Skills Zone

Trading unfairly

The duty not to trade unfairly is a catch-all provision that will allow enforcers to take action against unfair commercial practices that do not fall into the banned practices category, and which are not misleading or aggressive commercial practices.

A commercial practice will be considered to be unfair if it “materially distorts the economic behaviour of the average consumer with regard to the product.”

Simply put, it’s a clause designed to prevent false claims about areas such as pricing, safety, weights and measures, descriptions of products and services, contracts between buyer and sellers, competition between businesses, and intellectual property and counterfeiting.

Misleading

The regulations also prohibit commercial practices that are misleading (whether by actions or omissions). For example:

Marketing a product in a way that creates confusion with competitors’ products
Omitting information such as restrictions on when a special offer can be redeemed
Providing information in an ambiguous way

Aggressive commercial practices

These are commercial practices which, by harassment, coercion or undue influence, significantly impair the consumer’s freedom of choice and are likely to cause them to make a different decision.

Whether a commercial practice is considered aggressive will depend on factors such as:

Timing, location, nature or persistence
The use of threatening or abusive language or behaviour
Any threat made to take any action, which cannot in fact be legally taken

This clearly seeks to cover scenarios such as doorstep traders or ‘cold’ callers that attempt to pressurise consumers.

Banned commercial practices

They include:

Displaying a quality mark without having obtained the necessary authorisation
Falsely stating a product will only be available for a very limited time
Claiming to offer a promotion without awarding the prizes
False closing-down sales

No evidence of the effect on a typical consumer is required - if a trader breaches one of the banned practices, action can be taken.

One provision that may cause difficulty relates to the use of the word ‘free’. Describing a product as ‘free’ is prohibited if the consumer has to pay anything other than the unavoidable cost of responding to the offer and the delivery of the item.

Advertising, marketing, sales, supplies, after-sales services and debt collection are also caught by the new rules. Even those who are not actually selling products to consumers will still have to take the regulations into account if their business is directly connected with the sale or supply of a product to consumers.

A list of the 31 practices (.pdf) is available from the Office of Fair Trading.

The enforcers

Among the bodies that can enforce the regulations are the Office of Fair Trading, Local Authority Trading Standards Services and the Department of Enterprise, Trade and Investment in Northern Ireland.

They may inspect goods and enter business premises to investigate breaches of the regulations, and where they suspect a breach has occurred, they can force traders to produce documents relating to their business, as well as seize and detain goods. Any obstruction of an enforcement officer or making a false statement is a criminal offence.

Companies and individuals charged with an offence under the regulations could face conviction and a fine up to £5,000 and/or imprisonment of up to two years.

The defence

The main defence for breaches of the regulations is due dilligence. To argue this successfully, you have to prove:

You made a mistake
You were relying on information given by another person
It was someone else’s fault
It was the result of an accident or cause beyond your control
You took all reasonable precautions and due diligence was exercised
Proper procedures are in place and were applied

For honest agents and operators the law should not be a problem. In fact, it could be a positive for the industry. As a spokesman for ABTA said: “We welcome the new legislation.

"In terms of how it will impact on ABTA members, since they’re already following the law and the ABTA Code of Conduct (.pdf) it will not impose any new requirements. It’s really aimed at the cowboys."

Find out more

If you are a member of ABTA, you can obtain further advice by contacting the association’s members’ information department at membersinfo@abta.co.uk or on 0845 177 2282.

Paul Burnley is a partner in the Litigation and Regulatory Group of DLA Piper
Poppy Williams is a solicitor in the Litigation and Regulatory Group of DLA Piper