An incorrect communication to a single consumer was a “misleading commercial practice”, prohibited under the Unfair Commercial Practices Directive 2005, implemented by UK legislation: the Consumer Protection from Unfair Trading Regulations 2008 (‘the CPRs’).
What is an unfair commercial practice?
There are five types of unfair commercial practices:
- Misleading action: includes marketing of a product which causes confusion with the product of a competitor, failure to comply with a code of conduct, or to provide false information or deliver an overall impression that deceives (or is likely to deceive), even if the information is factually correct!
- Misleading omissions: taking into account the circumstances of the commercial practice and the medium used to communicate it, it omits, hides, disguises or delays materia
- General prohibition: where the practice contravenes the requirements of professional diligence and materially distorts the economic behaviour of the average consumer in relation to a product (or is likely to do so).
- l information so as to cause the average consumer to take a transactional decision that they would not otherwise have made.
- Aggressive practices: includes harassment, coercion or undue influence, and the practice significantly impairs (or is likely significantly to impair) the average consumer’s freedom of choice.
- Engaging in any of the 31 specific banned practices listed at Schedule 1 (‘black list’): including, but not limited to, displaying a quality mark without authorisation and falsely stating that a product will be available for a very limited time in order to obtain an immediate decision.
Recent ECJ decision
In the recent case of Nemzeti Fogyasztóvédelmi Hatóság v UPC Magyarország Kft (‘Nemzeti’) a Hungarian customer was intending to end his current subscription with a cable company and immediately start a new subscription with another. The customer was given the wrong expiry date leading to an overlap of subscription costs to both companies for a short time.
The Court of Justice of the European Union (‘ECJ’) found that this single act to a single consumer amounted to an unfair commercial practice and stated that the following was irrelevant to their decision:
• whether the consumer could have obtained the correct information himself
• whether the practice is also contrary to the requirements of professional diligence;
• whether the conduct was unintentional; and
• that the loss suffered is insignificant.
Falling foul of the CPRs could lead to both civil and criminal sanctions for businesses. Whilst the ECJ have taken a zero tolerance approach in Nemzeti it may still be possible to raise a defence if the offence was committed because of a mistake, reliance on information supplied by another, the act or default of another person, an accident or another cause beyond your control; provided that you take all reasonable precautions and exercise all due diligence to avoid the commission of such offences.
In order to provide evidence in support of the due diligence defence and as a manner of good practice; treating your customers fairly, being open and honest and maintaining professionalism throughout is essential. Regular training of products and services should be provided to staff so that information provided is accurate and up to date. It follows that policies, procedures and any literature of your company should also be regularly reviewed and updated. It is important that customers are signposted to other publicly available information so that they can make an informed decision. Any inaccuracies found should be corrected immediately. Finally, keep records of all the efforts you make.
For further advice or information please contact the Head of our Corporate/Commercial Team and Partner Andrew Kerr.