Rogue traders and salesmen adopt a range of unsavoury tactics to secure a sale, from exaggeration and embellishment to more hostile and aggressive techniques. However, consumers often have little recourse if they have suffered as a result.

In February this year, the Government instructed the Law Commission to review the law on misrepresentation and unfair practices in consumer transactions, in particular concentrating on:

  • Simplifying the law of misrepresentation
  • Considering whether aggressive commercial practices should be classified as illegitimate pressure under the law of duress; and
  • Considering extending consumer rights to include a private right of redress for unfair commercial practices.

The Law Commission held a series of preliminary consultations with key opinion-formers and stakeholders, one of which was hosted by Nick Mallett at DMH Stallard. Last week, the Commission published a summary of the initial feedback received from stakeholders.

The law protecting consumers from unfair commercial practices

Unfair commercial practices between businesses and consumers are prohibited by the Consumer Protection from Unfair Trading Regulations 2008 (the “Regulations”), which implement the 2005 EU Directive on Unfair Commercial Practices. Practices specifically prohibited by the Regulations include displaying quality marks without authorisation, falsely stating that a product will be available for a very limited period to obtain an immediate decision, and, in respect of personal visits to the consumer’s home, ignoring requests to leave or stay away.

Problems with the current law

Despite the breadth of the prohibition, in reality the Regulations offer little practical protection or enforcement rights to consumers. The Regulations are enforced by the Office of Fair Trading. They provide for civil and criminal penalties against a business in breach. However, there is no private remedy available to consumers subject to an unfair commercial practice. A consumer who has suffered loss has to rely on the existing private law doctrines of misrepresentation, duress, undue influence and harassment.

Many stakeholders reported to the Law Commission that the current private law doctrines offering consumers any form of private redress are too complex and uncertain to be effective. Furthermore, the private law doctrines do not sufficiently cover misleading omissions, and generally the law does not impose a positive duty to disclose information.

The feedback from Stakeholders revealed that unfair commercial practices are a real problem for consumers. Examples given by consumer groups included claims that a training course would lead to a job when the particular market was already saturated, and a salesman staying at the house of an elderly man for three hours, giving the impression he would leave only if the consumer agreed to buy an orthopaedic bed.

Particular concern was expressed over unfair practices employed against vulnerable groups, such as the elderly, disabled and those who do not speak English.

Next Steps

The feedback from Stakeholders has revealed the difficulties faced by consumers in seeking remedies from rogue traders and salesman for unfair commercial practices. The Law Commission recognised that it is not the role of the law to protect consumers from bad bargains. A balance needs to be struck in reforming the law in this area to protect consumers from malpractice without encouraging consumers to abdicate responsibility for bad deals.

The Law Commission plans to start a formal consultation process in Spring 2011, which will consider exactly how the law should be reformed to protect consumers who fall victim to misrepresentations and unfair commercial practices. Whilst it is not yet clear what the best options are, from an amendment to the current Regulations to a full codification of consumer rights into a Consumer Bill of Rights as suggested by the consumer group Consumer Focus, what is clear is that any such reform will undoubtedly have a huge impact on businesses providing goods and services to consumers.

Interested parties should be ready with their submissions to the consultation process, early next year.