Briefing on the changes to the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) in respect of misleading and aggressive practices

1. Freshfields Bruckhaus Deringer llp Proposed new rights for consumers to sue for
misleading and aggressive practices
September 2013
Summary
Last month, the UK government released further proposals to change consumer law – this
time, by allowing consumers to sue traders who breach the Consumer Protection from
Unfair Trading Regulations 2008 (the CPRs) and specifying the remedies that they would
obtain if successful.
In this briefing we examine the main proposals and how they could affect you. In short:
businesses should prepare for increased exposure to consumer claims, which could be•
encouraged by competitors;
the remedies available are likely to include damages and rights to unwind certain•
contracts; and
the government is seeking comments on the proposal before 11 October 2013. We are•
preparing responses and would welcome your views.
Misleading and aggressive commercial practices
The CPRs criminalise misleading and aggressive commercial practices by businesses towards
consumers. They are enforced by Trading Standards and the OFT, either via criminal
prosecutions or through the process set out in Part 8 of the Enterprise Act 2002, which allows
enforcers to seek statutory undertakings or court orders to prohibit conduct that breaches
these and other consumer protection regulations. In many cases, the CPRs are also the
statutory backdrop for the Advertising Standards Authority (ASA)’s assessment of
advertisements and company websites.
Consumers cannot currently bring claims for damages against traders for breach of the CPRs.
Instead, a consumer might have to rely on making a complaint to the ASA (which cannot
award damages) or on another legal basis, for example misrepresentation, which may well
be difficult to establish. A report by the joint Law Commissions of England & Wales and
Scotland in 2012 was critical of the situation and the government now wishes to offer
consumers clearer and simpler redress for misleading and aggressive commercial practices.
The government proposes to introduce legislation that would create:
a private right of redress for consumers who have been victims of misleading or•
aggressive practices. A consumer will have a right to redress if the trader’s misleading or
aggressive practice was a significant factor in the consumer’s decision to enter into the
contract or make a payment;
Misleading and aggressive
commercial practices
What we think of the
proposals
Have your say
Andrew Austin
T +44 20 7716 4048
E andrew.austin@freshfields.com
Proposed new rights for
consumers to sue for
misleading and aggressive
practices

2. standard remedies for victims of misleading and aggressive practices. These include:•
a right to unwind: if the goods or services have not been fully consumed, and the——
consumer rejects them within 90 days, the consumer will be entitled to ‘unwind’
the contract or payment and receive a full refund of the price paid; or
a right to a discount: consumers may decide to keep the remaining goods or services——
and claim a discount on the price paid. The right to a discount will continue to be
available even when the right to unwind has been lost, and the level of the discount
will be set according to statutory bands; and
an entitlement to seek damages. In addition to the standard remedies above, consumers•
will be entitled to damages if they can prove the misleading and aggressive practices
caused further economic loss, distress or inconvenience.
What we think of the proposals
The creation of new rights for consumers to sue is unlikely to be welcomed by many•
businesses. The proposals may be more popular with claimant-focused law firms.
A particular risk for businesses will be follow-on civil litigation after a finding by the ASA•
or another regulator that a company has breached the CPRs. This will raise the stakes
when it comes to defending complaints made to the ASA about misleading advertising
or considering whether to agree to statutory undertakings proposed by the OFT or
Trading Standards Services – the risk of follow-on damages claims will need to be taken
into account.
There is also a risk of inconsistent decision-making. If the ASA rejects a complaint that•
an advertisement is misleading, but a county court dealing with a civil consumer claim
finds to the contrary, can the trader risk continuing to run the campaign?
Although the new rights to sue would be open only to consumers, it is possible that•
traders seeking a competitive advantage may stand behind claims brought against their
competitors. Competitor claims relating to misleading advertising are relatively common
in many EU countries, where injunctions and damages are usually available.
The CPRs themselves are broadly drafted and there have been few court decisions•
interpreting them. Litigation, at least in the immediate aftermath of these new rights
being introduced, is likely to be complicated, with numerous references by the courts
to the European Court of Justice for guidance.
It is unclear how the proposed remedies, and in particular the right to unwind the•
contract, will apply to (in particular) digital products – will there be a duty on the
consumer to delete digital content?
Have your say
The Department for Business, Innovation and Skills is seeking comments on the detail of
how its proposals would apply. The deadline for submitting comments is 11 October 2013.
We will be helping a number of representative bodies prepare responses to these proposals.
We would welcome your thoughts and input.
freshfields.com
Freshfields Bruckhaus Deringer llp is a limited liability partnership registered in England and Wales with registered number OC334789. It is authorised and regulated by the Solicitors Regulation
Authority. For regulatory information please refer to www.freshfields.com/support/legalnotice. Any reference to a partner means a member, or a consultant or employee with equivalent standing
and qualifications, of Freshfields Bruckhaus Deringer llp or any of its affiliated firms or entities. This material is for general information only and is not intended to provide legal advice.
© Freshfields Bruckhaus Deringer llp, September 2013, 36787