The Office of Fair Trading (OFT) and Department of Business and
Regulatory Reform (BERR) has jointly published new guidance
intended to help traders to comply with the Consumer Protection
from Unfair Trading Regulations. These rules, known as the CPRs,
came into force on 26th May 2008.
The new guidance was published on Friday, one day after the
first court ruling under the new legislation.
The CPRs include controls on "invitations to purchase". The
guidance sets out examples of practices that amount to invitations
to purchase.
The examples include "a price on a product in a shop"; "a page
or pages on a web site where consumers can place an order"; and "a
text message promotion to which consumers can directly respond in
order to purchase the promoted product".
Where there is such an invitation to purchase, the CPRs require
certain information to be given to consumers in a clear,
unambiguous, intelligible and timely manner. The CPRs list the
required information, which includes the main characteristics of
the product, the price, including any taxes, and the existence of a
cancellation right if it applies to the sale.
Rules on 'distance selling', which also apply e-commerce sales
to consumers, have been in force since October 2000. They also
required this information; but the penalties for non-compliance
were mild. Under the 2000 rules, the OFT could obtain a court order
to force compliance; or a consumer who suffered damage as a result
of the breach could sue for compensation. Under the 2008 rules, the
penalties range up to a fine and two years' imprisonment for
company directors.
The new guidance gives other examples of conduct that will
breach the Regulations.
These include failures to disclose limited stock in
promotions:
"A camera firm advertises nationally using the line ‘Digital
cameras for £3’," says the guidance. "They had only ever planned to
have a very small number of such cameras available at that price.
This would breach the CPRs because the number of cameras actually
available for £3 would not be sufficient to meet the likely level
of demand arising from the scale of the advertising and the trader
knew this but failed to make clear in the advertisement that only
limited numbers were available."
Confusing the brands of a product can now be treated as a
criminal offence where once it may only have resulted in trade mark
or passing off actions in civil courts.
A trader designs the packaging of shampoo A so that it very
closely resembles that of shampoo B, an established brand of a
competitor. If the similarity was introduced to deliberately
mislead consumers into believing that shampoo A is made by the
competitor (who makes shampoo B) – this would breach the CPRs,"
says the guidance.
The use of the word 'free' is also controlled by the CPRs. This
caused some controversy, when there were fears that 'buy one, get
one free' promotions – known as BOGOF deals – would be banned. BERR
and the European Commission responded to that controversy by
confirming that BOGOF deals are not
banned.
The new guidance deals with the controls on the word 'free' only
briefly: "A trader advertises a ‘free’ gift. He then tells
consumers that in order to receive their ‘free’ gift they need to
pay an extra fee. This would breach the CPRs."
Misleading discounts or closing down sales where a shop does not
close are also banned. The guidance gives an example of a trader
advertising televisions, saying the price has been substantially
discounted. If they have "only been on sale at the non-discounted
price in very small numbers for a very short period of time in one
of the trader’s numerous shops," the promotion will be deceptive
and in breach of the rules.
The guidance was published on the day after the first court
ruling under the new rules. That case, against two Wiltshire
traders, resulted in an Enforcement Order.
Jimmy Stockwell and his son Shane offered handy-man services to
local homes. Complaints were made to local Trading Standards
officers that the Stockwells' behaviour was aggressive and their
work of poor quality. The Order, granted by His Honour Judge Cutler
at Salisbury County Court, ordered the defendants not to breach a
range of provisions in the Regulations.
It is only if the Stockwells disobey the terms of the Order that
they face being found in contempt of court and then risk
imprisonment, a fine, or both.
A spokesman for Wiltshire Trading Standards told OUT-LAW.COM
that the case was brought as a civil action by Trading
Standards with the support of the OFT. They requested an
Enforcement Order in the action. Asked why the case was not brought
before the criminal courts, which have powers to levy fines or
imprison defendants, the spokesman said that the lower standard of
proof required in a civil action made that approach more
attractive. "We could get it done quicker," he said.
In the past, such a case might have been dealt with by Trading
Standards under the Enterprise Act which requires warnings to be
given and evidence that the offending conduct took place on a
regular basis, the spokesman said.
Editor's note, 07/08/2008: The spokesman
for Wiltshire Trading Standards had not responded to OUT-LAW's
request for comment when this story first appeared. The story
has been extended since it first appeared.
