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Does Your Marketing Material Comply With The New 'Consumer Protection Law'?

The Unfair Commercial Practices Directive recently put into place a common set of consumer protection rules on what are unfair commercial and advertising practices in the EU.  This Directive came into force in the UK on 26 May 2008 by the Consumer Protection from Unfair Trading Regulations 2008.

The new law prohibits certain ‘sharp practices’ in the marketing, sale and supply of a product to consumers.  It does not apply to business-to-business transactions although the government’s view is that it will apply to unfair practices further up the supply chain (for example, where a manufacturer misleadingly labels its product despite the fact that the direct contact with the consumer is through the retailer).  

The general prohibition is a general ban on unfair commercial practices.  In addition, the law sets out in more detail two main categories of unfair commercial, practices – misleading practices and aggressive practices.  Finally, the ‘black list’ contains details of commercial practices that are always unfair.  

A breach of the new law will, in most cases, be a criminal offence.  Directors and managers could be fined and even sentenced to up to two years in prison for contravention of it.

GENERAL PROHIBITION

The general prohibition sets out the general principle that a commercial practice is unfair if “(a) it contravenes the requirements of professional diligence; and (b) it materially distorts or is likely to materially distort the economic behaviour of the average consumer”.

The exact nature of the above test is not yet clear given that the concepts in it are new to English law.  There is, for example, much discussion as to what exactly an “average consumer” is.  European case law dictates this to be a “reasonably well-informed and reasonably, observant and circumspect” person.  However, if your customers are children, elderly or vulnerable, you need to take extra care in your behaviour towards them.

On balance, if you follow honest market practices and act in good faith then it is unlikely that you will fall foul of the law.  It is also a good idea to document your reasoning why you think a commercial practice is fair in case it is ever challenged.

‘MISLEADING PRACTICES’ AND ‘AGGRESSIVE PRACTICES’

A commercial practice is a‘misleading practice’ if it:

            • contains false information, or in any way deceives or is likely to deceive the average consumer, even if the information is correct; and

            • causes or is likely to cause him to, for example, enter into a contract he would not otherwise have entered into.

A commercial practice is also a ‘misleading practice’ if it:

            • omits material information that the average consumer needs to make an informed decision;

            • hides or provides material information in an unclear, unintelligible, ambiguous or untimely manner;

            • fails to identify its commercial intent if not apparent from the context; and

            • causes or is likely to cause him, for example, to enter into a contract he would not otherwise have entered into.

A commercial practice is an ‘aggressive practice’, “if it significantly impairs or is likely significantly to impair the average consumer’s freedom of choice or conduct in relation to the product concerned through the use of harassment, coercion or undue influence” and it causes or is likely to cause him, for example, to enter into a contract he would not otherwise have entered into.

‘BLACK LIST’

The ‘black list’ sets out 31 practices which are always considered unfair, including (by way of example):

            • falsely stating that a product will only be available for a very limited time so that consumers cannot make an informed choice;  Or

            • describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.

CONCLUSION

The new law has resulted in the repeal of much legislation in the field of consumer law. In theory, there should be a marked improvement of business understanding of the law which, in turn, should make it easier and cheaper to comply with.

We would be happy to discuss these new Regulations with you in the context of your specific business activities or to discuss how the new law will impact upon your business generally.

For further information please contact:

Paul Caddy, paul.caddy@laytons.com

Tel: 0161 834 2100

For PDF version of this focus sheet please click here