Unfair Trading/Commercial practices

Question 1

What did the Unfair Trading Regulations 2008 implement

Answer 1

Directive 2005/29/EC on unfair commercial practices in the internal market

Question 2

S2 of the Unfair Trading Regulations provides what?

Answer 2

The definition of commercial practices including 3 elements

1) AOCRC: act, omission, course of conduct, representation, commercial communication
2) before, during or after the commercial transaction
3) in relation to a product

Question 3

What did R (Surrey Trading Standards) v Scottish and Southern Energy 2012

Answer 3

CoA criminal division dismissed Ds criminal conviction for engaging in misleading commercial practice contrary to regulation 9 of the UTRs 2008

** Def of commercial practice in ref 2(1) of the Regulations was
amply sufficient to cover involvement, supervision or control of training in appropriate circumstances
as being directly connected with the promotion or sale of the supply of a product

Question 4

Step 1) definition of a consumer

Answer 4

• Mars and Gut cases
• Springenheide 1998: in order to determine whether a description or statement designed (in this case the promotion of eggs) is liable to mislead the purchaser in breach of regulation on marketing standards for eggs,
• national court must take into account the presumed expectations which it envokes in an average consumer
  Who is reasonably observant and circumspect
• when the national court has difficulty in assessing the misleading nature of the statement it can refer to consumer research poll and expert reports

Question 5

Article 2(2) UTRs 2008 states

Answer 5

Basically reinforced springheide case

Question 6

What section of the UTRs is particularly important for the what?

Answer 6

Recognition of vulnerable consumers

Question 7

Who is mislead?

Answer 7

• average consumer within a particularly vulnerable group
• issues with the above: does the maker of the statement realise it will reach this vulnerable group? Subjective test
• article 5(3) of Directive 2005 and Regulation 2(6) of UTR 2008: limits the liability basically for when adverts or statements are exaggerated and aren’t supposed to be taken seriously like the links advert

Question 8

Unfair Commercial Practices Typology

Answer 8

General prohibition (Regulation 3) 
1) Banned Practices in schedule 1 

UNFAIR COMMERCIAL PRACTICES SUBJECT TO UNFAIRNESS TESTING:
> Misleading Actions (Reg 5)
> Misleading Omissions (Reg 6)
> Aggressive Practices (Reg 7)

Question 9

Banned commercial practices are contained in ?

Answer 9

Schedule 1 of the UTRs

Question 10

What are the BANNED commercial AGRESSIVE PRACTICES in schedule 1?

Answer 10

Numbers

24/27, 30-31

Question 11

What did Rodney stone Geoffrey Moore 2012 involve

Answer 11

Suuroundied the practice no 7 in the schedule stating that the product won’t be available for much longer or only for a certain period of time and also aggressive practices about the sales team going to the homes - was about praying on the elderly as they were a mobility company

Question 12

What was R v King (Scott) 2014 about?

Answer 12

About a cars salesman who ran a business selling cars but had deprived consumers of their rights on the particular occasions he sold cars claiming to be a private seller = so he didn’t have to provide a warranty or a guarantee - against number 22 falsely claiming or creating the impression that the trader was not acting for purposes relating to his trade etc

Question 13

Purely Creative Ltd v OFT

Answer 13

That was about number 31 of the banned aggressive practices where it was giving the consumer the impression that they’d already won

1) directive 2005/29 must be interpreted as commercial practices of the consumer having to request more info on the prize or incur a cost or pay money for it or to get the prize
2) it is irrelevant that the cost of claiming or gaining more information was de minimis compared to the value of the prize
3) it was irrelevant that the company gave various methods to claim the prize or that they didn’t benefit from the cost incurred to do so
4) preamble recticals 18/19 to directive and article 5(2)(b) = it’s for the national courts to assess the info provided to consumers by taking into account whether it was clear and could be understood by the public targeted by the practice

Question 14

Subject to the unfairness test - misleading practices under regulation 5 of the UTRs

Answer 14

Misleading actions can be one of two ways either under s5(2) or s5(3): s5(2) is supplemented by factors in a 5(4)

Question 15

Misleading action - reg 5

OFT v Purely Creative Industries 2011: don’t get mixed up with aggressive practices case Purely Creative plc v OFT!!!

Answer 15

“Traditional decision not otherwise taken” i.e. An economic consequence of a transactional decision, causal link is key - the misleading action must be needed and with regards to omitted information, it’s not whether the omitted info would assist or be relevant but whether it is necessary to enable the average consumer to take an informed transactional decision

Question 16

Misleading omission in regulation 6

Answer 16

Use the legislation to guide you through the application of article 6 there is no case law
- key example was where someone heard on the radio that there was cheap airline tickets being sold and the airline did give all of the information but in an untimely fashion

Question 17

Inertia selling is a banned practice under no. 29 and you’ve won prize scams under s31

Answer 17

Covered by aggressive practices and also breach of the aggressive practices are all criminal offences apart from number 28 coercing children to get their parents to buy them products

Question 18

Aggressive practices - R v Carlton D Williams and Lee David Stagg

Answer 18

2 men in Bridgewater and Bristol in Somerset, going around preying on vulnerable
Women and children and clamping their cars outside shops and businesses including a doctors’ surgery, even clamped and towed a car with one of the victims’ girlfriend in the car!! Forced them to pay the fee for the clamp, the tow and any storage fees if they didn’t pay the clamp fine in time!

Question 19

The OFT v Ashbourne Management - aggressive practices

Answer 19

Ashbourne management represented over 700 gyms and to corce payment for the memberships they would report non repayment and threaten to report the non-report to credit agencies

Question 20

R v Patrick Conners 2012

Answer 20

Refusal to leave until the customer agreed to work to be done on his domicile (residence)

Question 21

The general prohibition in regulation 3

Answer 21

> contrary to professional diligence
materially distort or likely to distort economic behaviour
average consumer or average member of a target group

Question 22

R v X Limited 2013

General prohibition - Reg 3

Answer 22

Involved a company selling home security equipment - sales achieved through cold calling on the telephone and doorstep sales
- main case involved a 76 year old widower: sold a carbon monoxide detector, home electrical inspection and cctv for just over £2,500 - four days after there was a further visit and the sale of products for a little over £2,300

Question 23

R v X limited 2013 continued

Answer 23

Unfair commercial practice in making inaccurate claim concerning the nature and extent of the risk to the personal security of the customer if he didn’t but the CCTV over the stats for burglaries

• set out in para 12 of schedule 1 : claim was that burglaries had risen in customers postcode by 46.2% in last 12 months, whereas it was comprised of a comparison of 2 three month periods
• making a materially inaccurate claim concerning the nature and extent of the risk to personal security of the consumer or his family if they don’t purchase the product

Question 24

R v X on due diligence defence

Answer 24

CoA found that there was clear evidence that a jury could conclude that the company was knowingly or recklessly operating a commercial practice in contravention of the requirements of due diligence. A single failure or perhaps more than one failing in respect of ONE consumer may not be sufficient, but in this case a jury could infer that the failure ran at every stage of the process from top to bottom

Question 25

So what does the general prohibition do?

Answer 25

Safety net for all practices
Future proof
Practice tested against due diligence
= would a good trader in the same trade use this profession?

Question 26

Offence is in what section?

Answer 26

8

Question 27

Public enforcement in the U.K.

Answer 27

Done by the OFT and local weights and measures authority

Regulations 20-25

Question 28

Private redress for consumers

Answer 28

The consumer protection (amendment) regulations 2014 added in part 4A in UTRs 2008 - regulations 27A to 27L
However they ONLY APPLY TO: misleading actions in Reg 5 and aggressive practices in Reg 7