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New Consumer Law Targets Rogue Traders

Fifty-three per cent of small business leaders believe their profits are affected by the unfair sales practices of competitors according to a Department for Business, Enterprise and Regulatory Reform study. The revised Consumer Protection from Unfair Trading Regulations (CPRs) will attempt to deal with this problem and are scheduled to come into force on 26 May 2008, subject to Parliamentary approval.

The CPRs will apply to all businesses that trade directly with consumers and will prohibit a wide range of unfair practices. They specifically ban outright 31 types of unfair sales and marketing practices, including bogus ‘closing down’ sales, prize draw scams and aggressive doorstep selling. They will also, for the first time, establish a catch-all duty not to trade unfairly, closing loopholes that rogue traders have previously been able to exploit. Essentially, for a practice to be prohibited it must be of an unacceptable standard as well as there being an effect (or the likelihood of such) on the economic behaviour of the typical consumer (for example leading the typical consumer to buy a product that they would not otherwise have bought).

The legislation significantly increases the powers available to the authorities to crack down on offenders. Enforcement agency officers will be allowed to enter business premises without having to obtain a warrant and to seize goods and documents. In addition, an authorised officer will have the right to break open containers of any type (such as a locked filing cabinet) to examine goods or documents where there is a reasonable suspicion that a breach of the CPRs has been committed.

Says Rupert Chichester of Grant Saw Solicitors, “The disruption that an unannounced visit by enforcement officers can cause is very substantial. Businesses should make sure not only that they do not breach the CPRs but also that they have a contingency plan in place in case they receive such a visit. All that is necessary to warrant a visit is that there is a reasonable suspicion of a breach of the CPRs and such a suspicion may arise quite innocently through association with another business which comes under suspicion.”

Attempting to obstruct an officer in the course of exercising these powers could lead to a fine of up to £5,000.

An important measure that businesses should consider taking is ensuring that duplicates and/or electronic copies of all critical business information are available so that removal of records will not mean the business cannot function.

For more information visit our litigation department >

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