Consumer Protection from Unfair Trading Regulations 2008 Graham Belton Fair Trading Team Manager Hampshire Trading Stand

1. Consumer Protection from Unfair Trading Regulations 2008Graham BeltonFair Trading Team ManagerHampshire Trading Standards Service

2. Background • Unfair Commercial Practices Directive adopted on 11 May 2005 • Introduces a duty not to trade unfairly • It provides for maximum harmonisation meaning some UK legislation required amendment • Massive consultation exercise on how to implement the directive • Over 20 laws affected, including core consumer protection measures • Involves some complex terms such as transactional decision test • Aims to simplify wherever sensible and appropriate • The new Regulations (CPRs) came into force on 26 May 2008

3. How does this effect the Tourism Industry? • Misleading price provisions of Consumer Protection Act 1987 were repealed • Code of Practice for Traders on Price Indications ceased to have effect • Price Indications (Method of Payment) Regulations 1991 were revoked • Price Marking (Food and Drink Services) Order 2003 was revoked • Tourism (Sleeping Accommodation Price Display) Order 1977 was revoked • Most of the Trade Descriptions Act 1968 was repealed

4. Interpretation • “Commercial practice” means any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction in relation to a product. • “Product” means any goods or service and includes immovable property, rights and obligations. • “Trader” means any person who in relation to a commercial practice is acting for purposes relating to his business, and anyone acting in the name of or on behalf of a trader.

5. Prohibited commercial practices • Practices specified in Schedule 1 of the Regulations • Misleading actions or omissions • Aggressive commercial practices • Promotion of unfair commercial practices in codes of conduct • Contravening the requirements of professional diligence

6. Practices specified in Schedule 1 The 31 specific practices deemed likely to affect consumers’ transactional decisions and therefore always regarded as unfair, include: • Misuse of codes, false endorsements, false approvals and false authorisations • Certain misleading claims regarding availability • Certain misleading claims regarding context or effect • Certain pyramid promotional schemes • Bogus prize draws • Certain aggressive sales techniques • Unreasonable demands regarding insurance claims and unsolicited goods • Failing to respond to pertinent correspondence

7. Misleading actions A commercial practice is misleading if: • It contains false information and is therefore untruthful in relation to any of the listed matters; or • It or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the listed matters, even if it is factually correct; and • It causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise

8. The listed matters • Existence or nature of the product • Main characteristics of the product • Extent of the trader’s commitments • Motives for the commercial practice • Nature of the sales process • Any statement or symbol relating to direct or indirect sponsorship or approval of the trader or the product • Price or the manner in which the price is calculated • Existence of a specific price advantage • Need for a service, part, replacement or repair • Nature, attributes and rights of the trader or his agent • Consumer’s rights or the risk he may face

9. Transactional decision “Transactional decision” means any decision taken by a consumer whether to act or refrain from acting concerning- (a) whether, how and on what terms to purchase, make payment in whole or in part for, retain or dispose of a product; or (b) whether, how or on what terms to exercise a contractual right in relation to a product.

10. Misleading actions (cont) A commercial practice is also misleading if: • It concerns any marketing of a product (including comparative advertising) which creates confusion with any products, trade marks, trade names or other distinguishing marks of a competitor; or • It concerns any failure by a trader to comply with a commitment contained in a code of conduct which the trader has undertaken to comply with; and • It causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise

11. Misleading omissions A commercial practice is a misleading omission if: • It omits material information; or • It hides material information; or • It provides material information in a manner which is unclear, unintelligible, ambiguous or untimely; or • It fails to identify its commercial intent, unless this is already apparent from the context; and • It causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise

12. Material information The term “material information” is defined as: • The information which the average consumer needs, according to the context, to take an informed transactional decision; and • Any information requirement which applies in relation to a commercial communication as a result of a Community obligation

13. Aggressive commercial practices A commercial practice is aggressive if: • It significantly impairs or is likely to significantly impair the average consumer’s freedom of choice or conduct in relation to the product concerned through the use of harassment, coercion or undue influence; and • It causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise

14. Contravention of professional diligence A commercial practice is unfair if: • It contravenes the requirements of professional diligence; and • It materially distorts or is likely to materially distort the economic behaviour of the average consumer

15. Professional diligence “Professional diligence” means the standard of special skill and care which a trader may reasonably be expected to exercise towards a consumer which is commensurate with either- (a) honest market practice in the trader’s field of activity, or (b) the general principle of good faith in the trader’s field of activity, or both.

16. Enforcement options • Majority of the prohibitions will be criminal offences, but not all • Civil injunction regime under Part 8 of the Enterprise Act 2002 will be available for all prohibitions

17. START HERE Might your practice affect consumers? Is what you are doing prohibited outright? (See Schedule 1 list of 31 practices) Practice is unfair Yes Yes No Are you giving false information to, or deceiving customers? Or are you failing to give enough information?* Or are you selling aggressively? Does your practice cause, or is it likely to cause an average consumer to change his mind about any products or related decisions (including cancellation)? Yes Yes No No Are you failing to act in accordance with the standards a reasonable person would expect? Yes No No Practice is not unfair Practice not caught by CPRs * In certain situations (that is, where an invitation to purchase is made) certain specified information must always be provided.

18. You will need to ensure: • Claims regarding awards or approvals such as 5-star, Michelin chef etc are accurate • All advertised prices are correct and inclusive of VAT • Any surcharge for payment by card or cheque is made clear • Price of rooms are displayed at reception • It is clear what is and isn’t included, for example, breakfast, evening meal etc • Details of single occupancy supplements are declared • Prices are clearly displaying in the bar area • Mini bar prices are clearly indicated in rooms • Any claims regarding location are accurate • Material information such as being on a busy road, on a flight path or limited parking is declared • Claims regarding facilities such as en suite rooms, swimming pools, gyms, Wi-Fi etc are accurate and indicate if charges are applicable

19. Any questions?

20. Further information available from • Hampshire Trading Standards Service • Tel: 01962 833620 • Fax: 01962 833698 • Email: rsadvice@hants.gov.uk • Web: www.hants.gov.uk/regulatory • Address: Hampshire Trading Standards Service Montgomery House Monarch Way Winchester Hampshire SO22 5PW • Office of Fair Trading • www.oft.gov.uk/advice_and_resources/publications/guidance/cprregs/