Unfair trading practices
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- Businesses have a general duty not to undertake unfair trading practices under the Consumer Protection from Unfair Trading Regulations (CPRs).
- The CPRs aid in determining whether certain advertising and marketing practices are misleading, aggressive or lack due diligence.
- In addition to this general duty, there are 31 business practices that are banned outright, such as displaying a quality mark without authorisation.
- The Business Protection Regulations impose impose further restrictions on how companies compare their products to rival products from other companies.
The Consumer Protection from Unfair Trading Regulations 2008 (Consumer Protection Regulations) implement the EU's Unfair Commercial Practices Directive (UCPD). The UCPD aims to harmonise European legislation preventing business practices that are unfair to consumers.
The aim of the legislation is to make it easier for traders in one member state to market and sell their products to consumers in other member states. This is particularly relevant to the tourism sector.
The Business Protection from Misleading Marketing Regulations 2008 (Business Protection Regulations) also implement the EU's Unfair Commercial Practices Directive. These regulations tighten restrictions relating to how companies compare their products to rival products from other companies.
Do the regulations apply to me?
Yes if you are either:
- advertising your accommodation facilities using any other form of media (including online and via social media)
- making statements about your facilities to the public.
What constitutes an unfair trading practice?
The aim of the CPRs is to provide a framework for determining whether certain practices are misleading, aggressive or lack due diligence on the basis that they would alter the behaviour of the average customer. In other words, if it can be determined that the customer made a purchase that they otherwise would not have done had they known the full facts of the matter, then the business has engaged in unfair practices.
This covers engaging in misleading practices such as making false or deceptive statements in marketing material or omitting important information that would have a bearing on the customer's purchasing decision.
Examples relating to accommodation facilities could include statements made about:
- the quality of the accommodation (see also Practices banned outright below)
- the amenities
- the location of the accommodation premises
- services related to the accommodation.
For example, it would be a false statement if you advertised that your accommodation was 'five minutes from the beach', when it is actually a half-hour drive, or that 'the rooms are spacious with panoramic views' if this only applies to one room.
Similarly, if you omitted to notify customers of the cost of making calls from their room or that you were undertaking refurbishment work that either closed facilities or generated considerable noise or dust, this could be deemed to be misleading.
Practices banned outright
While much of what constitutes an unfair practice will have to be determined through case law, the legislation lists 31 practices that are banned outright. These practices include:
- displaying a quality mark (such as an accommodation grading scheme mark) without having the necessary authorisation. This includes displaying a quality mark that is out-of-date
- falsely claiming that a premise or product has been approved or endorsed by a public body such as VisitEngland
- falsely stating that an offer will only be available for a limited time.
So, if you were to display on your premises an incorrect VisitEngland star rating, or an outdated tourist board rating such as a Crown or Diamond classification and grading, this would be regarded as a breach of the regulations.
In addition to the Consumer Protection Regulations, the Business Protection from Misleading Marketing Regulations 2008 tighten the legislation relating to comparison marketing. These regulations specify that companies must not use advertising to:
- compare products or materials that are not designed for the same period
- confuse people as to the advertiser and the competitor
- present imitations or replicas of products bearing a protected trade mark or trade name
- take unfair advantage of the reputation of competitors' trademarks, trade names, other distinguishing marks, or country of origin information.
Examples relating to accommodation facilities could include:
- taking out an advertisement that unfavourably compares the cost of staying at a neighbouring hotel with staying at your hotel would be deemed to be unfair if you failed to mention that the neighbouring hotel was a five star property while yours was a three star property
- describing your guesthouse as “the Torquay Hilton”, even if you consider this to be a tongue-in-cheek description.
Online reviews and endorsements
If your website allows customers to review your property, the Consumer Protection from Unfair Trading Regulations 2008 prevent you from managing or presenting the reviews you receive in a way that misleads your customers. This means that you cannot write or commission fake reviews. ‘Commission’ includes asking friends to write reviews and offering inducements to customers in return for writing positive reviews.
It also means that, in order not to mislead your customers, the review section of your website must accurately reflect your customers’ views, regardless of whether they are positive or negative. Your process for collecting, moderating and publishing reviews must not hinder their impartiality and you must publish all genuine and lawful reviews. For example, you cannot pick and choose which guests you ask to provide a review when they depart – you must either invite all of the guests, or none – and you cannot choose which reviews to publish on your site.
The Competition and Markets Authority (CMA) have issued specific guidance summarising the dos and don’ts for online review sites.
It is not illegal to pay a person or publication to promote your business online; however, potential customers need to know the endorsement has been paid for. For example, while it is legal to pay a blogger to write a piece about your business, it must be clear that you have paid for this endorsement. This can be done by adding a statement such as ‘Advertisement Feature’ or ‘Advertisement Promotion’.
The CMA have also issued specific guidance on online endorsements.
Enforcement and penalties
Your local Trading Standards office is responsible for enforcing the regulations.
Anyone who breaches the regulations can be prosecuted for a criminal offence by a local trading standards office and subject to a fine and/or, in extreme cases, a sentence of up to two years. In addition, it could lead to a civil claim - see Misrepresentation below.
Defence against a charge of unfair trading
Possible defences against a charge of unfair trading include:
- you made a pure mistake and were not given the opportunity to remedy the situation
- your statement was based on information supplied by a third party
- the statement was made by some 'other person' ('other person' does not mean any of your employees).
However, in any defence, you would still have to show that you took all reasonable care and exercised all due diligence to check that the facts were true in any publication or statement. You should keep written records of those efforts so you can prove what you did (e.g. a copy of your brochure or information sheet marked to show the checks you made).
Engaging in unfair trading practices can not only result in a criminal prosecution (see Enforcement and penalties above) but it may also result in a civil claim being brought against you by any person who has suffered loss as a result of a false statement. This stems from what is referred to in law as misrepresentation.
When misrepresentation occurs
Misrepresentation occurs where a party is induced to enter into a contract by certain statements that later turn out to be untrue. With respect to accommodation premises, these could again include statements about the accommodation's:
For example, if Mr Anderson and his family had booked into a bed and breakfast with an assurance that it was only 'five minutes from the beach' and it turned out to be a half-hour drive he would be able to either:
- refuse to continue with the booking and claim damages from you for any losses incurred as a result
- continue staying with you but claim damages for his, and his family's, distress and disappointment.
For any promotional material, you should bear in mind the following:
- Advertising codes (for broadcast and non-broadcast media) are issued by the Committee of Advertising Practice (CAP) and require advertisements and sales promotions to be legal, decent, honest and truthful. Advertising codes also deal with specific issues, including the availability of products at the advertised price and VAT inclusion in prices.
- The requirements of the Package Travel, Package Holidays and Package Tours Regulations 1992 - see the 'Holiday packages' section for more information.
Many operators advertise and market their business through social media – for example, having a Facebook account for the business and/or a Twitter feed attached to their website.
It is important to realise that while you may use a far more relaxed or “chatty” style of communication when using social media than you would in print or on your main website, everything that you post via social media must still comply with all aspects of the CPRs. It is therefore essential to re-read anything that you are about to post using social media to make sure that it is accurate, is not open to misinterpretation and does not make unfair comparisons.
Your local Trading Standards office
Find your local Trading Standards office, which is responsible for enforcing the regulations and should be able to give you further guidance.
Consumer Protection: a basic guide
Read the guidance publication 'The Consumer Protection from Unfair Trading Regulations: a basic guide for business'.
Further information on the advertising codes can be obtained from the Committee of Advertising Practice (CAP) website.