Consumer Redress for Misleading and Aggressive Practices

Current project status

• Initiation: Could include discussing scope and terms of reference with lead Government Department
• Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
• Consultation: Likely to include consultation events and paper, making provisional proposals for comment
• Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
• Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

This project is complete. Our recommendations have been accepted by the Government and included in The Consumer Protection (Amendment) Regulations 2014

The regulations form part of a package of measures to clarify consumer law.  These measures will draw on three joint reports by the Law Commission and Scottish Law Commission. Read more about our consumer rights work and the legislation.

This is a joint project with the Scottish Law Commission.  It was formerly referred to as the Misrepresentation and Unfair Commercial Practices project.

The problem

Misleading and aggressive commercial practices are a major problem.  Consumer Focus commissioned research which found that almost two-thirds of the population had fallen victim to a misleading or aggressive practice within the last two years, causing an estimated consumer detriment of £3.3 billion a year. A large proportion of the victims are among the most vulnerable in society, with housebound and older people facing a particular threat from high-pressure, doorstep selling. Under the existing laws that govern misleading and aggressive practices it is difficult, if not impossible, for consumers to get their money back.

In May 2008, the Consumer Protection from Unfair Trading Regulations implemented the Unfair Commercial Practices Directive into UK law. They provide that traders must not use “unfair commercial practices” against consumers. While the Regulations cover many of the unfair practices consumers complain about, they can only be enforced by the Office of Fair Trading or Trading Standards.

Consumers have to rely on private law rights if they want to take action.  Our review found current private law in this area to be fragmented, complex and unclear. The law needs to be clear and simple in order to be effective.

Our report

On 28 March 2012, we published a report that recommended limited reform, targeting the most serious causes of consumer detriment. We followed the Consumer Protection from Unfair Trading Regulations 2008 in most, but not all, respects.

We set out our recommendations on liability and remedies. Consumers would have the right to unwind the transaction (get a refund), or receive a discount on the price. Additional damages may be recoverable to compensate for additional loss.  We also considered the specific area of unfair payment collection.

The report includes an impact assessment of the recommendations.

The consultation paper

On 12 April 2011 we published a consultation paper, Consumer Redress for Misleading and Aggressive Practices, in which we made proposals for reform and asked questions.

Our proposals covered three key areas:

• Misleading practices. The law of misrepresentation provides a potential remedy in many cases, but the law is fragmented, complex and unclear.
• Aggressive practices (such as high pressure sales techniques). The current law is ill-suited to consumer disputes and leaves significant gaps in protection. Aggressive debt collection was highlighted as a particular problem.
• A new scheme of consumer remedies. Consumer groups told us that consumers usually prefer a refund, and the ability to “unwind” the transaction. The current law usually allows this in principle, but in practice the right has complicated conditions and exceptions.

Preliminary work

In July 2008, the Department for Business, Enterprise and Regulatory Reform (BERR) asked the Law Commission to give it preliminary advice on the issues which would be raised by providing consumers with a new private right of redress for unfair commercial practices under the Consumer Protection from Unfair Trading Regulations. We sent our preliminary advice to BERR in November 2008.

In February 2010 we started our current, larger project and produced a short paper outlining the current legal framework and some of the difficulties that exist. Between March and September 2010, we held a series of preliminary meetings with stakeholders to discuss problems raised by unfair commercial practices. We have set out our key findings from these meetings in our Feedback from Stakeholders.