A new civil right of action for consumers became available on 1 October 2014, against traders and businesses which have employed certain misleading or aggressive practices, under The Consumer Protection (Amendment) Regulations 2014 (the "2014 Regulations").

Summary

The 2014 Regulations amend the Consumer Protection from Unfair Trading Regulations 2008 (the "2008 Regulations") which implemented the Unfair Commercial Practices Directive. The 2008 Regulations were part of a wider programme of changes to the consumer protection regime in the UK, which aimed both to increase and simplify consumer protection in the UK. The 2014 Regulations now give consumers a direct right of action that was previously enforceable only by the CMA or by Trading Standards. The criminal offence for misleading omissions under the 2008 Regulations remains in force.

Business impact

The right of redress under the 2014 Regulations applies where there has been a sale and supply of products by traders to a consumer, or the sale of goods by a consumer to a trader, where the trader's misleading action or aggressive practice is a "significant factor" in the consumer's entry into the transaction.

Examples of misleading actions include:

  • any marketing of a product (including comparative advertising) which creates confusion with any products or trademarks/names of a competitor;
  • false product information or deceptive presentation; or
  • failing to honour commitments under a Code of Conduct which the trader has agreed to abide by and with which it holds itself out as complying.

Significantly, digital content is now included in the definition of "product" under the 2014 Regulations.

An example of an aggressive practice (which practices are defined as those that significantly impair (or are likely to) the average consumer's freedom of choice or conduct in relation to the product concerned through use of harassment, coercion or undue influence and thereby cause him to make a transactional decision that he would not have taken otherwise) would be:

  • imposing onerous or disproportionate barriers to a consumer wishing to switch to another product or trader.

Interestingly, misleading omissions, which are also part of the definition of "unfair commercial practices" in relation to which an action may be brought under the 2008 Regulations, are not included in the consumer's direct right of redress under the 2014 Regulations.

Newly available remedies for consumers under the 2014 Regulations include:

  • a right to unwind contracts (in most situations within a 90 day period and when the underlying product is still capable of rejection);
  • a right to damages (including in respect of financial loss suffered as a result of alarm, distress or physical inconvenience occurring as a result of the prohibited practice); and
  • for claims which are not in relation to consumer to business contracts or consumer payments, a right to discount (ranging from 25%-100% of the price paid).

In order to avoid liability, traders must be able to demonstrate that they took reasonable precautions and exercised due diligence to avoid the "prohibited practice", and that the practice was a result of a mistake, accident, act or default or a third party or otherwise outside their control.

Whether the 2014 Regulations will result in an increase in claims in comparison to the 2008 Regulations remains to be seen, but with consumers no longer relying on enforcement by Trading Standards or on bringing complex claims of misrepresentation or duress, businesses will need to be aware of the importance of avoiding any breach of the consumer protection regime.

It remains an offence under the CPRs to knowingly or recklessly engage in commercial practice materially distorting a consumer's economic behaviour (including misleading omissions), punishable with a fine of up to £5,000 or up to 2 years' imprisonment. Thus traders should not only consider whether they may face direct consumer action but also whether their marketing practices contravene requirements in order to avoid being considered reckless in this regard.