are 31 specific commercial practices which are expressly prohibited. The Consumer Regulations amend, replace or complement existing consumer law; notably parts of the Trade Descriptions Act 1968 and the Consumer Protection Act 1987. Will your business be affected by the Consumer Regulations? The Consumer Regulations will apply to any conduct by businesses directly connected to the promotion, sale or supply of products to consumers. Therefore, your business will be affected by the Consumer Regulations where: • your business has a direct relationship with consumers; • your business has a sufficiently close connection with consumers as to fall within the scope of the Consumer Regulations (for example, where a trader supplies products to a supermarket to be sold to shoppers, the trader will need to ensure that their labelling complies with the Consumer Regulations); and/or • your business purchases products from consumers. Unfair commercial practices The Consumer Regulations contain a general prohibition on "unfair commercial practices" (the "General Prohibition"). The General Prohibition prohibits practices which: • fail to meet the standard of professional diligence (i.e. the standard of skill and care that a trader in the relevant field of activity could reasonably be expected to exercise); and www.olswang.com 1
• materially distort the economic behaviour of the "average consumer". Misleading actions and omissions The Consumer Regulations prohibit misleading actions and omissions which cause the average consumer to make a different transactional decision from that which they might otherwise have made. "Misleading actions" include giving false or misleading information to, or deceiving, customers: • about the existence or the main characteristics of a product; • about the trader's compliance with a code of conduct; and/or • by marketing a product in such a way that creates confusion with a competitor's products. An example would be where a trader sells a television package to a consumer, saying that it includes a channel which is only available at an additional cost. "Misleading omissions" include omitting information which the average consumer needs in order to make an informed decision, or providing information in an unclear, unintelligible, ambiguous or untimely manner. The context of any omissions, such as limitations of time or space, will be taken into consideration, as will other steps the trader has taken to convey the information (such as stating that "terms and conditions apply"). In addition, the Consumer Regulations provide that if a trader makes an "invitation to purchase" (for example, by including a page on a website which enables customers to place an order) the invitation must include specified material information, such as a full description of the advertised product. Aggressive practices The Consumer Regulations prohibit aggressive commercial practices involving harassment, coercion or undue influence. This prohibition is aimed at stopping, amongst other things, high-pressure selling techniques that include intimidation. Examples given by the Guidance issued by the Office of Fair Trading include forceful techniques employed by unscrupulous door-to-door salesmen. Prohibited practices The Consumer Regulations list 31 specific commercial practices which are considered unfair in all circumstances. The list includes the following practices: • falsely stating that a product will only be available for a very limited time (or on particular terms for a limited time); www.olswang.com 2
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Consumer Protection from Unfair Trading Regulations 2008 - Olswang

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