5â Misleading actions

(a)â Definition of misleading action

The first of three consecutive regulations prohibiting identifiable types of behaviour is regulation 5, which controls misleading actions.48 It can reasonably be argued that regulation 5, which is very extensive in impact, lies at the very heart of the new regime and is the natural successor to long-standing protectionist legislation such as the Trade Descriptions Act 1968 and Part III of the Consumer Protection Act 1987, covering much the same ground as those statutes. It follows that, in interpreting regulation 5, recourse may be had to some of the case law which analysed the previous controls. Breaches of regulation 5 are criminal offences under regulation 9.

Regulation 5, which gives effect to Article 6 of the Unfair Commercial Practices Directive,49 provides that a practice will be a misleading action if it satisfies the conditions in either regulation 5(2) or (3). Regulation 5(2) has two strands, both of which must be satisfied if a breach of regulation 5 is to occur. First, regulation 5(2)(a) provides that a commercial practice will be unfair when it contains false information and is therefore untruthful in relation to the matters specified in regulation 5(4) or if its overall presentation in any way deceives the average consumer in relation to any of those matters even if the information is factually correct. Secondly, regulation 5(2)(b) requires that the false information must either cause or be likely to cause the average consumer to take a transactional decision he would not otherwise have taken.

The approach of regulation 5(2)(a) is reminiscent of section 1(1)(a) of the Trade Descriptions Act 1968 under which it was an offence to apply a false trade description to goods,50 meaning in practice the making of an untrue statement

47 For enforcement procedures under the Enterprise Act 2002, see Part 5 Chapter 1.

48 The other two are reg. 6 misleading on omissions and reg. 7 on aggressive commercial practices. 49 Directive 2005/29/EC.

50 It was also an offence to supply goods to which a false trade description had been applied, see Trade Descriptions Act 1968, s.1(1)(b).

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bars; beauty products such as face creams and shampoos for their impact in promoting clear well-moisturised skin and silky, glossy hair; and cleaning products, such as bleach, for ensuring clean, germfree facilities and work surfaces in the kitchen and bathroom. Such claims may cross the boundary between being representations that are to be believed and relied upon, and advertising puffs which, while entertaining and drawing a consumer’s attention to the product, are not intended to be relied upon by the average consumer who, in practice, would not do so. As regulation 5(2) requires that the commercial practice in question ‘deceives or is likely to deceive the average consumer’ it follows that an advertising puff will not give rise to a breach of regulation 5(2).

The risks of the product are clearly those unavoidable during the use of the product and, as such, should be addressed in instructions for use and warnings. This would include instructions about how to use the product safely, whether its use is affected by another product, e.g., instructions with over-the-counter medicines not to drink alcohol, and any warnings about risks inherent in the use of the product. This would clearly include any age-related warnings, such as routinely appear on toys warning of their unsuitability for children below a specified age.

The composition of the product speaks to its constituent elements and thus would include descriptions such as wool, stainless steel, copper, etc., all of which would have attracted liability previously under the Trade Descriptions Act 1968.58 Accessories would include those additional parts which need to be included with the main product, such as cleaning tools with a vacuum cleaner, fixings with self-assembly furniture and remote controls with a television. The absence of any of these when the product has been advertised as including them would be a misleading action under regulation 5.

As products become more technical, there is the potential for greater use of after-sales services. Products such as computers and broadband, the workings of which typically lie outside the knowledge of the average consumer, give rise to a need for an efficient and effective after-sales support service. Further, consumers expect to be able to complain if the product does not work properly or, in some other way, does not match up to the description applied to it and to have their complaint handled quickly and efficiently with an appropriate outcome in a reasonable time. Both the after-sales service and the handling of complaints are included in regulations 5(5)(g)–(h) and thus are main characteristics of the product such as to give rise to liability under regulation 5(2).

Other ‘main characteristics of the product’ as defined in regulation 5(5) include the method and date of manufacture, the method and date of the provision of the product, delivery of the product, fitness for purpose and its usage. These factors would all have attracted liability previously under the Trade

58 Trade Descriptions Act 1968, s. 2(1)(c) specifically included composition as one of the factors, the description of which would constitute a trade description for the purposes of the 1968 Act.

366 The Consumer Protection from Unfair Trading Regulations 2008

Descriptions 1968, with regard to either goods59 or services,60 and thus the new provisions merely re-inforce the pre-existing situation. The method and date of manufacture covers statements such as hand-made and organic, which make clear statements about the method of production, while the date of manufacture pins down the age of the product, which, as stated above, might be very important when supplying cars61 or valuing and selling antiques. The method and date of provision of the product overlap to some extent with the delivery of the product and would include obvious things such as delivery dates. However, it is wider than that as product in this context includes services. Thus, it would include statements about the provision of services such as car maintenance, the installation of double glazing or the processing of photographs. Also included would be details about the method of delivery, e.g., hand delivered, sent by special delivery and air-mail; and the place of delivery, whether that involves the buyer collecting the goods from the premises of the seller or them being delivered to the home of either the buyer or that of a third party. ‘Fitness for purpose’ and ‘usage’ again repeat previous controls under the Trade Descriptions Act 1968.62 Fitness for purpose covers a wide range of situations, which would include, for example, statements such as ‘water-proof’ when applied to a diver’s watch,63 or ‘child-resistant’ when referring to bottles for tablets, or ‘rustproof’ when referring to metal tools. It would also include statements about the strength or durability of a product, each of which is an attribute relevant to the fitness for purpose of the product. Arguably, ‘usage’ would include both proposed usage by the buyer or any third party and its suitability for that purpose, but is also broad enough to include the past usage of the product.64 Thus, statements such as that the product is second-hand or has had a given number of previous owners, or that a car has been involved in a prestigious road-race or a statement as to the number of miles on the clock, would all fall within the ambit of the phrase ‘usage’ and, as such, be subject to control and give rise to an offence if untrue.

The final group of attributes detailed in regulation 5(5), which explain the parameters of the ‘main characteristics’ of the product for the purposes of regulation 5(4) include the quantity of the product, the specification of the product, its geographical or commercial origins, the results to be expected from its usage and the results and material features of tests or checks carried out on the product. The quantity of the product is self-evident and would include any statement as to weight, capacity or volume while also including any statement as to

59 Ibid. s.1.â 60â Ibid. s.14.

61Age is a determining factor when fixing the value of cars.

62Trade Descriptions Act 1968, s. 2(1)(d) and (j), respectively. Of course, the CPUT Regulations 2008 are actually giving effect to Art. 6.1 of the Unfair Commercial Practices Directive.

63See Sherratt v. Gerald’s the American Jeweller’s Ltd (1970) 114 Sol. Jo. 117 in which a watch described as water-proof let in water after being submerged for one hour. See also Griffiths and Griffiths, above n. 51.

64As previously governed by the Trade Descriptions Act 1968, s.2(1)(j), which covered ‘other history, including previous ownership or use’.

(vii)â Price (regulation 5(4)(g),(h))

The next two factors both relate to the price at which the product is being sold. Price is an extremely important factor in the making of any transactional decision, whether the decision is to buy, not buy, sell or not sell. It follows that stringent controls are needed over pricing and all matters relating to pricing. Prior to the CPUT Regulations 2008, issues regarding misleading statements about price were governed by the Consumer Protection Act 1987, Part III, with additional guidance provided by the Code of Practice for Traders on Price Indications.76 The first of the two price-related paragraphs refers to the price or manner in which the price is calculated.77 Clearly, this refers to straight-forward statements about price but also would include unit pricing by, for example, weight, length or capacity whereby the actual price for the product concerned is calculated by reference to the unit price. This would include everything from cheese and fruit sold by the kilogramme to curtain fabric sold by the metre or drink sold by volume. The Code of Practice for Traders on Price Indications, which explained and gave examples of pricing controls under the Consumer Protection Act 1987, has been repealed and replaced by a new guidance, the BERR Pricing Practices Guide.78 This provides traders with examples of good practice in a multiplicity of pricing situations, such as comparison with their own previous price, references to value or worth, prices relating to particular sizes, the sale of entertainment tickets and credit facilities.

The guidance also addresses pricing issues that are closely connected to the second of the two pricing controls included in regulation 5(4)(h), namely, the existence of a specific price advantage. Typically, this might relate to a comparison of the prices charged by a trader with those charged by a competitor79 or might relate to some special price, such as an introductory offer price or an ‘after-sale’ or ‘after promotion’ price,80 or comparisons relating to different circumstances such as ‘when perfect’ comparisons.81

Q10 Consider the scope of the criteria discussed in paragraphs (c) to (h) of regulation 5(4).

Red Tractor logo can be spotted on thousands of products such as beef, lamb, pork, chicken, turkey, milk, cheese, cream, cereals, vegetables, sugar, flour, fruit and salads in shops and supermarkets everywhere. See www.redtractor.org.uk/rtassurance/assurance/about/rta.eb.

76In addition to the 1987 Act, there were also some statutory instruments dealing with particular aspects of pricing controls. These SIs were repealed along with Part III of the 1987 Act by the CPUT Regulations.

77CPUT Regulations 2008, reg. 5(4)(g).

78Department for Business, Enterprise and Regulatory Reform Pricing Practices Guide: Guidance for Traders on Good Practice in Giving Information about Prices (London, 2008).

79For example, it is common practice in supermarkets for shelf edge tickets to show not merely the price at which the trader is selling the goods but also the price, usually higher, at which a major competitor is selling the same item. See BERR Pricing Practices Guide, above n. 78, Part 1.5.

80Ibid. Part 1.3.â 81â Ibid. Part 1.4.

(viii)â The need for a service, part, replacement or repair (regulation 5(4)(i))

This is most likely to relate to contracts for the provision of a service where a consumer is falsely told that the item is in need of repair or replacement, such as new parts for a car or an electrical appliance, or where a product is faulty and the trader informs the consumer that the item cannot be repaired and will have to be replaced. The obvious motive in both of these situations is to persuade the consumer to pay for a service or repair that the product does not need or, alternatively, to persuade the consumer to buy an unnecessary new replacement item instead of retaining or repairing the one that they already possess. In either instance, the practice is intended to encourage the consumer to believe that the item they already own is in a poorer condition than is really the case. It must be remembered that the CPUT Regulations 2008 apply not only when the trader is supplying the product in question but also when they are acquiring it and, hence, false or deceptive statements made about the need for a repair to an item when the trader is acquiring it will be covered by this provision.82 The most obvious scenario would be undervaluing a car during a part-exchange deal by suggesting that the vehicle needs repairs when this is not the case.

(ix)â The nature, attributes and rights of the trader (regulation 5(4)(j))

Regulation 5(4)(j) addresses the nature, attributes and rights of the trader. This paragraph is qualified by the contents of regulation 5(6), which details various aspects of the trader’s person, qualifications and business attributes. Thus, on a personal level, it considers the trader’s qualifications and his identity, whether as an individual or as the representative of a company. Identity may be important in that the consumer may want to deal with only one person or company83 and would not be prepared to contract with anyone else. Qualifications are significant in that they make a statement about the ability and professionalism of the person in question. Thus, for a trader to falsely suggest that he possesses qualifications may encourage a consumer to employ that trader, a decision he would not have made had he known that the trader lacked a relevant qualification.84 Other factors that are relevant in respect of the nature of the trader and his attributes and rights are his assets, both physical and financial, the status of his business and any approvals that he claims to have, together with any affiliations or connections that he may have to trade bodies or organisations, the

82For an example of a decision under the Trade Descriptions Act 1968, see Fletcher v. Budgen [1974] 2 All ER 1243, in which a trader, when buying a car from a consumer, falsely told the consumer that the car was unrepairable and only worth scrap value.

83Mistakes as to identity arising from fraudulent actions of a buyer pretending to be somebody else have given rise to numerous civil law cases in which the innocent purchaser has sought to have a contract declared void or voidable for mistake as to identity. See, e.g., Cundy v. Lindsay (1878) 3 App. Cas. 459, HL; Kings Norton Metal Co. Ltd v. Edridge, Merrett & Co. Ltd (1897) 14 TLR 98, CA; Lewis v. Averay [1971] 3 All ER 907; Citibank NA v. Brown Shipley & Co. Ltd [1991] 2 All ER 690.

84For a decision made under the Trade Descriptions Act 1968, see R v. Breeze [1973] 2 All ER 1141, in which the defendant stated that he was a qualified architect when this was not the case.

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ownership of any industrial, commercial or intellectual property rights and any awards or distinctions that he, his business or his product may possess.

(x)â The consumer’s rights or the risks he may face (regulation 5(4)(k))

The final factor to be included in regulation 5(4) are the rights of a consumer or the risks that he may face. Consumers have a wide variety of rights, includingÂthe most well-known, such as rights under the Sale of Goods Act 197985 and the corresponding rights under the Supply of Goods and Services Act 1982.86 In addition, other rights would include, among many others, rights under the Supply of Goods (Implied Terms) Act 1973 in relation to hire-purchase contracts, rights under the Consumer Credit Act 1974, rights under the Consumer Protection (Distance Selling) Regulations 200087 and rights under the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.88 A statement that suggested that these rights did not exist or had wrongfully been excluded would be classed as a misleading statement such as to give rise to liability under regulation 5(2)(a), as would any statement that a consumer’s rights are a distinctive feature of the trader’s product.89 The risks that a consumer might face would include what remedies would be available to him if the product failed after the guarantee period had expired.90

Breaches of regulation 5 of the CPUT Regulations 2008 may result in a twofold outcome, namely, the commission of a strict liability criminal offence under regulation 9 with the consequent penalties of a fine up to the statutory maximum on summary conviction and an unlimited fine or imprisonment for up to two years or both for a conviction on indictment,91 and also the possibility of a Community infringement under the Enterprise Act 2002 leading to civil law enforcement via undertakings, enforcement orders and interim enforcement orders.92

85The most well publicised rights under the Sale of Goods Act 1979 are undoubtedly those relating to the right to pass title, sale by description, satisfactory quality and fitness for purpose, and

sale by sample which give rights on breach to rescission of the contract and damages, see Part 2 Chapter 2. Alternative remedies of repair, replacement, reduction of the purchase price and rescission are also available under s.48 of the 1979 Act. These statutory remedies cannot be excluded against a person dealing as a consumer (Unfair Contract Terms Act 1977, s.6(2)) and can only be excluded against a person who is not dealing as a consumer when the exclusion clause is reasonable (Unfair Contract Terms Act 1977, s.6(3)). Notices which purported to give effect to a term which would offend s.6 were prohibited previously by the Consumer

Transactions (Restrictions on Statements) Order 1976, SI 1976/1813, which was repealed by the CPUT Regulations 2008.

86The Supply of Goods and Services Act 1982 provides for implied conditions in contracts for the transfer of goods other than by sale or hire purchase and implied conditions in contracts of hire. It also provides for the inclusion of implied terms in contracts for services of reasonable care and skill, stipulations as to time of performance and stipulations as to contractual consideration. See

90See Butterworths Trading and Consumer Law, above n. 7, Division 1A, para. 11.

91CPUT Regulations 2008, reg. 13.

92Enforcement under the Enterprise Act 2002, Part 8 was discussed in Part 5 Chapter 1.