Unfair commercial practices are prohibited in the UK. This arises out of the
and came into force on 26th May 2008 as The Consumer Protection from Unfair Trading Regulations 2008 (regulation #1277) and was designed to prevent the consumer from being disadvantaged or damaged by an unfair commercial practice.
In deciding what is an unfair commercial practice, it is necessary to determine the effect of a commercial practice on the average consumer who is reasonably well informed, reasonably observant and circumspect. Also in determining the effect of a commercial practice, it is necessary to examine whether the practice is directed to a particular group of consumers and if it is, then the average consumer is referenced to an average member of that group.
Also where there is a clearly identifiable group of consumers who are particularly vulnerable to the practice (or any underlying product) because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, and where the practice is likely to materially distort the economic behaviour only of that group, then the definition of average consumer is altered to be a reference to the average member of that group of vulnerable consumers and this is without prejudice to the common and legitimate advertising practice of making exaggerated statements which are not meant to be taken literally. (For example, “The World’s Best Treatment for arthritis” or the “Ultimate in wheelchair comfort” would be an example of the type of exaggerated statements that would fall within the “not meant to be taken literally” category. )
So what is an unfair commercial practice?
A commercial practice is unfair if it contravenes the requirements of professional diligence and materially distorts – or is likely to materially distort – the economic behaviour of the relevant average consumer with regard to the product.
A commercial practice is also unfair if it is a misleading action under the provisions of regulation 5 and if it is a misleading omission under the provisions of regulation 6 or aggressive under the provisions of regulation 7; or listed in Schedule 1.
So, any of the following items (listed in Schedule 1) are automatically unfair commercial practices and this means:
1. Falsely claiming to be a signatory to a code of conduct.
This is designed to cover both claiming to be a signatory to a code of conduct when the trader is not actually a member, for example, claiming to be a Member of the Federation of Master Builders when not actually a member, but is also likely to also cover to other obvious deception. Firstly, and fairly obviously, where a trader creates their own code of conduct under their own name, but then simply ignores it or doesn’t keep to the code of conduct. This would include a company that claims to have a code of conduct but doesn’t publish it and won’t provide it (which would usually be expected to be done before a contract is formed). It is likely that a trader providing a Code of Conduct after finishing the work would have be burden of proof to show that the Code of Conduct was written and generally applied to their business prior to first mentioning this Code to the relevant Consumer.
In addition, it is possible that where the Code is defective or otherwise so poor as to be meaningless, then a judge would conclude that a consumer would be likely to expect a robust and protective code and that such a code would include a set of standards which was found in other codes of Conduct within that industry. As yet (pending caselaw on the subject, it is unclear whether a judge would simply find that there was a breach of the Unfair Commercial Practices Regulations alone, or whether a judge would state that the promise of the Code of Conduct without its actual provision to the consumer implied terms consistent with the good Codes of Conduct within the industry. In the author’s view, it is likely that an English Court would imply the necessary terms into the contract.
Therefore is a commercial provider is going to advertise that they have a Code of Conduct, then the Commercial provider should, at the very least, ensure that the Code is published on their website (and that they track each version of changes) and preferably that the Code is provided to potential customers prior to contracting. (The danger of providing it at the time of contracting is that the consumer will argue that they did not have a reasonable opportunity to examine the Code and was entitled to assume it was the type of Code of Conduct used throughout the relevant industry, opening the door to the use of implied terms).
The prohibitions will also cover a situation where a business provides a Code of Conduct under a separate name to give the illusion that the Code is one of the codes widely adopted by industry, but where in fact the Code is a Sham Code and only used by the provider of the Code. For example, if WripUOff Car Dealers provides the Federated Automotive National Trade Association & Sales Industry of Great Britain (FANTASI GB) Code of Conduct where WripUOff Car Dealers (or associated family businesses) are the only member(s) then the FANTASI Code of Conduct is a sham association and the Code similarly a Sham Code and a breach of the Regulations. In such a case however, it is unlikely that the Court would have the ability to imply terms into the Code, because the Code would have been published.
In such cases, the use of a false or trading name for the Code Provider which is different from the Trader, unless very carefully explained, would be an Unfair Commercial Practice. (Any explanation would probably have to follow the Denning Shoe Lane Parking guidelines on making it very obvious to a consumer that the code is owned by the Trader or an associated group of traders and the non-deceptive practice is to use the Trader’s own name.
2. Displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation.
The next automatically unlawful behaviour in the Schedule is falsely displaying a trust mark, quality mark or equivalent. A Trust or Quality Mark is seem widely in the building trade and
3. Claiming that a code of conduct has an endorsement from a public or other body which it does not have.
4. Claiming that a trader (including his commercial practices) or a product has been approved, endorsed or authorised by a public or private body when the trader, the commercial practices or the product have not or making such a claim without complying with the terms of the approval, endorsement or authorisation.
5. Making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply, or to procure another trader to supply, those products or equivalent products at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered (bait advertising).
6. Making an invitation to purchase products at a specified price and then—
(a)refusing to show the advertised item to consumers,
(b)refusing to take orders for it or deliver it within a reasonable time, or
(c)demonstrating a defective sample of it,
with the intention of promoting a different product (bait and switch).
7. Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice.
8. Undertaking to provide after-sales service to consumers with whom the trader has communicated prior to a transaction in a language which is not an official language of the EEA State where the trader is located and then making such service available only in another language without clearly disclosing this to the consumer before the consumer is committed to the transaction.
9. Stating or otherwise creating the impression that a product can legally be sold when it cannot.
10. Presenting rights given to consumers in law as a distinctive feature of the trader’s offer.
11. Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial).
12. Making a materially inaccurate claim concerning the nature and extent of the risk to the personal security of the consumer or his family if the consumer does not purchase the product.
13. Promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not.
14. Establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.
15. Claiming that the trader is about to cease trading or move premises when he is not.
For example, fictitious closing down sales.
? Does this include Clearance Sales?
16. Claiming that products are able to facilitate winning in games of chance.
17. Falsely claiming that a product is able to cure illnesses, dysfunction or malformations.
18. Passing on materially inaccurate information on market conditions or on the possibility of finding the product with the intention of inducing the consumer to acquire the product at conditions less favourable than normal market conditions.
This particular item is a misleading market condition prohibition and potentially includes an organisation offering services to particular consumers at a price significantly higher than it offers the identical or material similar services to consumers buying through other organisations or via alternative purchasing methods. This would also overlap with the protections available under regulations 5 to 7.
Care Sector Dual Pricing – an Unfair Commercial Practice?
One particular possibility is that of the care sector. In the UK Care Sector, the Care sector offers identical or material similar services to local authorities at a significantly lower price than it makes the same services available to consumers, but after a certain period of time, the care services are taken over by the local authority and at that time, the price is significantly reduced. In many cases, the price contracted with the local authority is barely enough to cover costs and without the excessive charging of ordinary consumers, many care homes would suffer material hardship or possibly be unable to cover all of its costs.
This arrangement, which could be considered a cartel between the care homes and the local authorities to provide or maintain excessively higher prices to consumers in order to benefit local authorities, is likely to be an unfair commercial practice.
The commercial practice should be that the costs of care are transparent and materially similar regardless of who pays for the care, especially where the same care is given to the patient when the cost of care drops dramatically when the local authorities take over liability to pay. This is clearly not the case in relation to the care sector and this is particularly of concern due to the fact that the beneficiaries of these contracts are the particularly vulnerable.
19. Claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent.
20. 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.
This means that a free service must be generally free so that if they take up the offer, then they may have to pay a reasonable charge for the cost of collection or delivery of the item, for example…….
21. Including in marketing material an invoice or similar document seeking payment which gives the consumer the impression that he has already ordered the marketed product when he has not.
22. Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer.
23. Creating the false impression that after-sales service in relation to a product is available in an EEA State other than the one in which the product is sold.
24. Creating the impression that the consumer cannot leave the premises until a contract is formed.
25. Conducting personal visits to the consumer’s home ignoring the consumer’s request to leave or not to return, except in circumstances and to the extent justified to enforce a contractual obligation.
26. Making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media except in circumstances and to the extent justified to enforce a contractual obligation
.27. Requiring a consumer who wishes to claim on an insurance policy to produce documents which could not reasonably be considered relevant as to whether the claim was valid, or failing systematically to respond to pertinent correspondence, in order to dissuade a consumer from exercising his contractual rights
28. Including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them.
29. Demanding immediate or deferred payment for or the return or safekeeping of products supplied by the trader, but not solicited by the consumer, except where the product is a substitute supplied in accordance with regulation 19(7) of the Consumer Protection (Distance Selling) Regulations 2000 (inertia selling)(1).
30. Explicitly informing a consumer that if he does not buy the product or service, the trader’s job or livelihood will be in jeopardy.
31. Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either—
(a)there is no prize or other equivalent benefit, or
(b)taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.
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