Treated Unfairly? | The Consumer Protection from Unfair Trading Regulations 2008 | HolidayTravelWatch

The Unfair Commercial Practices Directive came into force on 26 May 2008 in the UK as The Consumer Protection from Unfair Trading Regulations 2008 (referred from here on as the Unfair Trading Regulations). They were introduced following a lengthy EU wide consultation on how the consumer was disadvantaged by the actions and behaviour of companies. The Regulations can be found at this link – http://www.opsi.gov.uk/si/si2008/uksi_20081277_en_2#pt1-l1g1 The Regulations repealed vast areas of previous UK consumer laws.

The Regulations introduced into the UK provide a wide area of prohibition on commercial behaviour which would cause a consumer to enter into a contract.

HolidayTravelWatch provided comment to the EU Commission and the then Department for Trade & Industry (now BERR) on the applicability of the Directive to the issue of Holiday Contracts. We considered that whilst the Directive would have benefits for the Consumer generally, they did not provide sufficient safeguard for those Consumers entering into Holiday Contracts.

Notwithstanding, it is clear that whilst the Regulations appear to relate in part to more ‘traditional transactions’ (double glazing, electrical goods, building work etc), there is the potential for the Travel Consumer to consider and use elements of the Regulations in the pursuit of their claims. Remember however, the principal Consumer Protection for holidaymakers is the Package Travel Regulations. The Unfair Trading Regulations should be used to supplement your armoury when stating your case to the tour operator or Trading Standards.

KEY DEFINITIONS:

It is important to set out some of the key definitions contained within the Regulations:

1. “code of conduct” means an agreement or set of rules (which is not imposed by legal or administrative requirements), which defines the behaviour of traders who undertake to be bound by it in relation to one or more commercial practices or business sectors;

2. “code owner” means a trader or a body responsible for—

a. the formulation and revision of a code of conduct; or
b. monitoring compliance with the code by those who have undertaken to be bound by it;

3. “commercial practice” means any act, omission, course of conduct, representation or commercial communication (including advertising and marketing) by a trader, which is directly connected with the promotion, sale or supply of a product to or from consumers, whether occurring before, during or after a commercial transaction (if any) in relation to a product;

4. “materially distort the economic behaviour” means in relation to an average consumer, appreciably to impair the average consumer’s ability to make an informed decision thereby causing him to take a transactional decision that he would not have taken otherwise;

5. “product” means any goods or service and includes immovable property, rights and obligations;

6. “professional diligence” means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers which is commensurate with either —

a. honest market practice in the trader’s field of activity, or
b. the general principle of good faith in the trader’s field of activity;

7. “transactional decision” means any decision taken by a consumer, whether it is to act or to refrain from acting, concerning—
a. whether, how and on what terms to purchase, make payment in whole or in part for, retain or dispose of a product; or
b. whether, how and on what terms to exercise a contractual right in relation to a product.

8. In determining the effect of a commercial practice on the average consumer where the practice reaches or is addressed to a consumer or consumers account shall be taken of the material characteristics of such an average consumer including his being reasonably well informed, reasonably observant and circumspect.

9. In determining the effect of a commercial practice on the average consumer where the practice is directed to a particular group of consumers, a reference to the average consumer shall be read as referring to the average member of that group.

10. Important caveat on statements – “(6) Paragraph (5) is without prejudice to the common and legitimate advertising practice of making exaggerated statements which are not meant to be taken literally”.

11. In determining the effect of a commercial practice on the average consumer—
a. where a clearly identifiable group of consumers is particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, and
b. where the practice is likely to materially distort the economic behaviour only of that group, a reference to the average consumer shall be read as referring to the average member of that group.

The areas of prohibition are summarised as follows

THE GENERAL PROHIBITION ON UNFAIR TRADING:

Regulation 3 provides the general prohibition. A commercial practice is unfair if it contravenes professional diligence and it materially distorts or is likely to materially distort the economic behaviour of a consumer toward a product. It goes onto state that a commercial practice is unfair if it is a misleading action, a misleading omission, it is aggressive or if it is contained within Schedule 1 to the Regulations.

CODES OF CONDUCT:

Regulation 4 prohibits the promotion of an unfair commercial practice within a Code of Conduct.

MISLEADING ACTIONS:

Regulation 5 provides the definition of what constitutes a “misleading action”. Either one of two conditions must be satisfied if it is to be considered to be a misleading action (we have highlighted the key features which we consider may be relevant to the area of either Package Holidays or so called DIY Holidays):

1. The commercial practice contains false information which is untruthful or its overall presentation deceives or is likely to deceive the average consumer even if the information is factually correct and either causes or is likely to cause the average consumer to take a transactional decision that they wouldn’t have taken otherwise, in other words they made a contract which they would not normally do. The condition provides listed matters to which the misleading action can apply to. In the first instance it defines the type of product as relating to:

a. its existence or nature,
b. its main characteristics (such as the products availability, benefits, risks, execution, composition, accessories, after sales assistance, the handling of complaints, its method and date of manufacture or provision, delivery, fitness for purpose, usage, quantity, specification, its geographical or origin, expected results from its use or the material features and results from any tests or checks),
c. the extent of the traders commitments,
d. the motives for their practice,
e. the nature of the sales process,
f. statement or symbol which implies a direct or indirect sponsorship of the trader or product,
g. the price or the manner in which the price is calculated,
h. the existence of specific price advantages,
i. the need for a service-part or repair,
j. the nature rights and attributes of the trader (such as his identity, assets, qualifications, status, approval,
k. affiliations or connections and awards and distinctions) and the consumers rights or the risks he may face (this would also include any rights existing under The Sale of Goods Act 1979 or The Supply of Goods & Services Act 1982).

2. The commercial practice concerns any marketing, including comparative marketing which creates any confusion with products, trade names, trademarks or any other distinguishing marks of a competitor, or, a failure by a trader to comply with a commitment contained within a Code of Conduct with which the trader has undertaken to comply with so long as the trader indicates that in a commercial practice he is bound by that Code of Conduct and the commitment is firm and is not simply aspirational.

MISLEADING OMISSIONS:
Regulation 6 provides the offence of “misleading omissions” (we have highlighted the key features which we consider may be relevant to the area of either Package Holidays or so called DIY Holidays):

These are classified as commercial practices that omit material information, hide material information, and provide material information in a manner which is unclear, unintelligible, ambiguous or untimely, or fails to identify its commercial intent unless this is apparent. The offence is completed if it causes or is likely to cause the average consumer to take a transactional decision that they wouldn’t have taken otherwise, in other words they made a contract which they would not normally do.

This Regulation identifies that all the features and circumstances of the commercial practice are to be considered when deciding whether a misleading omission has taken place. In that consideration, all the limitations of any medium used by a trader (which can include limitations on space or time, whether imposed on the trader or not) and the measures that are taken by any trader to provide information to the consumer.
The Regulation goes onto define material information as that given to a consumer within the context of the transaction so that they can make an informed decision. It also includes information that must be given as a result of an EU legal obligation.

The Regulation considers the information that is expected where there is an ‘invitation to treat’ (this means that the trader is inviting you to make an offer on something he has displayed in a shop window or online – he does not have to accept your offer! Note however, this could change if for example an online transaction was accepted, it could potentially be then classed as an offer – Advice will always be needed!).

Such information will be considered to be material (in addition to the material information above) if not already apparent and will consist of the following: the main characteristics of the product (limited by the medium it is presented through):
a. the trader’s identity (such as his trading name and address and the details for any other trader for whom he is trading),
b. price including any taxes or where the price cannot be calculated in advance – the manner in which it is calculated,
c. freight-delivery or postal charges and where they cannot be calculated in advance information that such charges will be payable,
d. arrangements for payment, delivery and performance and
e. a complaints handling policy.�
f. Where products and transactions involve a right of withdrawal or cancellation, a notice indicating the existence of such a right.

AGGRESSIVE PRACTICES:

Regulation 7 considers within the context of the transaction, taking into account all the features and circumstances of the transaction, that some commercial activity may amount to aggressive behaviour (we have highlighted the key features which we consider may be relevant to the area of either Package Holidays or so called DIY Holidays).

Such behaviour will be considered as aggressive if it impairs or is likely to impair a average consumers freedom of choice or conduct in relation to the product if harassment, coercion or undue influence is used and it causes or is likely to cause the average consumer to take a transactional decision that they wouldn’t have taken otherwise, in other words they made a contract which they would not normally do.

To decide if a commercial practice uses harassment, coercion or undue influence consideration will be given to:
a. the timing, location or persistence;
b. the use of threatening or abusive language or behaviour,
c. “the exploitation by the trader of any specific misfortune or circumstance of such gravity as to impair the consumer’s judgment, of which the trader is aware, to influence the consumer’s decision with regard to the product”,
d. “any onerous or disproportionate non-contractual barrier imposed by the trader where a consumer wishes to exercise rights under the contract, including rights to terminate a contract or to switch to another product or another trader”,
e. any threat to take any action which cannot be legally taken.

Coercion is further defined as including the use of physical force.

Undue influence is further defined as “exploiting a position of power in relation to the consumer so as to apply pressure, even without using or threatening to use physical force, in a way which significantly limits the consumer’s ability to make an informed decision”.

SCHEDULE 1 – THE CIRCUMSTANCES WHEN COMMERCIAL PRACTICES ARE IN ALL CIRCUMSTANCES CONSIDERED UNFAIR:

We shall identify and summarise the key circumstances which may be relevant to Package Holiday or so called DIY Holiday Sales:

1. Claiming to be a signatory to a Code of Conduct;
2. Displaying trust or quality marks without authorisation;
3. Claiming that a Code of Conduct has an endorsement from a Public or other body when it does not;
4. Making an invitation to treat or purchase without disclosing that he may not be able to fulfil that offer or find some other trader who can;
5. Making an invitation to treat or purchase with the intention of offering a different product – this is known as bait and switch!
6. Falsely stating that the product will only be available or available on particular terms for a limited time in order to try and get an immediate decision so depriving the consumer the opportunity to make an informed choice;
7. Presenting rights already given in law as a distinctive feature of the offer;
8. Using editorial comment to promote a product without identifying whether the trader has paid for that comment;

OFFENCES:

Regulations 8 to 12 identify the range of offences that can be committed by a trader by reference to the Regulations.
PENALTIES:

Regulation 13 states that any trader found guilty of any offences under Regulation 8 to 12 can be fined on summary conviction, or on conviction on indictment, fined and/or imprisonment for a maximum of 2 years.

LIMITATION PERIODS:

Regulation 14 states that no action can be commenced at the end of a three year period that the offence was committed, or, one year from the date of discovery by the prosecutor.

OFFENCES COMMITTED BY CORPORATE BODIES:

Regulation 15 provides for the prosecution of a body corporate. If it can be shown that the offence was committed with the consent or connivance of an officer of the company, or if it was attributable to any negligence on his part, then the officer and the company can be prosecuted and punished accordingly. Directors, managers, secretaries or other similar officer can be included in such an issue.

OFFENCES BY OTHER PEOPLE:

Regulation 16 can provide for other people to be charged for such offences along with the Trader.

THE DUE DILIGENCE DEFENCE:

Regulation 17 allows a trader to claim a defence if they can show that the act complained of was due a mistake, reliance on information given to him by another person, the act or default of another person, and accident or a cause beyond his control. The trader must show that he took all reasonable precautions and exercised due diligence to avoid committing the offence or to prevent another person under his control to commit the offence. They will not however be entitled to rely on this defence if they have not served a notice on the prosecutor, setting out the details.

THE INNOCENT PUBLICATION OF AN ADVERT DEFENCE:

Regulation 18 provides that where an offence has been committed through an advertisement it will be a defence for a trader to show that he is the person who publishes or arranges to publish advertisements, that he received the advert in the ordinary course of his business and that he did not know nor had any reason to suspect that the advert amounted to an offence.

TRADING STANDARDS POWERS:

Regulation 19 states that ‘it shall’ the duty of every enforcement authority to enforce the Regulations.

Regulation 20 provides the power to make test purchases.

Regulation 21 provides wide powers of entry, investigation etc.

Regulation 22 enables the enforcing authority to apply for and enter a premises with a warrant.

Regulation 23 creates a specific offence of obstructing authorised officers for which they can be fined following a summary conviction. In addition, if answers are provided to an authorised officer by a trader which they know to be false, they can be fined on summary conviction or upon conviction on indictment, a fine or imprisonment.

HOW CAN THIS REGULATION APPLY TO THE SALE OF A PACKAGE OR DIY HOLIDAY?

In the first instance we would always state that the starting point must be with The Package Travel Regulations. Despite the considerable debate on what constitutes a ‘package’, you must not assume that the transaction you have made is anything but a package. When the tour operator or travel provider gives a response that indicates that they think that your holiday contract does not constitute a ‘package’ then further enquiry with the benefit of legal advices will be required.

However, when stating your initial complaint it is perfectly acceptable to consider and perhaps state other areas where you think your tour operator or travel provider may be in breach of a statutory provision.

With regard to the Unfair Trading Regulations we would suggest that you consider your case and in addition to your direct complaint to the tour operator or travel provider, that you also make a complaint of their actions under these Regulations to your local Trading Standards department. The Regulations are clear; they ‘shall’ enforce the Regulations. By implication that would mean that they would obviously have to carry out an initial investigation into your complaint. Once they have ascertained the facts, they would then be able to advise you as to the action they can take, or advise why they cannot take that action.

There is nothing in the Regulations to suggest that an individual could not bring a private prosecution under these Regulations before the Criminal Courts. If you are considering such a route we would strongly advise that you seek both the advices of your local Trading Standards department and also from a suitably qualified solicitor – DO NOT INSTITUTE ANY CRIMINAL PROCEEDINGS WITHOUT TAKING THIS ACTION!

To put these Regulations into context we shall set out 2 case examples which are based on past complaints received by HolidayTravelWatch (we have highlighted the key features which we consider may be relevant to the area of either Package Holidays or so called DIY Holidays):

Example 1 – Significant Change to Holiday Arrangements before Departure:

Mr & Mrs A are due to travel to on holiday with their 2 children for a 2 week all-inclusive holiday. They have fully paid for their holiday. The hotel accommodates 1500 people. They have become aware through press reports and holiday review sites that there are many hundreds of holidaymakers who have become ill at this hotel. Many holidaymakers have returned, some with confirmed diagnoses, many others remain in resort and are demanding that they be returned to the UK. They are aware that the tour operator is arranging for many people to have stool samples tested in the hotel. Mr & Mrs A are obviously worried for their health, particularly for the children. They have tried to ‘negotiate’ with the tour operator directly using Regulation 12 & 13 of The Package Travel Regulations (these Regulations provide significant rights to holidaymakers where a significant change has been made to the essential terms of the contract before departure – that change being that they cannot guarantee the their personal safety within the resort and as such this will affect the viability of the contract). The tour operator’s response is that there are no major problems at the hotel, there were less than 1% of holidaymakers affected by a ‘virus’ and that the problems that were created by those holidaymakers minor illnesses have been resolved and that the hotel is safe! Mr & Mrs A make repeated calls to the tour operator providing them with an update of the information that they are receiving. Mr & Mrs A are aware of other holidaymakers in a similar position and have spoken directly with returned holidaymakers. They are desperate to try and remove themselves from this hotel and transfer to another hotel or resort. The tour operator is unrelenting and simply read a statement which tells Mr & Mrs A that the only choice that they have is to go otherwise they will lose their money.

The contract has not yet commenced and the product is yet to be delivered.

Under the Unfair Trading Regulations the tour operator is potentially in breach of Regulation 3 as they have adopted a commercial practice which goes against ‘professional diligence’ and is distorting the ‘economic behaviour’ of Mr & Mrs A toward this holiday product.

In addition the tour operator is potentially in breach of Regulation 5 by providing Mr & Mrs A with a ‘misleading action’, that being that tour operator has made repeated statements to Mr & Mrs A which are ‘false’, ‘untruthful’ or deceitful. Such actions are causing Mr & Mrs A to purchase a product which they ordinarily would not take. The statements made refer directly to the ‘nature and existence of the product’ and the ‘main characteristics of the product’, in particular, the ‘availability’, ‘benefits’, ‘risks’, ‘execution’, ‘fitness of purpose’, ‘results of tests or checks’, ‘delivery’ and ‘handling of complaints’ of the product.

In this example it is clear that the tour operator was well aware of the real problems at this hotel. It is also clear that there is a volume of information available to the tour operator and that they are ‘tailoring’ their responses to Mr & Mrs A and quite clearly to other holidaymakers. It is suggested that the tour operator is potentially in breach of Regulation 6 in that they are making a ‘misleading omission’ with regard to information about the product. They have received timely information from Mr & Mrs A about the threat to the viability of the operation of the contract and quite clearly from other returning, existing and intending holidaymakers. Under this Regulation it is clear that the tour operator has omitted, hidden or provided information which is ambiguous or untimely, as a result this is causing Mr & Mrs A to refrain from acting on how to exercise their contractual rights within the holiday contract, in other words continuing with a contract for a product whose viability is threatened.

Given the response by this tour operator to Mr & Mrs A and quite possibly other holidaymakers, it could be considered that the tour operator has committed a commercial practice which could be said to be ‘aggressive’ as defined under Regulation 7. We would suggest that Mr & Mrs A’s ‘freedom of choice’ has been significantly impaired because the tour operator has used ‘undue influence’ against Mr & Mrs A. In doing so, the tour operator has exploited a ‘circumstance of such gravity’ which has ‘impaired’ Mr & Mrs A’s judgement. In this case the tour operator has exploited their ‘position of power…so as to apply pressure’ and this in turn has ‘significantly’ limited Mr & Mrs A’s ‘ability to make an informed decision’.

All in all a serious set of circumstances and potential offences committed by the tour operator. We consider that these Regulations should be used where possible to supplement rights contained within The Package Travel Regulations and/or other statutory rights.

Example 2 – Purchase & payment of holiday online following which holiday not available:

Mr & Mrs B decide to book their holiday online, using one online travel provider for all their requirements. They intend to travel in 8 weeks time and the travel provider’s website claims that they provide a ‘real time’ booking facility and that they are members of ABTA. They are displaying the ABTA logo and advise that they comply with the ABTA Code of Conduct. They are attracted to a holiday deal where the flight, hotel and transfers are quoted in one price. They are keen to go to this hotel as the travel provider’s website contains holiday reviews of this hotel, all of which are positive. They commence the process of choosing the dates, flight, board arrangements and transfers. They complete personal information and input their credit card details. The transaction is processed, approved and a acknowledgement invoice is e mailed followed by a confirmation invoice. This confirmation invoice confirms that they are booked into the said hotel for the period they wish. 24 hours later they receive a phone call from the online travel provider to advise that they cannot go to the hotel that was booked and confirmed that it was overbooked. Naturally disappointed they seek to find an alternative. The only one on offer is to a hotel which does not have good reviews and is £500 per person more expensive. They try to negotiate a move to a different resort/country, none is available. They request that their money be refunded, this is refused as ‘normal booking conditions apply – they will lose all the money as it is now too close to departure. Reluctantly they decide to go. As feared the second ‘choice’ did not meet the representations made by the travel provider. Whilst in resort they decided to go to the hotel of their original choice to see if there were any free rooms and found that there were. They also discovered that the hotel had not had a contract with the travel provider for some 18 months; they could not understand why the travel provider was advertising their hotel! They also discover that the travel provider does not have membership of ABTA. The travel provider fails to respond to their complaints

As in the previous case example, the starting point must always be with The Package Travel Regulations; however, there are important issues that are raised also under the Unfair Trading Regulations in this case.

Under the Unfair Trading Regulations the travel provider is potentially in breach of Regulation 3 as they have adopted a commercial practice which goes against ‘professional diligence’ and is distorting the ‘economic behaviour’ of Mr & Mrs B toward this holiday product.

The travel provider is potentially in breach of Regulation 5 by providing Mr & Mrs B with a ‘misleading action’, that being that tour operator has made repeated statements to Mr & Mrs B which are ‘false’, ‘untruthful’ or deceitful. Such actions are causing Mr & Mrs B to purchase a product which they ordinarily would not take. The statements made refer directly to the ‘nature and existence of the product’ and the ‘main characteristics of the product’, in particular, the ‘availability’, ‘benefits’, ‘fitness of purpose’, ‘delivery’ and ‘handling of complaints’ of the product. In addition the travel provider through its commercial practice has failed to comply with commitments within the ABTA Code of Conduct and membership of ABTA, this has caused Mr & Mrs B to go ahead with the holiday contract.

It is clear that the travel provider was well aware that they would not be able to confirm this booking. It is suggested that the tour operator is potentially in breach of Regulation 6 in that they are making a ‘misleading omission’ with regard to information about the product. They nonetheless ‘completed’ the initial transaction. Under this Regulation it is clear that the travel provider has omitted, hidden or provided information which is ambiguous or untimely, as a result this is causing Mr & Mrs B to refrain from acting on how to exercise their contractual rights within the holiday contract, in other words continuing with a contract for a product whose viability is threatened.

Given the response by this travel provider to Mr & Mrs B, it could be considered that the travel provider has committed a commercial practice which could be said to be ‘aggressive’ as defined under Regulation 7. We would suggest that Mr & Mrs B’s ‘freedom of choice’ has been significantly impaired because the travel provider has used ‘undue influence’ against Mr & Mrs B. In doing so, the tour operator has exploited a ‘circumstance of such gravity’ of ‘which the trader is aware, to influence the consumer’s decision’ which has ‘impaired’ Mr & Mrs A’s judgement. In this case the travel provider has exploited their ‘position of power…so as to apply pressure’ and this in turn has ‘significantly’ limited Mr & Mrs A’s ‘ability to make an informed decision’.

In this case we would also suggest that the travel provider has committed a commercial practice against Mr & Mrs B which in all the circumstances will be considered to be unfair, that being:

Making an invitation to treat or purchase a product with the intention of offering a different product – this is known as bait and switch!

(Note: Facts within this article should be checked as this area is very likely to be subject to change as more cases are prosecuted. In addition, there is a free precedent letter to Trading Standards at this link – http://www.holidaytravelwatch.net/downloads/when-you-return/ )

Tags: The Consumer Protection from Unfair Trading Regulations, The Package Travel Regulations