UCPD Regulations
The Unfair Commercial Practice Regulations harmonise fair trading laws in the European Union member states so as to facilitate the functioning of the single market.
The UCPD prohibits unfair business practices in all sectors. Misleading actions, omissions and aggressive commercial practices are deemed unfair practices. Practices include courses of conducts, representations and communications by a trader in promoting, selling or supplying a product to a consumer. A trader is a person acting in the course of a trade, business or profession. A consumer is a natural person not acting in the course of a business. Products include goods and services and cover everything from simple products to complex services.
A commercial practice is deemed to be unfair if it contravenes the requirements of professional diligence and materially distorts economic behaviour of the average consumer. Professional Diligence is the standard of skill and care which a trader may reasonably have been expected to exercise towards consumers commensurate with honest market practice and /or the general principles of goods faith in its field of activity.
The standard will vary in circumstances depending on the context. The standard is not defined, guidance in codes of practice including OFT codes may help establish whether traders have met the required standard of professional diligence.
The “average consumer” is the bench mark. The “average consumer” is deemed to be reasonably well informed in the circumstances. Where a product is aimed at consumers who are vulnerable because of their age, the relevant consumer will be the average member of that group.
Unfair Practices
A commercial practice is unfair if in breach of professional diligence, it materially distorts or is likely to materially distort the economic behaviour of the average consumer.
A commercial practice is deemed unfair
- if it is misleading
- if there is a misleading omission
- if it is aggressive
- if it is listed in the schedule which sets out specific certain unfair practices.
A commercial practice is any act or omission, course of conduct, representation or commercial communication by a trader which is directly connected with the promotion sale or supply of a product to or from consumers. This includes advertising and marketing.
Professional diligence in the above sense is the standard of skill and care which a trader may reasonably be expected to exercise towards consumers in accordance with honest market practice and the general principles of good faith in the field or activity concerned.
Material distortion of economic behaviour refers to impairing the average consumer’s ability to make an informed decision. It is assumed that the average consumer is reasonably well-informed reasonably observant and careful
Where a product is aimed at a group the average member of the group is the touchstone for this purpose. Vulnerable consumers are subject to further criteria.
Misleading Practices
Commercial practices also deemed unfair if they are misleading or aggressive or are included in the list of the specific practices deemed to be unfair. Commercial practices are deemed to be misleading, if they give false information which the deceive the average consumer in relation to the existing characteristics of the product, the extent of trade commitment price, facts including how it was fixed, need for service or repairs, the nature of the trader including the status and qualification and consumer rights.
Practices are deemed misleading if in the circumstances they are likely to make the average consumer make a decision that he would not have otherwise have taken. It is also deemed misleading if a product is marketed in a way that causes confusion with that of competitors or fails to comply with relevant codes of conduct which the trader undertakes or represents himself to comply with.
An omission can be misleading in a certain circumstances. Commercial practice can be deemed misleading if the circumstances omits, hide or disguise material which will cause the average consumer to take a different decision. The information required will depend on the circumstances but would include the main the characteristics, identity of the trader, price, terms of payment, delivery and complaints or rights of cancellation.
Aggressive Practices
An “aggressive” commercial practice is one by which harassment, coercion or undue influence, significantly impairs the average consumer’s freedom of choice or conduct. It is a practice which in its factual context taking account of the circumstances significantly impairs or is likely to impair the average consumer’s freedom of choice of conduct in relation to the product concerned due to harassment coercion undue influence and thereby causes the consumer to make a transactional decision which he would not otherwise have made.
The question of whether a commercial practice is aggressive, must be considered in its context. This will include time and location, use of threatening or abusive language or behaviour, exploitation of specific misfortune or circumstances.
There is relevant to the issue of harassment, coercion or undue influence, the following
- timing location nature or persistence
- use of threatening or abusive language or behaviour
- exploitation of any specific misfortune or circumstance of such gravity as to impair the consumer’s judgement of which the trader is aware in order to influence the consumer’s decision with regard to the product set to take action that cannot be legally undertaken.
Coercion includes the use of physical force. Undue influence is the exploitation of a position of power in relation to a consumer to apply pressure even without threats of physical force in such a way as to significantly limit the consumer’s ability to make an informed decision
The CMA guidance give suggestive illustrations including pressurising bereaved families to buy expenses coffins, taking a consumer to a holiday club presentation with no means of getting home unless they sign a contract and door step traders who insist on taking consumer to the bank to collect money.
Deemed Unfair Practices
The regulations list 31 commercial practices which are deemed to be unfair in all circumstances. They include the following:
- 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 diseases;
- Falsely stating that a product will be available for a limited time to get immediate decision;
- Making a materially inaccurate claim about the risk to the personal security of the consumer if the family decides not to purchase the product;
- Ignoring a request to leave or stay away from the consumer’s home;
- Establishing, operating and promoting a pyramid promotional scheme;
- Describing a product as free or without charge if the customer has to pay anything other than minimal actual expenses;
- Falsely representing once self as a consumer.
Other Unfair Practices
A commercial practice is misleading if it contains false information in relation to key matters such as the nature of the product, which is likely to cause the average consumer to make a transactional decision he would not otherwise have made.
A commercial practice is misleading if any marketing creates confusion with products, trade names trademarks et cetera of a competitor. It is unfair if the trader fails to comply with codes of conduct which he claims to comply with and this causes the average consumer to make a transactional decision which he would not otherwise make.
A practice may be unfair by reason of a misleading omission. Relevant factors include the features and circumstances of the commercial practice, the limitations of the media used to communicate and if the media is limited in space, whether steps have been taken to circulate further information through other mechanisms
Material information is that which the average consumer requires to know in order to make an informed decision. It also includes that required by EU legislation.
Where the commercial practice is an invitation to purchase, additional information may be material such as the identity of the seller, the trading name and the identity of agents on whose behalf he acts.
The regulations prohibit traders from misleading consumers about prices or the manner in which they are calculated. It prohibits omissions in the case of an invitation to purchase, of information on the price or related charges including taxes, delivery, charges and postal charges unless they are apparent from the context, where their omission may cause the consumer to make it different transactional decision.
Enforcement
Breach of the legislation incurs civil and criminal liability. The CMA may take civil enforcement action in respect of breach of the regulations.An application may be made court for an enforcement order. Criminal prosecutions may also be taken by the Competition and Markets Authority.
Private persons can take action under certain conditions. A trader commits an offence if he engages any of the above mentioned unfair commercial practices. A defence is available if it can be proved that the offence was committed due to a mistake, reliance on information supplied by a third party or circumstances beyond the trader’s control. There is £5,000.00 fine on a summary conviction with a higher limit on indictment.
In a prosecution the trader must generally be shown knowingly or recklessly to have breached the requirements of professional diligence in a manner whereby the behaviour of the average consumer is distorted. There are some defences which may apply to a trader who undertakes a commercial practice that breaches the general or specific prohibition.
In the case of offences of strict liability
- there is a defence of mistake
- reliance on information supplied by a third party
- act or default of another person
- reason beyond the persons control
provided that he took all reasonable care in the circumstances
There is a defence for advertisers where they have received advertisements in the ordinary course of business and they did not know that the publication would breach the legislation.
