Out-Law News 2 min. read

Law Commissions consult on creating new consumer right

The Law Commission and Scottish Law Commission are reviewing whether or not consumers should be able to take direct action against retailers who treat them unfairly. It has asked consumers and businesses if the action would be too severe.

Consumers are protected from traders' misrepresentations and unfair dealing by the Consumer Protection from Unfair Trading Regulations, which implement EU law, and by the existing law of misrepresentation.

The Regulations introduced for the first time a legal requirement that traders not treat consumers unfairly and introduced penalties for aggressive commercial practices.

Consumers cannot take direct action under the Regulations, though. Only consumer regulator the Office of Fair Trading and Trading Standards can pursue cases.

Consumers can take direct action if the goods or services they bought were misrepresented to them, but the Commissions said that this is problematic because the law in that area is so complex.

"As a result of its complexity, the law of misrepresentation is underused. Consumer advisers have told us that they find it difficult to advise consumers in this area, particularly if the misrepresentation does not constitute a breach of contract," said the Commissions' report on the issue.

The Commissions are now investigating whether or not consumers should be given the right to take action directly against companies in order to give them a simple, direct course of action. The Department for Business, Innovation and Skills (BIS) has asked them to report on the issue, the Commissions said.

Consumer groups have said that the current legal framework leaves consumers without the ability to take action for themselves. But business groups have expressed concern that a private right of redress would give consumers rights that were too wide.

The Commissions also recognise that changing the law could create some technical problems.

"We noted that creating a private right of redress would raise difficult questions about what happens to existing law," said the report. "Repealing current law may reduce protection, while leaving provisions in place and simply adding another layer may produce even greater complexity."

The Commissions have asked respondents to highlight situations or practices where consumers have no way to take direct action at the moment. They have also asked businesses and consumers to give their views on how long consumers should have after a sale to take action.

The Commissions said that the course of action most likely to improve consumers' position without damaging business was to make alterations to existing law rather than creating new ones.

"It is possible that the law could be improved without introducing a new right of action; unexpected consequences would be less likely if changes were made within existing structures," they said in their report. "Improvements might be achieved by reforming the current law on misrepresentation and looking at the law on duress in order to clarify whether aggressive practices under the [Regulations] should automatically be classed as a form of illegitimate pressure. We also raised the possible alternative of introducing a new private right of action limited to the areas where a right is most needed."

"We will be looking at those unfair commercial practices where consumers suffer loss, but there is no potential remedy in the existing law. We have started the project by requesting evidence of these cases from stakeholders," the report said.

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