Consumer Protection : business development briefing

Consumer protection: business development briefing

This business development briefing just provides an overview of the law in this area. You should talk to a lawyer for a complete understanding of how it may affect your particular circumstances.

This business development briefing sets out how a business can comply with its obligations under consumer protection legislation.

Unfair commercial practices

Consumer protection legislation provides a general prohibition on unfair commercial practices.

Misleading acts or omissions

A business must not mislead consumers through acts or omissions. For example:

• A business falsely tells a consumer their boiler cannot be repaired and they will need a new one. This constitutes a misleading action.

• A business sells a satellite television package to a consumer, without indicating that sports channels are only available at an additional subscription cost. This constitutes a misleading omission.

Aggressive commercial practices

Businesses must not subject consumers to aggressive commercial practices (for example, bringing a consumer to a holiday club presentation with no means of getting home unless they sign a contract).

Definitively unfair commercial practices

Consumer protection legislation contains a list of 31 commercial practices that are always unfair. These include:

• Displaying a quality mark without authorisation.
• Falsely claiming to be a signatory to a code of conduct.
• Falsely claiming a product is able to cure illnesses.

Who can take action for a breach?

• A business will commit an offence if it engages in unfair commercial practices.
• The OFT and the Trading Standards Services can take enforcement action against a business if the business breaches consumer protection legislation.
• Penalties include:
  • a fine not exceeding the statutory maximum on summary conviction; and
  • a fine of up to two years imprisonment or both on indictment.

Unfair terms in consumer contracts

• Consumers can challenge contract terms on the basis that they are unfair.
• Consumer protection legislation applies to any unfair terms in contracts between a consumer and a business selling goods or services.
• A term will be regarded as unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract in favour of the business.
• If a term is unfair, then it is not binding on a consumer, although the remainder of the contract will continue in force if it is capable of doing so.
• When deciding whether a term is unfair, a court will take into account:
  • the type of goods and services being provided;
  • the circumstances surrounding the conclusion of the contract; and
  • all the terms of the contract, or of another contract on which it depends.

Potentially unfair terms in consumer contracts

Consumer protection legislation provides a non-exhaustive list of potentially unfair terms. The types of terms identified are those that, in effect, are trying to achieve the following:

• Make a consumer pay an unfair penalty.
• Mislead a consumer about his legal rights, or mislead him about the contract.
• Deny a consumer full redress.
• Tie a consumer into a contract unfairly.
• Allow a business to not perform its obligations.
• Not allow a consumer to recover his prepayments on cancellation.
• Allow a business to vary the terms after the contract has been agreed.