Condemned Sells: The UK Has Strengthened Its Legislation against Sharp Marketing Practices, Writes Neil Hodge, but It's So Wide-Ranging That Even Reputable Advertisers Should Ensure That They Aren't Breaking the Law
Hodge, Neil, Financial Management (UK)
Two regulations have come into force that will give UK consumers and businesses greater protection from misleading advertising and clamp down on other dishonest marketing activities. Both enable courts to fine companies, their directors and managers up to 5,000 [pounds sterling] for breaching the rules. The most serious violations could even lead to a two-year prison sentence.
The first piece of legislation--the Consumer Protection from Unfair Trading Regulations 2008--aims to prevent firms from deceiving the public with advertising campaigns or unduly pressuring them into buying their products. It lists 31 practices that will always be considered "unfair". These include saying that a product is "free" when it isn't; telling a consumer that if he does not buy the product or service the trader's livelihood will be in jeopardy; and claiming that a product has a quality mark when it doesn't.
"For the first time, the manner in which a sale is being achieved is as relevant a concept as the content of an advert or pitch," says Susan Hall, a partner at law firm Cobbetts. "This means that the hard sell so beloved of the typical used-car salesman will now become a criminal offence. Many of the 31 unfair practices will be obvious through common sense, but some may come as something of a surprise to unwitting businesses. For example, the tenth item on the list prohibits the presentation of consumers' legal rights as a 'distinctive feature' of a trader's offer. This means an end to the promotion of rights to return defective products as a bonus feature of a product. Elsewhere, paid-for editorial content in newspapers and magazines (known as advertorial) must be made clearly distinguishable from genuine editorial, while bogus closing-down sales are banned."
The second law--the Business Protection from Misleading Marketing Regulations 2008--bans adverts that mislead traders and it places strict controls on comparative adverts. It also prohibits companies from presenting imitations or replicas of products bearing a protected trademark, or of taking unfair advantage of the reputation of competitors' trademarks, brand names or country-of-origin information. Trading Standards and the Office of Fair Trading may apply to the courts for injunctions to prevent any breach of the regulations. But, despite calls from consumer bodies, the legislation does not create any private right of action against traders by businesses or consumers.
"These new laws represent a more joined-up approach to protection and get rid of some of the grey areas in the earlier legislation," Hall says, but she warns that "it's not only the deliberately unscrupulous companies that will be affected. A number of changes may cause serious legal headaches for careless businesses."
The EU unfair commercial practices directive--from which the Consumer Protection from Unfair Trading Regulations are derived--aims to achieve a "high common level of consumer protection" throughout Europe. Before the member states incorporated the directive into their national laws there was a patchwork approach to consumer protection legislation across the continent, according to Clare Frith, a solicitor at Eversheds. Divergent laws inevitably caused disparities in the level of protection and hindered cross-border trade. But today there's still no guarantee that regulations are the same across the EU. Firms could fall foul of up to 27 different national laws because of differences in interpretation and enforcement, she warns.
The new UK regulations have a much wider reach than their predecessors. For example, they have introduced protection specifically for "vulnerable consumers". Nick Johnson, a specialist in marketing law at Osborne Clarke, says that children and old people won't be the only groups covered by this term. …