Wronged Consumers provided with a New Weapon against Misleading or Aggressive Traders

Posted on: November 11th, 2014

Consumers have been offered greater authority to challenge devious rogue traders and receive reparation under new rights. On 1 October 2014 the Consumer Protection (Amendment) Regulations 2014 (the “2014 Regulations”) came into force. The 2014 regulations have made available a new civil right of action for wronged consumers against sellers and businesses which have engaged in particular aggressive or misleading procedures.

Overview

The 2014 Regulations make changes to the Consumer Protection from Unfair Trading Regulations 2008 (the “2008 Regulations”) which implemented the Unfair Commercial Practices Directive. The 2008 Regulations were part of a broader agenda of alterations to the consumer protection regime in the UK, which endeavoured to both to simplify and enhance consumer protection in the UK. The 2014 Regulations now provide to consumers direct redress that was formerly enforceable only by Trading Standards.

Part 4A of the 2008 regulations confers these additional rights on consumers, such that the right to pursue a claim under the Misrepresentation Act will be substituted by the rights existing under Part 4A of the 2008 regulations.

The requirements

The three requirements which must be fulfilled in order to have a right of redress under Part 4A are as follows:

  • There must be either a sale of goods by a consumer to a trader, or a sale and supply of goods by a trader to a consumer.
  • The trader must have employed a prohibited practice (misleading or aggressive practice) in relation to the product;

The prohibited practice must be “a significant factor” in the consumer’s entry into the transaction.

Examples of misleading actions may include:

  • Erroneous product information or deceptive appearance;
  • Marketing of a product which would allow for confusion with any products or trademarks/names of a competitor;
  • Neglecting to honour obligations under a Code of Conduct which the trader has consented to comply with.

An aggressive practice is defined as one that significantly impairs, or is likely to impair, the average consumer’s freedom of choice or behaviour with respect to the product concerned through the use of harassment, coercion or undue influence, and which in doing so, triggers the consumer to make a transactional choice that the consumer would not have taken otherwise. An example could be enforcing arduous or disproportionate obstacles on a consumer wanting to switch to an alternative product or trader.

The Department of Business, Innovation and Skills provides the following two examples: “those who are harassed into home improvements by a door-to-door salesman when they really don’t need it or somebody who is misled into purchasing a mobile phone by false promises on download speeds and network coverage.”

Significantly, digital content is now incorporated into the definition of “product” under the 2014 Regulations.

The remedies

The newly accessible remedies for consumers under the 2014 Regulations include:

  • The right to damages – including with regard to financial loss incurred on account of physical inconvenience, alarm or distress taking place due to the prohibited practice;
  • The right to unwind contracts – in the majority of circumstances within a 90 day period and in the situation where the underlying product is still capable of rejection; and
  • For claims that are not concerning consumer to business contracts or consumer payments, the right to a discount (extending from 25%-100% of the price paid).

Business impact

The changes signify another key movement in the trend in the direction of reinforcing the rights of consumers, and will give to consumers a further alternative remedy against businesses which fail to comply with the Regulations.

Importantly, it must be remembered that it is still an offence under the Consumer Protection Regulations to knowingly or recklessly engage in commercial practice materially distorting a consumer’s economic behaviour (including misleading omissions). This is liable to be punished by a fine of up to £5,000 or up to 2 years’ imprisonment.

Therefore, traders should not only take into account the prospect of direct consumer action against them, but additionally the prospect of any contravention of the law in their marketing practices so as to avoid being deemed reckless in this regard.

So as to evade liability, traders should be equipped to demonstrate and provide evidence that they have implemented reasonable precautions and exercised due diligence to prevent the “prohibited practice”, and that the practice was a consequence of a oversight, accident, act or default or a third party, or else beyond their control.

Whether the 2014 Regulations will cause a swell in claims when compared with the 2008 Regulations is still unclear, but time will tell. However, with consumers no longer being dependant upon enforcement by Trading Standards or on producing multifaceted claims of misrepresentation or duress, businesses and traders should be conscious of the significance of avoiding any contravention of the consumer protection regime.