New consumer protection law in UK Part.1

With the The Consumer Protection from Unfair Trading Regulations (CPRs) coming into effect on 26th May 2008 the Unfair Commercial Practices Directive (UCPD) was implemented into UK law. The UCPD aims to harmonise the legislation across the European Community preventing business practices that are unfair to consumers, so as to support growth of the internal European market.

Read the first part of a series of articles about the guide by the Office of Fair Trading.

The guide by the OFT and the Department for Business and Enterprise and Regulatory Reform illustrates the views of these two organisations and seeks to illustrate how the CPRs may apply in practise. But the ultimate decision whether or not a commercial practise is unfair within the meaning of the CPRs or not can only be made by the British courts. But it is important for British e-traders in B2C trade to know what actions are prohibited since may 2008.

This graphic shows the structure of the new regulation

Source: The Office of Fair Trading “Guidance on the Consumer Protection from Unfair Trading Regulations” Crown Copyright

The regulation aims at making cross-border transactions involving consumers easier and at giving greater confidence to shop in the UK by providing a high common standard of consumer protection. The CPRs simplify the UK Consumer Protection framework by repealing some of the existing consumer protection law in wholly and some in part to provide greater protection to these laws. The CPRs apply to commercial practices before, during and after a contract is made and contain different categories of prohibited pratices:

1. General Prohibition of unfair commercial practices
2. Misleading and aggressive commercial practices
3. Banned commercial practices

But online traders who treat their customers fairly do not have to worry about major changes to their practises and online shops. But this regulation should not be underestimated because traders who engage in unfair practices towards consumers may face both civil and criminal enforcement.

When do the CPRs apply?

The CPRs apply to any act, omission and other conduct by businesses directly connected to the promotion, sale or supply of a product3 to or from consumers (whether before, during or after a commercial transaction, if any). If only consumers are involved in a transaction the CPRs don’t apply. In most of the cases where the CPRs apply there will be a direct commercial contact between the a business and a consumer but there are instances where even there is no direct commercial practice but a sufficiently close connection so that the instance falls into the scope of the CPRs.

1. General Prohibition of unfair commercial practises

• In General a commercial practise is unfair if it is not professionally diligent (must be unacceptable measured against an objective standard) and
• distorts or is likely to distort the economic behaviour of the average consumer (the consumer buys a product he otherwise wouldn’t have bought or doesn’t exercise his cancellation right he otherwise would have used)

2. Misleading and Aggressive Practises

The CPRs prohibit commercial practices which are misleading or aggressive and which are likely to cause the average consumer to take a different decision.

3. Practises Prohibited in all Circumstances

The term product in the sense of the CPRs includes product but also services in a wide sense such as immovable property and rights and obligations. Before the CPRs the law distinguished between goods and services and each had a different set of rules.

Scope of the CPRs

Outside Scope: business to business transactions with no potential to affect consumers

Inside Scope:

• Business practises with an  effect on businesses and consumers
• Direct sales to consumers
• Purchases from consumers made by businesses

Here you can find the complete guide by the Office of Fair Trading.