Consumers should have private rights of redress against unfair business practices, OFT says

Rules governing unfair business practices are set out in the Consumer Protection from Unfair Trading Regulations (CPRs).

The regulations state that a practice is unfair if it fails to meet the standard of "professional diligence", which is the standard of skill and care that would reasonably be expected of a trader in its field of activity, and it materially impairs an average consumer's ability to make an informed decision, causing him to make a decision he would not otherwise have made.

Currently the CPRs are enforced by the OFT and Trading Standards under powers given to the authorities under the UK's Enterprise Act. The organisations can enforce the regulations through the civil and criminal courts.

The CPRs do not give consumers the private right of redress. Aggrieved consumers in England and Wales can claim compensation against firms under provisions of English misrepresentation law if they can show they entered into a contract based on false assurances given to them.

"The current law is complex for consumers and not particularly well-suited to pressured sales practices, which are increasingly commonplace," said Claire McCracken, a technology law specialist with Pinsent Masons, the law firm behind OUT-LAW.COM.  "New consumer-friendly laws are to be welcomed, especially by vulnerable groups who tend to suffer at the hands of aggressive sales people."

The OFT said that a new Act was needed to establish better rights to private redress for consumers. It proposed that a new Act should set out consumer rights to take action against businesses that adopt any unfair business practices prohibited currently under the CPRs. The OFT was responding to a consultation launched by the Law Commission and Scottish Law Commission.

"Redress should be available for all the prohibited practices in the Regulations," the OFT said in its consultation response (42-page / 350KB PDF).

"Broadly speaking, if a consumer is subjected to an unfair commercial practice, then they should be able to seek redress from the trader," the OFT said.

In April the Law Commissions proposed that the UK introduce a new Act covering consumer rights of private redress. Those proposals said consumers should have the right to take action against companies that take misleading actions and use aggressive business practices.

The OFT said any new consumer private redress laws should cover the "whole scope" of the regulations.

"We do not think that providing a right of action only in respect of misleading actions and aggressive practices will be effective, and it may create undesirable consequences and perverse incentives for traders in the way they may adapt their trading practices," the OFT said.

"We think it is especially important that private rights of action are provided where a misleading omission is made by a trader, and that provision for vulnerable consumers is explicitly included in any new proposals or Draft Act," it said.

Under the provisions of the CPRs, misleading omissions are made when a trader omits or hides material information, provides it in an unclear, unintelligible, ambiguous or untimely manner, or fails to make it clear he has a commercial intent.

Writing new laws that did not give consumers the right to private redress against businesses that make misleading omissions "could potentially leave a serious gap in empowerment and protection for consumers," the OFT said.

Technology law news is also available from Bootlaw, a free resource for technology start-ups, with regular events hosted by Pinsent Masons.