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2â Scope of the 2008 Regulations |
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looks at the prohibition against aggressive commercial practices, including an |
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analysis of the various types of activity that can be classed as aggressive. |
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Section 8 analyses the thirty-one commercial practices detailed in Schedule |
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1 to the Regulations, which are always presumed to be unfair, and section 9 dis- |
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cusses the offences created by the Regulations. |
2â Scope of the 2008 Regulations
(a)â What constitutes a ‘commercial practice’
The Unfair Commercial Practices Directive 2005/29/EC, and hence the Consumer Protection from Unfair Trading (CPUT) Regulations 2008, SI 2008/1277 delineate both the transactions that fall within their remit and the categories of consumers who are to be protected. This has necessitated the introduction of new terminology. The most fundamental definition relates to the meaning of the phrase ‘commercial practice’, defined in regulation 2(1) of the CPUT Regulations 2008 as being:
any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product.
The first point to note is that the term only covers commercial activities involving traders. Thus, activities undertaken by individuals do not fall within the remit of the Regulations while civil law remedies remain under sale of goods and other related legislation. A trader for the purposes of the Regulations is anyone ‘acting for purposes relating to his business,1 and anyone acting in the name of or on behalf of a trader’. This would encompass anyone who has a controlling interest in a business2 and anyone else overtly acting on behalf of a business, which would include employees.3
The activities covered are very broad in nature and include both positive actions and omissions, also representations and commercial communications such as advertising and marketing, and extend to a trader’s course of conduct.
1 The Unfair Commercial Practices Directive defines a trader as someone acting for purposes relating to ‘his trade, business, craft or profession’, see Art. 2. However, in the United Kingdom, someone acting in the course of a business is presumed to include anyone acting in pursuit of their profession, see Roberts v. Leonard, The Times, 10 May 1995, in which veterinary surgeons were convicted of offences against s.1(1)(b) of the Trade Descriptions Act 1968 when they falsely stated on an export licence that they had inspected 557 calves.
2 See Warwickshire County Council v. Johnson [1993] 1 All ER 299, a decision under the misleading pricing provisions of Consumer Protection Act 1987, s.20(1), in which the House of Lords held that the phrase ‘in the course of any business of his’ only applied where the defendant was the owner of the business or had a controlling interest in it.
3 Employees have, in the past, been found guilty of offences under criminal trading legislation such as the Trade Descriptions Act 1968, so their inclusion in this provision does not break new ground. The Unfair Commercial Practices Directive specifically includes ‘anyone acting in the name of or on behalf of a trader’, see Art. 2.
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The Consumer Protection from Unfair Trading Regulations 2008 |
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Many of these actions form the basis of specific prohibitions in the Regulations, |
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such as the control of misleading actions under regulation 5 and misleading |
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omissions under regulation 6. However, in an attempt to encompass all poten- |
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tially unfair practices and future-proof the provisions against as yet unknown |
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practices, there is a general prohibition against unfair commercial practices |
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under regulation 3 with the breadth of the definition of a ‘commercial practice’ |
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lending strength to this catch-all regulation. |
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The commercial practice must be connected with the promotion, sale |
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or supply of a product. Given the inclusion of the promotion of a product, it |
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follows that there is no requirement that a sale or other supply has occurred. |
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Accordingly, the provisions of the Regulations can be used as a preventative |
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measure giving enforcement authorities the power to step in and act before a |
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consumer has been adversely affected by the practice in question. This is in line |
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with previous consumer legislation where the enforcement strategy has been |
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to prevent incidents occurring rather than deal with the consequences of con- |
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sumers being affected by a prohibited act. |
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The definition of a ‘commercial practice’ also extends to activities where |
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the product is being promoted, sold or supplied both to and from the con- |
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sumer. While most activity is likely to involve products being promoted, sold |
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or supplied to a consumer, it is important to remember that sometimes prod- |
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ucts are acquired from a consumer instead. The most obvious example is the |
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part-exchange of second-hand cars, when the consumer typically supplies his |
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old vehicle to a trader as part-payment for a new one.4 This approach accords |
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with the previous position under the Trade Descriptions Act 1968, whereby in |
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Fletcher v. Budgen5 a trader was convicted of an offence when, while acquiring |
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a vehicle from a customer, he described it as being unrepairable and fit only for |
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scrap. Having bought it for £2 from the customer, the trader spent some money |
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repairing it and sold it for £135. |
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The final aspect of the definition of a ‘commercial practice’ outlines the tem- |
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poral ambit of the controls. While most of the previous controls in this area |
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applied to activities occurring before or at the time of the supply or offer to sup- |
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ply the goods,6 the scope of these controls over commercial practices extends |
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to activities ‘occurring before, during or after a commercial transaction (if |
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any) in relation to a product’. This is significant since, in addition to promo- |
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tional activities before the time of supply and during it, controls now extend |
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to things occurring after the supply of the goods or services. Thus, from now |
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on, after-sales service and maintenance will be covered as well as such things as |
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complaint |
handling and debt collecting.7 |
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4 |
See M. Griffiths ‘Unfair commercial practices: a new regime’ (2007) 12 Communications Law 194, 195. |
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5 |
[1974] 2 All ER 1243. |
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6 |
See, among others, the Trade Descriptions Act 1968 and Part III of the Consumer Protection Act |
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1987. |
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7 |
See D.L. Party, R. Rowell and C. Ervine, Butterworths Trading and Consumer Law (London, 1990) |
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Division 1A. |
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353 2â Scope of the 2008 Regulations
It is clearly important to identify the scope of the word ‘product’ in this context. The CPUT Regulations 2008 define ‘product’ as including not merely goods but also services and immovable property such as land. While services were included in some previous enactments, such as in section 14 of the Trade Descriptions Act 1968, the inclusion of immovable property is a new departure. The Regulations will impact on a trader selling or leasing land to a consumer. This would include, for example, the initial sale of a house by a property developer to a consumer, however should that consumer subsequently sell the house to a new owner, the latter transaction would fall outside the Regulations. Similarly, the sale of immovable property between businesses is also beyond the remit of the Regulations. ‘Property’ also includes other rights and obligations such as, for example, a right to use a caravan for a period, membership of a club, premium rate phone calls and the provision of credit to consumers.8
Q1 Consider how the remit of the CPUT Regulations 2008 extends beyond that of previous controls.
(b)â The meaning of ‘consumers’
As previously indicated, the CPUT Regulations 2008 are intended to protect ‘consumers’, defined in regulation 2(1) as being ‘any individual who in relation to a commercial practice is acting for purposes which are outside his business’.9 However, having identified that the protection is limited to individuals, the Regulations go on in various places to refer to ‘average’ consumers and ‘vulnerable’ consumers, both of which require further explanation. An analysis of who is an ‘average consumer’ is found in regulation 2(2) to (6), with an additÂional explanation provided by the Office of Fair Trading (OFT).10 The average consumer may be an individual or may be one of a group of like people affected by the commercial practice in question. Regulation 2(2) provides that when assessing the effect of a commercial practice on an average consumer, account must be taken of the main characteristics of such a consumer, including his being ‘reasonably well informed, reasonably observant and circumspect’. This objective approach accords closely to the English concept of the reasonable man. No actual consumer need be involved,11 the standard being decided by the court’s interpretation of the way that a reasonable man would react or behave in the circumstances.
8See Office of Fair Trading, Consumer Protection from Unfair Trading Regulations 2008. Guidance on the Implementation of the Unfair Commercial Practices Directive, OFT 1008 (London, 2008) para. 14.18. See also Butterworths Trading and Consumer Law, above n. 7, Division 1A, para. 8.
9This makes clear that the protection is limited to individuals and does not extend to sole traders or small partnerships as occurs, for example, under some sections of the Consumer Credit Act 1974.
10 OFT Guidance, above n. 8, paras. 14.28–14.37.â 11â Ibid. para. 14.28.
354 The Consumer Protection from Unfair Trading Regulations 2008
While the term ‘average consumer’ might be assumed to be the average of all consumers in the United Kingdom as a whole, this is not necessarily the case. Commercial practices can be directed at identifiable groups within society, in which case the average consumer would be construed as the average member of that group. Thus, for example, a group might be determined by age, social background, interests, employment or culture. The OFT uses as an example that the average consumer of a Welsh language magazine must be assumed to read Welsh.12 Thus, Welsh speakers are an identifiable group for the purpose of promoting or selling this product and an average consumer would be a member of that group. Further, within an identifiable group of consumers, it is possible to target a section of that group for the purposes of promoting a particular product. Thus, to continue with the OFT’s example, not all Welsh speakers would be interested in an academic journal about Welsh linguistics.13 Such a product would, in practice, be carefully targeted, with the average consumer being a member of that particular targeted group.
Regulation 2(5) considers the position of identifiable groups of consumers who may be vulnerable to the practice14 or the underlying product15 because of mental or physical infirmity, age or credulity16 which the trader could reasonably have been expected to foresee. Physical infirmity includes a variety of situations, from the person in a wheelchair who may be particularly affected by claims regarding ease of access,17 to those suffering from a medical condition who might be affected by claims that a particular product may cure their condition or alleviate their symptoms.18 Age is clearly relevant in relation to certain products, with the elderly and children being target groups for some products. The promotion of toys to children is an obvious example, particularly, it could be argued, at Christmas-time when children are hoping to receive more toys than at other times of the year.19 Credulity is more difficult to quantify than ‘age’ but relates to those people who are, perhaps because of some misfortune, more likely than other consumers to believe claims about the practice or product in question. In determining the impact of a commercial practice on the average vulnerable consumer, account must be taken both of the vulnerability in
12 Ibid. para. 14.33.â 13â Ibid.
14E.g. doorstep selling in sheltered accommodation See Butterworths Trading and Consumer Law, above n. 7, Division 1A, para. 8.
15E.g. funeral plans and security equipment. See ibid.
16Note that this list is exhaustive with the concept of vulnerability being limited to these three factors.
17OFT Guidance, above n. 8, para. 14.37.
18Falsely claiming that a product is able to cure illness, dysfunctions or malformations is always regarded as an unfair commercial practice under CPUT Regulations 2008, Sch. 1 para. 17. See also Griffiths, above n. 4, at 196.
19It is always regarded as an unfair commercial practice to use an advertisement to directly exhort children to buy advertised products or to persuade their parents or other adults to buy those products for them. See CPUT Regulations 2008, Sch. 1 para. 28. However, while all but two of the thirty-one commercial practices listed in Sch. 1 are criminal offences, a practice within para. 28 does not constitute a criminal offence.
355 2â Scope of the 2008 Regulations
question and whether the practice is likely to materially distort the economic behaviour of that group.20 There must a clear link between the vulnerability and the economic impact. That said, when assessing commercial practices as they apply to vulnerable groups, it does not prevent traders using exaggerated advertising about the product which is not expected to be taken literally.21
Q2 Consider how the definition of a ‘consumer’ seeks to identify and protect those affected by the Regulations.
(c)â Which transactions are covered
The CPUT Regulations 2008 introduced new definitions and concepts that are crucial to understanding the breadth and thrust of the Regulations. Three of these are ‘invitation to purchase’, ‘transactional decision’ and ‘materially distort the economic behaviour’. It is only through understanding these concepts that it is possible to fully appreciate the impact of the Regulations.
In English law, we are used to the term ‘invitation to treat’ as the stage in contractual discussions that precedes a contractual offer. Thus, we are familiar with the idea that a display of goods in a shop window is an ‘invitation to treat’22 by virtue of which the potential buyer may acquire enough information about the goods to enable him to make an offer for them. The information provided might include colour, size, manufacturer, constituent fabric, etc., but without any requirement to include details about the price, which the potential buyer could, of course, discover relatively easily by asking a shop assistant. Technically, the same would be true of an advertisement in a magazine but, in practice, it is most unlikely, for purely practical reasons, that the price would not be included. By contrast, the related concept of an ‘invitation to purchase’ is to be found in regulation 2(1) of the Regulations23 and provides that such an invitation is a ‘commercial communication that includes both the characteristics of the product and the price in a way appropriate to that communication, in such a way as to permit the consumer to make a purchase’. It follows from the definition that the inclusion of the price is essential if the details provided to the consumer are to constitute an ‘invitation to purchase’24 as opposed to merely being a commercial communication and a contractual ‘invitation to treat’. Equally, where there is a failure to provide details of the characteristics of the product, or where the communication does not put the consumer in a position to purchase the goods, or where it is merely an advertisement for the brand rather than for a particular item, the communication will not constitute an ‘invitation to
20 CPUT Regulations 2008, reg. 2(5)(b).â 21â Ibid. reg. 2(6)
22Fisher v. Bell [1961] 1 QB 394.
23The wording of reg. 2(1) closely follows that of Art. 2(i) of the Unfair Commercial Practices Directive.
24A failure to include price means that it is not an invitation to purchase, see OFT Guidance, above n. 8, para. 7.28.
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The Consumer Protection from Unfair Trading Regulations 2008 |
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purchase’.25 The OFT Guidance provides some examples of what would constitute invitations to purchase and includes, among others, an advertisement in a newspaper that includes an order form to be sent to the seller; an interactive TV advertisement; a restaurant menu; and a webpage on a website where consumers can place an order.26 The information must be provided in a ‘clear, unambiguous, intelligible and timely manner’27 unless the information is clear from the context, such as the name of a shop when the consumer is already in it.28 The exact nature of the required information will be considered in depth when analysing ‘misleading omissions’ under regulation 6 below.
Q3 Analyse how the term ‘invitation to purchase’ differs from the concept of ‘invitation to treat’.
The second important term is ‘transactional decision’ and is central to the controls over misleading actions,29 misleading omissions30 and aggressive commercial practices.31 What constitutes a ‘transactional decision’ is defined in regulation 2 as any decision taken by a consumer whether to act or refrain from acting in respect of a contract for a product. Further, the decision must relate to whether, how and on what terms to purchase a product, whether to make payment in full or part for a product, and whether to retain or dispose of a product. Thus, it covers both decisions to take a positive action and decisions not to act at present or, indeed, at all. The transactional decision will revolve around the terms on which the purchaser is prepared to buy and, most particularly, how much he is prepared to pay. This might dictate whether to buy in a small local shop, or in a major supermarket or department store with immediate delivery or whether to delay delivery for a couple of days in order to buy the item more cheaply via the Internet. Factors such as cost and delivery times are part of the transactional decision. Whether a deposit is payable or whether the full amount must be paid immediately, and whether to pay cash for an item or pay via a credit card, with the possibility of incurring interest if the debt is not settled in full when the bill arrives, might affect the buyer’s decision as to whether and where to purchase the goods. Further, the decision to purchase on credit may be affected if there are two credit card providers, one offering interest-free credit while the other charges interest.32 While these examples all relate to the purchase of a product, the decision not to purchase an item or to retain an item rather than sell it would also constitute transactional decisions. Thus, if, for example, a consumer decides not to sell his car in part-exchange for a new one, that choice is a ‘transactional decision’ for this purpose.
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27
29â
30
32
Ibid. paras. 7.27, 7.29 and 7.30, respectively.
Ibid. para. 7.25, where other examples are also included.
Ibid. para. 7.31.â |
28â Ibid. para. 7.32. |
CPUT Regulations 2008, reg. 5(2)(b) and (3)(b)(ii). |
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Ibid. reg. 6(1).â |
31â Ibid. reg. 7(1)(b). |
For further examples of transactional, decisions see Butterworths Trading and Consumer Law, above n. 7, Division 1A, para. 8.