The Unfair Commercial Practices Directive ("the Directive") has been implemented at EU level for some time now and must come into force in UK law before 12 December 2007. The Directive aims to harmonise rules on unfair trading and clarify consumers' rights in order to encourage greater cross border trading within the EU. The new law will replace the various national provisions across the 27 EU member states that currently regulate business-to-consumer unfair commercial practices and will have a large impact upon many businesses, including retailers.
The Directive contains a general prohibition on treating consumers unfairly and is meant to act as a safety net protecting the rights of consumers across all trade sectors.
A practice is “unfair” if it fails to meet a requirement of "professional diligence" (ie if it falls short of the standard of special skill and care reasonably expected of a trader in its given sector) and if it materially distorts or is likely to materially distort the consumer’s economic behaviour.
In judging whether the material distortion requirement has been met, it is the impact that the practice will have on an average consumer that is relevant, although where the practice is targeted at a certain group of consumers (children for example), then it is the average consumer in that particularly vulnerable group that will be relevant in assessing this requirement.
The Directive also specifically prevents businesses from "misleading" consumers or subjecting them to "aggressive selling techniques" - practices which are automatically deemed to be unfair.
A misleading commercial practice could include situations where a retailer fails to provide the minimum factual information that the average consumer needs prior to purchase (such as the main characteristics of the product, the price, any delivery costs or the right of withdrawal) or if the consumer would be deceived into making a decision about a transaction that he would otherwise not have made.
An aggressive commercial practice would be where the retailer induces a sale by using harassment, coercion (including physical force) or undue influence so as to significantly impair the consumer’s freedom of choice or conduct.
Finally, the Directive contains an annex of 31 practices that will be deemed unfair in any circumstances. Examples of practices falling within this “blacklist” include pressure selling, pyramid schemes, implying that the consumer cannot leave a shop until they sign a contract, misleading marketing and claiming to be a signatory to a code of conduct when a business is not.
If businesses infringe the new legislation, they are likely to face civil sanctions (such as injunctions to put an end to the practice in question) and may also face criminal sanctions (though, as at the date of this article, it has not yet been decided whether such criminal sanctions will in fact be imposed).
The Directive can be enforced by anyone who has "a legitimate interest in combating unfair commercial practices" - so not only the individual consumer but also consumer protection groups.
Although it seems that the impact of this Directive is to give even wider protection to the consumer, it is thought that it will be advantageous for businesses to have one piece of consumer protection legislation in place rather than the current system of many pieces of legislation that are specific to individual trade sectors.
Although there may be an initial cost involved in getting up to speed with the new Directive, the longer term cost of compliance should hopefully be reduced. It is also hoped that the broad nature of the general prohibition will mean that further legislation is not required as and when new unfair commercial practices arise.