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Introduction

The new regulations will be introduced on 26 May 2008 and aim to protect consumers by prohibiting traders from indulging in a number of aggressive and misleading sales practices.

What is the new law?

The new regulations introduce a general obligation on all businesses not to treat consumers unfairly, and, in particular, not to use unfair commercial practices to distort consumer's buying decisions.

The regulations apply to actions, omissions and other conduct by businesses directly connected to the promotion, sale or supply of products to or from consumers. They do not apply to transactions only involving consumers (that is, in private transactions between two consumers).

Who enforces this new law?

Responsibility for enforcing the regulations will lie with the Local Authority Trading Standards Service (TSS) and the Office of Fair Trading (OFT).

Consumers who suffer detriment as a direct result of unfair commercial practices will not be permitted to take private enforcement actions themselves against the infringing third parties. Instead, consumers must raise complaints with the OFT and the TSS and rely on them to enforce the regulations.

This had lead to concerns among some groups who fear competition for scarce resources may mean less effective action against infringement . As public bodies such as the OFT/TSS have to balance competing interests and have a duty to allocate their resources according to public interest, this could conceivably lead to some reported cases not being pursued on perfectly legitimate public policy grounds.

Brand Owner's Fears

Brand owners had previously hoped the ban on certain misleading marketing practices (for example, the regulation that bans traders from promoting their product in a way similar to an existing product, so as to deliberately mislead the consumer into believing that the product is made by the same manufacturer) would result in better protection against copycat products. However, under the regulations brand owners will have no direct right of action to enforce this.

The Government is due to review the implementation of the Directive in three years time.

What does this mean for my Business?

Businesses who fail to comply with the regulations face harsh potential penalties, including fines of up to £5000, or in extreme cases, imprisonment. Businesses will, therefore need to keep alert to the new regulations and fully assess whether a change in their current business practices is needed.

Businesses should review with a specialist commercial lawyer their current promotional practices and customer facing processes in light of this legislation.

What is the impact in a nutshell?

The new regulations aim to protect consumers by prohibiting traders from indulging in a number of aggressive and misleading sales practices, including:

• Claiming to be a signatory to a code of conduct when the trader is not
• Falsely stating that a product will only be available for a limited period
• Claiming that a trader is about cease trading when he is not
• Making persistent and unwanted contact selling goods and services by telephone, fax or email
• Promoting a product similar to an existing product in such a manner as to deliberately mislead the consumer into believing that the product is made by the same manufacture.

Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.