New laws that came into force at the end of May are designed to protect the consumer from cowboys - but how does it affect the average retailer? Writing for kbbreview, solicitors Poppy Williams and Paul Burnley take a look into the details...

As with other business sectors, the world of kitchens, bedrooms and bathrooms has people at its extremes. There are those like the infamous Vance Miller who flaunt the law and find themselves either at the end of a hefty fine or staring out of the window of a prison cell.

On the other side there are others that trade fairly, follow the law and keep up-to-date with all regulations and requirements.

Somewhere in the middle though there are those who operate in line with the law but perhaps don’t see the problem in the occasional white lie to get a sale or, perhaps even worse, are blissfully unaware that they might be breaking laws with practices they’ve been carrying out for years.

They’re the people that need to take note of the new Consumer Protection laws that came into force at the end of May.

Part of the Unfair Trading Regulations, these laws are one of the biggest changes to consumer legislation for 40 years and cover ‘any goods or services’. The new regulations introduce a general duty not to trade unfairly; a prohibition against misleading or aggressive practices; and, interestingly, it banned 31 specific prohibited commercial practices outright.

So what does ‘a general duty’ mean? It is a catch all provision that will allow enforcers to take action against unfair commercial practices which aren’t included in the 31 banned ones or are considered misleading or aggressive.

This, of course, leads to a second question: what exactly is considered ‘unfair’? The definition the regulations use is a practice that “materially distorts the economic behaviour of the average customer with regard to the product”.

Let’s look at what this means in every day business. The new laws prohibit practices which are misleading and are likely to cause a typical customer to take a different decision. So, it’s misleading to make false statements about specific key factors even when the information is correct - for example marketing a product in a way which creates confusion with a competitors products. Omitting material information or providing that information in an ambiguous way may be considered misleading.

The Consumer Protection Regulations (CPRs) also prohibit commercial practices, which can be deemed as aggressive - this is anything that impairs the average customer’s freedom of choice by harassment or undue influence.

Banned

The regulations ban 31 specific commercial practices outright, the vast majority of which will apply to kitchen, bedroom and bathroom retail and many of which may not seem immediately illegal.

For example, it won’t come as a surprise that if you falsely claim accreditation from an organisation such as Trust Mark or another body then you would expect that to breach regulations. But, it is also against the new rules to advertise a special offer for products you don’t have in stock or are unable to obtain within a reasonable time.

Saying a product is only available for a limited time when it’s not, presenting consumers’ legal rights as a distinctive feature of an offer, or describing a product as ‘free’ if the consumer has to pay anything other than delivery.

So, say you place an advert in a local paper saying that the first 10 people who make contact will get a free oven with their new kitchen. In reality though, this was never available and you’re telling everyone who calls that the 10 have already gone - this would directly contravene the new regulations.

I would advise anyone who deals with consumers to read through these 31 banned practices and seek further information if they’re not sure.

This is not just a shop floor issue either - advertising, marketing, sales, supplies, after-sales service and debt collection are all caught by the new rules. Even those not actually selling products to consumers themselves will still have to take the Consumer Protection Regulations into account if their business is directly connected with the sale or supply of a product to consumers.

Enforcement

There is no point having laws if there is no one to enforce them and the Office of Fair Trading, Local Authority Trading Standards and the Department of Enterprise, Trade and Investment in Northern Ireland will all have a duty to enforce the new rules.

Enforcement Officers may use their powers to inspect goods and enter business premises to investigate possible breaches of the CPRs. They will also be able to require traders to produce documents relating to their business.

Enforcement officers may also seize and detain goods relevant to their investigations. Any intentional obstruction of an enforcement officer or making a deliberately false statement to an officer is a criminal offence.

In addition to the OFT and Trading Standards Services, other bodies such as the Financial Services Authority, will be able to apply to the Court for an Enforcement Order to prevent a breach or breaches of the CPRs.

If an enforcement order is obtained, any breach of it could be a contempt of court which could result in up to two years imprisonment and/or an unlimited fine.

If you are found guilty of an offence under the CPRs then you could face a fine up to £5000 or imprisonment fot up to two years - or both.

“Due diligence” is the main defence available to businesses for breaches of the CPRs. To argue this defence successfully, it must be shown that the offence was due to a mistake, reliance on information given by another person, the act or default of someone else, an accident or another cause beyond the accused’s control. It must also be shown that all reasonable precautions were taken to avoid committing the offence. It is not sufficient to show due diligence procedures were in place, it is also necessary to show they were applied in practice. Significantly, there is no defence to a breach of the general prohibition.

These regulations may seem like yet more red tape for you to consider when running your business, but they are a major step forward in protecting the consumer against the very people who bring the overall sector into disrepute. Consumer Direct, the government’s consumer advice service, received 2827 complaints about fitted kitchens and 1499 about fitted bathrooms in just the first three months of this year. In total, those complaints were valued at nearly £20m. Laws like these help to make sure that money is well spent rather than wasted.

Paul Burnley is a partner and Poppy Williams is a solicitor in the Litigation and Regulatory Group of DLA Piper UK LLP

Further information
 
  ENGLAND www.businesslink.gov.uk/unfairtrading
  SCOTLAND www.bgateway.com/unfairtrading
  WALES www.businesseye.org.uk
  N. IRELAND www.nibusinessinfo.co.uk/unfairtrading

For a quick glance at the 31 banned practices click here.