Consumer Protection – What business need to do

Consumer protection: business briefing

This business briefing sets out how a business can comply with its obligations under consumer protection legislation.

Unfair commercial practices

Consumer protection legislation provides a general prohibition on unfair commercial practices.

Misleading acts or omissions

A business must not mislead consumers through acts or omissions. For example:

  • A business falsely tells a consumer their boiler cannot be repaired and they will need a new one. This constitutes a misleading action.
  • A business sells a satellite television package to a consumer, without indicating that sports channels are only available at an additional subscription cost. This constitutes a misleading omission.

Aggressive commercial practices

Businesses must not subject consumers to aggressive commercial practices (for example, bringing a consumer to a holiday club presentation with no means of getting home unless they sign a contract).

Definitively unfair commercial practices

Consumer protection legislation contains a list of 31 commercial practices that are always unfair. These include:

  • 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 illnesses.

Who can take action for a breach?

  • A business will commit an offence if it engages in unfair commercial practices.
  • The OFT and the Trading Standards Services can take enforcement action against a business if the business breaches consumer protection legislation.
  • Penalties include a fine not exceeding the statutory maximum on summary conviction; and a fine of up to two years imprisonment or both on indictment.

Unfair terms in consumer contracts

  • Consumers can challenge contract terms on the basis that they are unfair.
  • Consumer protection legislation applies to any unfair terms in contracts between a consumer and a business selling goods or services.
  • A term will be regarded as unfair if it causes a significant imbalance in the parties’ rights and obligations under the contract in favour of the business.
  • If a term is unfair, then it is not binding on a consumer, although the remainder of the contract will continue in force if it is capable of doing so.
  • When deciding whether a term is unfair, a court will take into account the type of goods and services being provided;  the circumstances surrounding the conclusion of the contract; and all the terms of the contract, or of another contract on which it depends.

Potentially unfair terms in consumer contracts

Consumer protection legislation provides a non-exhaustive list of potentially unfair terms. The types of terms identified are those that, in effect, are trying to achieve the following:

  • Make a consumer pay an unfair penalty.
  • Mislead a consumer about his legal rights, or mislead him about the contract.
  • Deny a consumer full redress.
  • Tie a consumer into a contract unfairly.
  • Allow a business to not perform its obligations.
  • Not allow a consumer to recover his prepayments on cancellation.
  • Allow a business to vary the terms after the contract has been agreed.

How can we help?

The Hollingsworth team will be happy to discuss your legal requirements in the first instance please fill in the form or call us on 0116 204 7260.

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