The biggest changes to consumer laws in 40 years are here. Unscrupulous travel businesses beware, warn solicitors Paul Burnley and Poppy Williams
Most travel companies trade honestly and treat customers fairly, but for the unscrupulous or careless, new regulations could result in prosecution and even business shutdowns.
On May 26 this year, the Consumer Protection from Unfair Trading Regulations 2008 came into force, and with it, some of the biggest changes to consumer legislation for 40 years.
The regulations replace many of the existing laws, including the Trade Descriptions Act, relating to marketing and selling “any goods or services”. They introduce a duty not to trade unfairly; prohibit misleading or aggressive practices; and the banning of 31 specific commercial practices.
The duty not to trade unfairly is a catch-all provision that will allow enforcers to take action against unfair commercial practices that do not fall into the banned practices category, and which are not misleading or aggressive commercial practices.
A commercial practice will be considered to be unfair if it “materially distorts the economic behaviour of the average consumer with regard to the product.”
Simply put, it’s a clause designed to prevent false claims about areas such as pricing, safety, weights and measures, descriptions of products and services, contracts between buyer and sellers, competition between businesses, and intellectual property and counterfeiting.
The regulations also prohibit commercial practices that are misleading (whether by actions or omissions). For example:
- Marketing a product in a way that creates confusion with competitors’ products
- Omitting information such as restrictions on when a special offer can be redeemed
- Providing information in an ambiguous way
Aggressive commercial practices
These are commercial practices which, by harassment, coercion or undue influence, significantly impair the consumer’s freedom of choice and are likely to cause them to make a different decision.
Whether a commercial practice is considered aggressive will depend on factors such as:
- Timing, location, nature or persistence
- The use of threatening or abusive language or behaviour
- Any threat made to take any action, which cannot in fact be legally taken
This clearly seeks to cover scenarios such as doorstep traders or ‘cold’ callers that attempt to pressurise consumers.
Banned commercial practices
- Displaying a quality mark without having obtained the necessary authorisation
- Falsely stating a product will only be available for a very limited time
- Claiming to offer a promotion without awarding the prizes
- False closing-down sales
No evidence of the effect on a typical consumer is required – if a trader breaches one of the banned practices, action can be taken.
One provision that may cause difficulty relates to the use of the word ‘free’. Describing a product as ‘free’ is prohibited if the consumer has to pay anything other than the unavoidable cost of responding to the offer and the delivery of the item.
Advertising, marketing, sales, supplies, after-sales services and debt collection are also caught by the new rules. Even those who are not actually selling products to consumers will still have to take the regulations into account if their business is directly connected with the sale or supply of a product to consumers.
A list of the 31 practices (.pdf) is available from the Office of Fair Trading.
Among the bodies that can enforce the regulations are the Office of Fair Trading, Local Authority Trading Standards Services and the Department of Enterprise, Trade and Investment in Northern Ireland.
They may inspect goods and enter business premises to investigate breaches of the regulations, and where they suspect a breach has occurred, they can force traders to produce documents relating to their business, as well as seize and detain goods. Any obstruction of an enforcement officer or making a false statement is a criminal offence.
Companies and individuals charged with an offence under the regulations could face conviction and a fine up to £5,000 and/or imprisonment of up to two years.
The main defence for breaches of the regulations is due dilligence. To argue this successfully, you have to prove:
- You made a mistake
- You were relying on information given by another person
- It was someone else’s fault
- It was the result of an accident or cause beyond your control
- You took all reasonable precautions and due diligence was exercised
- Proper procedures are in place and were applied
For honest agents and operators the law should not be a problem. In fact, it could be a positive for the industry. As a spokesman for ABTA said: “We welcome the new legislation.
“In terms of how it will impact on ABTA members, since they’re already following the law and the ABTA Code of Conduct (.pdf) it will not impose any new requirements. It’s really aimed at the cowboys.”
Find out more
If you are a member of ABTA, you can obtain further advice by contacting the association’s members’ information department at firstname.lastname@example.org or on 0845 177 2282.
Paul Burnley is a partner in the Litigation and Regulatory Group of DLA Piper
Poppy Williams is a solicitor in the Litigation and Regulatory Group of DLA Piper
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