New regulations to protect consumers from unfair trading and business from misleading marketing

Article

04 June, 2008

What are the regulations?

On 26th May 2008 two new major pieces of legislation came into force; The Business Protection from Misleading Marketing Regulations 2008 ("BPRs") and The Consumer Protection from Unfair Trading Regulations 2008 ("CPRs").

What's changed?

The new Regulations represent the biggest change to consumer protection law in over 40 years and repeal much of the Trade Descriptions Act 1968, Consumer Protection Act 1987 and the Fair Trading Act 1973 amongst others.

The BPRs apply to business to business transactions. The BPRs prohibit advertising which misleads traders and set out conditions where comparative advertising (i.e. advertising which in any way identifies a competitor or a product offered by a competitor) is permitted.

The CPRs introduced a general duty on traders not to trade unfairly and seek to ensure that traders act honestly and fairly towards their customers. The CPRs apply to business to consumer transactions.

The CPRs prohibit misleading actions and aggressive practices and also specify thirty one commercial practices which will automatically be considered unfair. These include:-

  • Bogus closing down sales
  • Using guilt to make sales
  • Falsely stating that a product will be available for a limited time only

What are the penalties?

If you fail to comply with these Regulations, your business may be investigated by your local authority's trading standard services and other bodies. Such investigations could take up a lot of your business time and you could face an unlimited fine or imprisonment for up to 2 years.

What other possible consequences could there be?

Although the Regulations state that an agreement shall not be void or unenforceable by reason only of a breach of the Regulations, it seems that the party convicted under the Regulations would have great difficulty enforcing an agreement. Potentially an agreement could be declared void if a customer can establish some form of misrepresentation or fraud in addition to a breach of the Regulations.

Breach of the Regulations is a criminal offence and therefore monies received whilst carrying out that breach could be viewed as proceeds of crime and therefore there may be further consequences in terms of money laundering enforcement under the Proceeds of Crime Act.

If you need advice on how these Regulations may affect your business practices or if you would like us to review your marketing, contractual or sales documents then please do not hesitate to contact the Business Law Department.

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