8â Commercial practices which are automatically unfair

380 The Consumer Protection from Unfair Trading Regulations 2008

of the anti-consumer commercial practices that have caused problems in the past. Many of the Acts and Regulations that controlled them previously have either been repealed or amended by the CPUT Regulations 2008.

Although there are thirty-one unfair commercial practices listed in Schedule 1, some of them have been grouped together here for ease of analysis.

(a)â Nature of services or facilities

The first four of the prohibited practices (paragraphs 1 to 4) relate in some way to claims regarding the nature of services or facilities, which, prior to the advent of the CPUT Regulations 2008, would have constituted an offence under the Trade Descriptions Act 1968.140 The first practice is committed by a trader claiming to be a signatory of a code of practice when he is not. This provision applies both to OFT approved codes of practice and also to other codes of practice promulgated by professional organisations and bodies. A trader who professes to be a signatory of a code of practice is encouraging the consumer to believe that he is trustworthy and will uphold the values promulgated by the organisation, and that as such, the consumer can rely upon him to perform the work concerned to a good standard within a reasonable time and for a reasonable price.

The remaining three practices in this group relate to claims regarding endorsements or approval by some body. Thus, the display of a trust mark, quality mark or equivalent without having the requisite authorisation is always unfair,141 as is claiming that a code of conduct has an endorsement from a public or other body when this is not the case. The last of the four relates to false claims that a trader, his commercial practices and/or his products have been approved, endorsed or authorised by a public or private body when they have not been, or where he is making such a claim while not complying with the terms of any approval, endorsement or authorisation. Paragraph 4 would be breached if, for example, a gas-installer professes to be CORGI-registered when he is not.142

(b)â Advertising goods that are not available

The next three unfair commercial practices relate to situations in which the trader is advertising goods without having a realistic possibility, or even the intention, of being able to supply them to some or all of the prospective purchasers. Paragraph 5 of Schedule 1 states that it is an unfair commercial practice for a trader to issue an invitation to purchase without revealing whether

140â Trade Descriptions Act 1968, s. 14.

141This would occur if a trader were to wrongly include a trust or quality mark on his product or in his advertising literature, as it fraudulently claims a level of approval for his product that does not exist.

142See OFT Guidance, above n. 8, para. 6.1.

(c)â Language

One of the underlying rationales behind EU consumer law is harmonisation and from that comes the opportunity to promote cross-border trade.145 Crossborder trade necessarily brings into play the whole issue of language and the consequent importance of consumers being provided with all of the relevant information about a product in a language that they understand. Schedule 1, paragraph 8 deals with some of the implications of the language issue. It relates to the provision of after-sales service to a consumer where the trader has communicated with the consumer prior to the transaction in a language which is not an official language in the EEA state in which the trader is based, but has not informed the consumer prior to him being committed to the transaction that the after-sales service will actually be provided in a different language. Thus, to quote the example proffered by the OFT, a trader in England who communicates with a consumer in German prior to the sale but fails to inform him that the after-sales service for the product will only be available through the medium of English would fall foul of this provision.146

(d)â No legal right of sale

Schedule 1 paragraph 9 deals with the situation where the trader creates the impression that the product can be sold legally when this is not the case. This does not necessarily imply that the goods are inherently illegal but, rather, that the seller does not have the legal right to sell them. This echoes the provisions of the Sale of Goods Act 1979, section 12, which deals with the implied condition in contracts for the sale of goods that the seller has the right to sell the goods in question.147 Thus, it might be because the goods have been stolen and, as such, the seller has no title to them or, alternatively, because to sell them would involve the breach of intellectual property rights belonging to another person.148 In either instance, or indeed in any similar scenario in which the trader wrongly states or implies an ability to sell the goods legally which is not true, paragraph 9 will apply.

(e)â Falsely claiming that legal rights are a distinctive feature of the product

Schedule 1 paragraph 10 deals with the legal rights of the consumer and any attempt by a trader to suggest that those legal rights are, in some way,

145The consumer acquis, which encompasses the eight major EU Directives affecting consumer law, is currently under review with the likelihood that some of the Directives will be amended.

146See OFT Guidance, above n. 8, para. 6.1.

147Other Acts contain similar provisions applicable to different types of contract, e.g., Supply of Goods and Services Act 1982, Part 1, which implies a similar condition into contracts for the transfer of goods other than by sale or hire-purchase.

148Niblett Ltd v. Confectioners’ Materials Co. [1921] 3 KB 387; contra Microbeads AG v. Vinehurst Road Haulage Ltd [1975] 1 All ER 529. For a full discussion of Sales of Goods Act 1979, s.12 see Part 2 Chapter 2.

383 8â Commercial practices which are automatically unfair

a distinctive feature of the offer being made by the trader. Thus, for example, the rights of the consumer under the implied conditions contained in sections 12–15 of the Sale of Goods Act 1979 are implied by statute and cannot be excluded against a consumer. As such, the rights will always exist irrespective of any action or conduct by the trader. The consumer has a right to expect that the goods will comply with any description applied to them and that they will be of a satisfactory quality and fit for their intended purpose, with any breach of those conditions giving rise to a right of rescission. Any suggestion by a trader that the right to a refund in that situation is a distinctive feature of his product is untrue and is potentially misleading to a consumer, who might wrongly believe that those rights would not exist if he were to buy the item elsewhere. Further, it is possible that the consumer might have paid a higher price for the goods in the erroneous belief that he was getting some extra protection as part of the deal.

Q14 Analyse the ambit of the first ten commercial practices listed in Schedule 1 (section 8(a)–(e) above) which are automatically deemed to be unfair.

(f)â Advertorials

Schedule 1 paragraph 11 addresses the issue of advertorials and it is one of only two unfair commercial practices listed in Schedule 1 that does not attract criminal liability. Practices falling within paragraph 11 only trigger civil law enforcement under Part 8 of the Enterprise Act 2002. Essentially, an advertorial is an advertisement masquerading as an independent publication. Typically, it takes the format of an editorial, which encourages consumers to rely upon it believing it to be independent of the manufacturer and, as such, the consumer is more likely to take its content at face value rather than recognising it as an advertisement in which the manufacturer has a vested interest. To avoid the potential for the consumer to be misled, a trader who has paid for an advertorial must make that clear to the consumer in the content, or by images or sounds that the consumer will identify. Failure to do so brings the practice within paragraph 11.

(g)â Exploiting fears about personal safety

Schedule 1 paragraph 12 seeks to prevent unscrupulous traders from exploiting any fear that a consumer may have about his personal safety or that of his family. The fear of crime is well documented and a consumer may seek to minimise any perceived risk to himself or his family by purchasing personal safety alarms, or burglar alarms, or security cameras for his property. As long as these items are sold objectively there is no problem. However, if the trader exaggerates the risk to the consumer by, for example, overstating the risk of burglaries in the area in which the consumer lives, then paragraph 12 may apply. However, to be actionable, the claim must be materially inaccurate and must relate to the nature and extent of the risk to the consumer if he does not buy the item in

385 8â Commercial practices which are automatically unfair

decision which he would not make otherwise. The first of the three, paragraph 15, relates to claims that the trader is about to cease trading or move premises when he is not.149 Typical among these is the never-ending ‘closing down sale’ in which the business never closes.150 The purpose behind such claims, and equally claims about the trader moving premises, is to force the consumer into an early transaction because of his perceived fear that the goods may not be available much longer. The net result is that the consumer makes a purchase without necessarily taking the time to think the matter over in the way that they would do otherwise. It forces an impulse buy which the consumer may regret later, either because they did not need the product or they could have purchased it at a better price elsewhere.

The second type of false claim (paragraph 16) prohibits the making of claims that the product in question is able to facilitate winning in a game of chance. Thus, the OFT Guidance gives an example of an advertisement for a computer program that claims to be able to help the purchaser ‘win money on scratchcard lotteries’.151 Such a statement would be classed automatically as an unfair commercial practice.

The third type of prohibited statement in this group is covered by paragraph 17 and forbids falsely claiming that a product is able to cure illness, dysfunction or malformation. It is reasonable to assume that consumers suffering with an illness, dysfunction or malformation are particularly vulnerable to advertisements for products which they believe may alleviate their suffering, either by curing the ailment or, at least, militating against the effects of the condition. This might be, for example, the relief of constant pain. Someone suffering with painful arthritis would be vulnerable to advertisements for chairs, orthopaedic beds or specialised mattresses that promise greater comfort when sitting or sleeping. Equally, someone suffering with a skin condition such as eczema or psoriasis would be vulnerable to claims about skincare products that might ease the inflammation and itching or cure the condition completely. Paragraph 17 is aimed at advertisements relating to cures as opposed to those that might alleviate symptoms, but the latter will still need to be accurate as otherwise they will constitute misleading actions and give rise to a breach of regulation 5(2) as regards the provision of false information about the fitness for purpose of the product.

149As discussed above, such a claim would also be relevant to a misleading action contrary to reg. 5 as it would be classed as a statement relating to the ‘motives for the commercial practice’ under reg. 5(4)(d).

150See Butterworths Trading and Consumer Law, above n. 7, Division 1A, para. 58 for an interesting point about the possibility that a ‘closing down sale’ notice might be qualified by the addition in small letters of a phrase such as ‘for a refurbishment’. The sign is only indicating a temporary closure and consumers will need to take care that they are not misled.

151See OFT Guidance, above n. 8, para. 6.1.

389 8â Commercial practices which are automatically unfair

to be able to leave the premises. This activity would interfere with the right of the consumer to make up his mind without fear of consequences and to decide objectively whether he wishes to contract for the product concerned.

While paragraph 24 controls practices occurring in trade premises, the practices prohibited under paragraphs 25 and 26 are more intrusive in that they affect the consumer when he is at his home, which, necessarily, makes them more difficult to avoid. Paragraph 25 prohibits the trader from making personal visits to the house of a consumer and then ignoring his requests to leave or not to return. Thus, a doorstep seller who refuses to leave until the consumer makes a purchase, or a trader who, having responded to a request from the consumer to visit his house to talk about a product, then refuses to leave without an order, or a trader who repeatedly calls back despite being asked not to return, all fall under the provisions of paragraph 25. Each of these examples would constitute an aggressive commercial practice under regulation 7 and would be an unfair commercial practice under paragraph 25. That said, conducting personal visits on the consumer’s premises despite requests not to do so is permissible to the extent that it is justified to enforce a contractual obligation, although the behaviour of the trader must be justifiable as opposed to oppressive.

Paragraph 26 deals with the related issue of persistent and unwanted solicitations by phone, fax, email or other remote media. While these practices do not involve the physical presence of the trader, they do, nonetheless, interfere with the ability of the consumer to enjoy the undisturbed quiet of his own premises. Persistent contact by phone, fax, etc., may constitute harassment and, as such, is unacceptable in that it interferes with the right of the consumer to make an objective decision about a transaction. Again, as with personal visits by the trader, persistent phone calls or contact via email, fax or other remote media is permitted to the extent justified to enforce a contractual obligation.

(p)â Insurance contracts

Insurance contracts are contracts uberrimae fidei, i.e., contracts of the utmost good faith. When taking out insurance policies, consumers are required to act in good faith and to bring to the attention of the insurance company any information that may be material to the decision by the insurance company whether to underwrite the risk. The insurance company has to be in a position to evaluate the risk posed by the consumer. It is not unreasonable, therefore, for the consumer to expect that the insurance company will also act in good faith and, most particularly, will pay out legitimate claims in full within a reasonable period and not create artificial barriers to any such claim. It is against this background that Schedule 1 paragraph 27 takes effect. It provides that it will be an unfair commercial practice for an insurance company to require a consumer who wants to make a claim on a policy to produce documentation which cannot reasonably be considered to be relevant as to whether or not the claim is valid. In short, insurance companies must not ask for irrelevant documentation