Trading Up: More Consumer Protection Needed?
Alistair Parker
(Solicitor)
The Consumer Protection from Unfair Trading
Regulations 2008 have had a real impact on the way businesses
market, advertise and offer their goods and services to consumers.
It is perhaps ironic that the first 18 months of the life of these
regulations have seen an economic recession which, in many ways,
has put the High Street consumer in a much stronger buying position.
The 2008 Regulations replace the Trade Descriptions Act 1968,
the Control of Misleading Advertising Regulations 1988 and Part
III of the Consumer Protection Act 1977. Both corporate bodies
and individuals can be prosecuted. A breach of the regulations
can lead to 6 months imprisonment in the Magistrates' Court or
up to 2 years imprisonment in the Crown Court. Each offence can
also attract a fine of up to £5,000. Multiple offences are
often alleged, for example, where an offending advert or practice
remains in use despite Trading Standards warnings, and thus various
breaches over a range of dates may be alleged. Proper legal advice
at an early stage is therefore essential.
Trading Standards officers have a positive duty to enforce the
2008 regulations and are reluctant to discontinue a prosecution
on the basis of the public interest, even where there is no evidence
of any specific customer being misled.
The Regulations set out a number of banned practices, such as
aggressive selling, which will not surprise responsible businesses.
However, within regulations 5 and 6, new offences of Misleading
Actions and Misleading Omissions can be found. These practices
are defined in detail within the Regulations. Essentially, it
is an offence to mislead a consumer as to almost any aspect of
the product or service, or nature of the transaction, provided
that it causes, or is likely to cause him to take a transactional
decision that he would not otherwise have taken. Examples of this
include advertising a closing down sale when the shop isn't closing
down, artificially increasing the price of a product temporarily
in order to later advertise a large price reduction, or pretending
that goods are in short supply or only available for a short period
of time in order to induce a quick sale.
Average Consumer
The average is defined within the regulations as being reasonably
well informed, observant and circumspect. Interestingly, there
is no need for an actual complaint from any such customer. Often,
such complaints arise from Trading Standards Officers themselves,
or from a disgruntled competitor of the suspected business.
Clearly, vulnerable consumers who have been targeted and taken
advantage of, are a special case. But perhaps an important question
remains. That is whether today's average consumer would actually
be persuaded to take a transactional decision by certain 'Misleading
Actions?. Misleading sales pitches such as 'Closing Down Sale'
or '75% off' are often only meant to grab a consumer's attention.
However, an average consumer is not likely to go to the next stage
of a transaction unless and until he is happy with the specifics
of the deal. Market research on the point might provide helpful
evidence for the defence. Most consumers are now competent Internet
users, aware of their options, and driven by a recession-era will
to find the best price by careful price comparison. Businesses
are all too aware of this, and prices have fallen partly as a
result.
This new consumer approach is perhaps best outlined in the recent
popular advert devised by M&C Saatchi for Dixons, where consumers
are encouraged to cruise High Street stores getting the very best
customer care and advice enabling them to choose their ideal product,
They then are simply encouraged to buy that very product from
the Dixons website! If this level of sophistication reflects the
average consumer, would he or she really be persuaded to part
with money because of a sign saying "50% off while stocks
last"?
Investigations - Practical Considerations
Local Trading Standards Teams have also become more sophisticated
and joined-up in their investigations. In a recent case, the linchpin
of the prosecution evidence was a recording of the BBC programme
'Rogue Traders', where the hapless Defendant was purportedly ensnared
while committing offences similar to that charged. More typically,
undercover officers will carry out test purchases, covert filming
in stores/ businesses, covertly recorded telephone calls whilst
posing as customers, and also engaging in written correspondence
with a business or individual without telling them that their
responses might be relied on as evidence. Sometimes, the seller
may make statements to Trading Standards, thinking he is simply
being advised, rather than being investigated. Some of these investigative
tools require authorisation under the Regulation of Investigatory
Powers Act 2000, which critics say is currently being over-used
in this as well as in other areas.
All of these tools ratchet up the costs of prosecution. It is
not unusual for Trading Standards to apply for thousands of pounds
in costs, even on a guilty plea at the first hearing.
Defences
Defences are available under Regulation 17 (due diligence), and
Regulation 18 (innocent advertisement). Businesses may well be
aware of these defences, but the burden remains on the defence
to prove them, on the balance of probabilities. In the absence
of clear internal documentation and witness testimony it is difficult
to succeed, especially in front of a Magistrates' Court which
may well have heard similar cases before and thus adopt a somewhat
jaded approach to the Defence
It is therefore very important that business and individuals obtain
informed legal advice at the earliest opportunity, as soon as
Trading Standards take an interest in their business practices.
It is also important to clarify whether there is an ongoing criminal
investigation, rather than simply generic advice being provided.
Cooperating with an investigation without legal advice may well
lead to unwittingly making admissions which could later be relied
on in Court. Seller: Beware.
For any questions or new instructions please contact Alistair
Parker at Saunders Law Partnership LLP.
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