In the next few days and weeks, I will be talking to local businesses in Mile End Ward, reminding them of their obligations under the law to have fair prices and also see what support they need during the Corona Virus Emergency. Local Shops are a vital asset in the community during this emergency, and it is important we support them while also making sure they have fair pricing practices.
Below are details of the Law that govern shops when it comes to fair pricing practices; Consumer Protection from Unfair Trading Regulations 2008 (the Regulations),
Price Marking Order – Government Guidance to Traders with regards to Price Marking
Traders obligations to consumers
The law on price marking states that where goods are offered for sale to consumers, they must have their price clearly indicated. The pricing information must be clearly legible, unambiguous, easily identifiable and inclusive of VAT and any other taxes.
This information should be clearly visible to your customers without them having to ask for it.
Unit pricing: what is it?
Unit pricing is designed to allow your customers to compare products by reference to weight or volume. For example, two packets of breakfast cereal of differing weights will have a price per 100 g as well as a total price shown.
Unit pricing is required by law for products that are either:
sold loose from bulk – for example, fruit and vegetables
… or
required by weights and measures legislation to be marked with an indication of quantity or sold in a prescribed quantity
Note that small shops with a retail area of fewer than 280 m2 do not have to display the unit price.
What are the general requirements in relation to pricing?
The law prohibits businesses from misleading their customers – for example, displaying goods at a lower price than actually charged, or showing a sale price when the higher price was never charged. The law also prohibits a trader from omitting or hiding information a consumer would need to make a decision whether to purchase goods or not. An example of this would be failing to inform a customer of a compulsory additional charge.
Consumer protection from unfair trading and Aggressive Practices
Aggressive practices
Regulation 7 of the CPRs prohibits aggressive commercial practices that intimidate or exploit consumers, restricting their ability to make free or informed choices. In order for an aggressive practice to be unfair it must cause, or be likely to cause, the average consumer to take a different transactional decision.
A commercial practice is aggressive if it:
significantly impairs, or is likely to significantly impair, the average consumer’s freedom of choice or conduct in relation to the product through the use of harassment, coercion or undue influence
… and
thereby causes them to take a different transactional decision
To decide whether a practice breaches this regulation, the following will be taken into account:
- timing, location, nature or persistence
- use of threatening or abusive language or behaviour
- exploitation by the trader of any specific misfortune or circumstance that impairs the consumer’s judgement in order to influence their decision with regard to the product
- any onerous or disproportionate non-contractual barrier imposed by the trader where a consumer wishes to exercise rights under the contract – for example, rights to terminate the contract or switch to another product or trader
- any threat to take action that cannot legally be taken
Note: ‘coercion’ includes the use of physical force, and ‘undue influence’ means exploiting a position of power in relation to the consumer so as to apply pressure – even without the use of (or threatening to use) physical force – in a way that significantly limits the consumer’s ability to make an informed decision.
General duty not to trade unfairly
Regulation 3 is called “Prohibition of unfair commercial practices”, which effectively means failing to act in accordance with reasonable expectations of acceptable trading practice.
The regulation prohibits practices that:
- contravene the requirements of professional diligence (defined as the standard of special skill and care that a trader may reasonably be expected to exercise towards consumers, which is commensurate with either honest market practice in the trader’s field of activity or the general principle of good faith in the trader’s field of activity)
- materially distort the economic behaviour of the average consumer (or are likely to) with regard to the product – that is, appreciably to impair the average consumer’s ability to make an informed decision, thereby causing them to take a transactional decision that they would not have taken otherwise
Consumers Rights
Consumers’ rights to redress
In addition to the criminal offences created by a breach of the provisions described above, the Regulations also provide consumers with rights to redress enforceable through the civil courts. For a consumer to have these rights to redress certain conditions must be met.
The first condition is that the consumer does one of the following:
- enters into a contract to buy a product (goods, services, digital content, etc) from a trader (a business-to-consumer contract)
- enters into a contract to sell goods to a trader (a consumer-to-business contract)
- makes a payment to a trader for supply of a product (consumer-payment contract)
- The second condition is that the trader has engaged in a prohibited practice. A prohibited practice means a misleading action or an aggressive practice (see above).
Furthermore, the trader will be liable for misleading actions or aggressive practices carried out by the producers of goods or digital content they supply if the trader could reasonably have known of the prohibited practice. An example of this would be where a manufacturer’s television advertisements for a product are misleading.
The final condition is that the prohibited practice was a significant factor in the consumer’s decision to enter into the contract.
What remedies are available to a consumer?
There are three main remedies available to a consumer: the right to unwind, the right to a discount, and the right to damages.
Right to unwind
The right to unwind allows the consumer to undo the contract and be put back into the position they were in before it was made. There are restrictions to this:
- the consumer must reject the goods within 90 days. In general this 90-day period begins either when the goods are delivered or the service begins
- the right to unwind only applies where it is still possible to undo the transaction. If the goods or digital content have been fully consumed or the service fully completed this would not be possible. However, if it is still possible to return some element of the goods or reject an element of the service this would be enough. Consumers are entitled to a full refund even though they may have received some benefit from it
- consumers cannot unwind a contract if they have already claimed a discount with respect to that contract and the same prohibited practice (see below regarding discounts)
The consumer’s right to a full refund is reduced in the case of continuous-supply products (such as utility contracts).
Right to a discount
This right applies where the right to unwind has been lost. This may be because of a delay in complaining or because the goods have been fully consumed. For goods and services costing less than £5,000 there is a fixed-percentage discount ranging from 25% for more than minor issues to 100% for very serious cases.
Above £5,000, if the misleading or aggressive practice led the consumer to pay more than the market price for the product, the price is reduced to the market price. Otherwise, the fixed-percentage discounts will still apply. A consumer may also claim a discount instead of unwinding a contract where the right to unwind still exists but the consumer does not wish to end the contract.
Damages
Consumers can claim damages if they have suffered reasonably foreseeable losses that exceed the price paid for goods, digital content and services. These damages can cover alarm, distress, physical inconvenience or discomfort as well as economic losses suffered as a result of the prohibited practice. Damages may be claimed in addition to unwinding the contract or claiming a discount. Damages are not payable if the trader can establish that the prohibited practice occurred due to a mistake, reliance on information supplied to the trader by another person, the act or default of another person, an accident or some other cause beyond the trader’s control and the trader had taken all reasonable precautions and exercised all due diligence to avoid the prohibited practice occurring.
Penalties
Failure to comply with trading standards law can lead to enforcement action and to sanctions, which may include a fine and/or imprisonment. For more information please see ‘Trading standards: powers, enforcement & penalties’.
Recent Comments