make sure you trade fairly
17 March 2009
Last year saw the biggest change to consumer legislation in over
40 years. As we approach its first anniversary Fiona Carter, Head
of Marketing Law at Browne Jacobson LLP, explains why businesses
need to be on their toes when it comes to selling their goods and
services in the EU.
Marketing communications have always been
highly regulated both in the UK and across Europe. The Trade
Descriptions Act 1968 and the Consumer Protection Act 1987 were the
mainstay of the UK’s trading laws for a number of years but there
has been a growing realisation that the laws across Europe were in
desperate need of harmonisation. In May last year the UK introduced
the EU's Unfair Commercial Practices Directive and thereby
implementing two pieces of legislation - the Consumer Protection
from Unfair Trading Regulations 2008 and the Business Protection
from Misleading Marketing Regulations 2008.
Consumer protection
The Consumer Protection from Unfair Trading
Regulations 2008 (CPRs) prohibit five categories of practices which
are deemed to be unfair. These are:
- Misleading actions - such as advertisements which involve
false information or are likely to deceive
- Misleading omissions – where traders omit or provide ambiguous
information about their product or service
- Aggressive practices - including the use of harassment,
coercion or undue influence
- Breaches of professional diligence - where business
traders are expected to adhere to certain standards which go hand
in hand with honest market practice and the principle of good
faith
- Blacklisted practices – the Regulations outline 31 practices
that are prohibited including activities such as copycat marketing,
posting fictional customer reviews on your own website and falsely
describing products as ‘free’ to name just three.
Business Protection
The Business Protection from Misleading
Marketing Regulations 2008 provides protection to other traders,
rather than to consumers. Traders are still prohibited from
engaging in misleading or deceiving actions that may damage their
competitors, both financially and competitively. The regulations
also outline under what circumstances a trader can produce
publicity comparing their products with their competitors.
Penalties
As well as an attempt to crystallise consumer
protection legislation across Europe, the Unfair Commercial
Practices Directive is a response to the explosion in social media
and misleading online marketing techniques such as ‘astro-turfing’
(websites used to create a false impression of grass roots support
for an issue) and ‘sock puppetry’ (posting entries under several
different names to make something look more popular that it really
is).
Given the wide extent of the Regulations, it
is crucial that all manner of businesses from retailers and estate
agents to financial advisers and insurers take steps to understand
the implications of the legislation and assess their current
trading practices to ensure compliance by themselves and their
staff. Those who fall foul of the regulations run a real risk that
they will be prosecuted. Any breaches of the legislation may result
in enforcement orders and criminal prosecutions. Offenders may face
an unlimited fine and up to two years imprisonment upon a
conviction.
Top tips
Some of the ways you can ensure you comply
with marketing legislation :
- Do not make a statement - unless you can
verify that it is true.
- Comply with all applicable codes - e.g the
Advertising Standards Authority's CAP codes. One way to avoid being
deceptive in your advertising is by being very selective about the
use of absolute statements or words like “always” and “never”
- Make sure you provide all necessary information
- when displaying goods for sale. For example the price
must always be clearly visible when inviting consumers to purchase
a product
- Be aware of the blacklist! – This is a list of
31 practices which will be prohibited in any circumstances.
It will be important for businesses and marketers to be familiar
with the list as it prohibits some existing common practices.
- Do not deliberately mislead the consumer – by
producing products or trademarks that mirror a competitor with the
aim of confusing the consumer.
- Have strict due diligence procedures in place
- to make sure that the advertisements you use to promote
your goods or services will not in any way mislead your
audience. Or if they are close to the line, then you will be
able to identify where the line lies and confidently refute any
challenges.
- Awareness - deliver an in-house training
programme to ensure all your sales team and in-house personnel are
aware of the regulations. Identify who it is who is
responsible for compliance – it could be you.
Browne Jacobson has produced ‘The Clarity
Guide to Marketing Law’, a free reference tool offering businesses
practical advice and guidance on a number of areas which comprise
advertising and marketing law. It is free to download by going to :
www.brownejacobson.com/marketinglaw.