Out-Law / Your Daily Need-To-Know

UK consumers given new private rights to redress if businesses act aggressively or misleadingly

07 Apr 2014, 1:49 pm

New laws that give consumers a right to make a private claim for damages when businesses have engaged in aggressive or misleading practices have been introduced before the UK parliament.

Under the Consumer Protection (Amendment) Regulations, consumers can raise a claim before the courts for a payment of damages by a business if they have either incurred a financial loss or "suffered alarm, distress or physical inconvenience or discomfort" they otherwise would not have done had the company not engaged in a "prohibited practice".

A 'prohibited practice' is either a "misleading action" by a business or an "aggressive" commercial practice, according to the rules.

The right to damages is limited "in respect of loss that was reasonably foreseeable at the time of the prohibited practice", and businesses can raise a number of defences to exclude their liability.

If a business can show that misleading or aggressive commercial practices they engaged in were "a mistake" or "an accident" then they will not have to pay damages to consumers who were victim to the activity, so long as they can show they "took all reasonable precautions and exercised all due diligence to avoid the occurrence of the prohibited practice".

Similarly, if the behaviour was caused by something "beyond the trader's control", because of "reliance on information supplied to the trader by another person" or "the act or default of a person other than the trader" then there is no liability for damages owed by the businesses, so long as their precautionary measures were reasonable and they exercised all due diligence to avoid the practices occurring.

The new regulations, the bulk of which come into force in October, also give consumers the right to unwind from contracts with businesses or claim a discount if those companies engage in misleading or aggressive business practices, under certain conditions.

"Misleading and aggressive commercial practices are a major problem for consumers," the UL government said in a report outlining the changes to the law (18-page / 202KB PDF). "A large proportion of the victims are among the most vulnerable in society, with housebound and older people facing a particular threat from high-pressure sales techniques. Existing laws mean it is very difficult for victims of rogue traders to get their money back."