The new law will protect consumers by outlawing a host of deceptive and intimidating sales practices that are unfair but that were not illegal.

How do the CPRs protect consumers?

The new Regulations will introduce a general duty not to trade unfairly; a prohibition against misleading or aggressive practices; and, interestingly; 31 specific prohibited commercial practices that are always considered unfair are banned outright.

In case you believe it unimportant, breaches of the CPRs may result in criminal prosecution, particularly of individuals.

General duty not to trade unfairly

This general prohibition will act as a "catch all provision" and will allow enforcers to take action against unfair commercial practices which do not fall into the banned practices category and which are not misleading or aggressive commercial practices.

A commercial practice will be considered to be unfair in this context if it is not professionally diligent and it "materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product".

This general clause is clearly far reaching, but broadly speaking if consumers are treated fairly then traders are likely to be complying with the CPRs.

Misleading and aggressive commercial practices

Misleading Practices

The CPRs prohibit commercial practices which are misleading (whether by actions or omissions) and which cause or are likely to cause a typical consumer to take a different decision.

Under these provisions a misleading action is a commercial practice which makes false statements about specific key factors; or itself, or in its presentation, deceives or is likely to deceive the average consumer about those specific key factors (even where the information is factually correct).

For example, marketing a product in a way which creates confusion with competitors' products is a misleading action and is prohibited.

Omissions of material information on a product or providing that information in an ambiguous manner may also be considered to be a misleading practice.

Aggressive Commercial Practices

The CPRs also prohibit aggressive commercial practices. These are commercial practices which by harassment, coercion or undue influence significantly impair (or would be likely to significantly impair) the average consumer's freedom of choice or conduct and cause, or are likely to cause, them to make a different decision.

In determining whether a commercial practice is aggressive, factors such as its timing, location, nature or persistence; the use of threatening or abusive language or behaviour; or any threat made to take any action which cannot in fact be legally taken, will be taken into account.

This provision clearly seeks to cover scenarios such as doorstep traders or "cold" callers on the telephone, if they are pressurising consumers and may also apply, for instance, to debt collectors if they act improperly or inappropriately to pressurise or threaten customers.

Specifically prohibited commercial practices

The CPRs list 31 specific commercial practices which will always be regarded as unfair and will be prohibited. It includes the so-called "dirty dozen" of practices which are well known to cause consumer detriment. Evidence of their effect or likely effect on the typical consumer is not required to prove a breach of these prohibited practices.

These prohibited practices include displaying a quality mark without having obtained the necessary authorisation, falsely stating that a product will only be available for a very limited time, claiming to offer a promotion without awarding the prizes, and false closing-down sales.

Although most of the practices listed are demonstrably unfair and would not be engaged in by most legitimate businesses, there are some more troublesome provisions including, in particular, "presenting rights given to consumers in law as a distinctive feature of the trader's offer". Many manufacturers market their goods as having the benefit of a warranty.

Where that warranty in fact offers no more than the rights which a consumer might otherwise have in law and is represented as a unique feature of the offer, it will be regarded as unfair.

Another provision which may cause difficulty relates to the use of the word "free". Describing a product as "free" or "without charge" is prohibited if the consumer has to pay anything other than the unavoidable cost of responding and the delivery of the item. Whether "buy one get one free" offers may need to be repackaged to avoid falling foul of the regulations, as such offers are clearly conditional on a purchase, is uncertain. It may be that the cost of buying the first item is merely considered to be the "unavoidable cost".

Will the CPRs apply to your business?

A wide range of practices will be covered by the concept of a "commercial practice". Amazingly, advertising, marketing, sales, supplies, after-sales services and debt collection will all be caught by this concept. Even those who are not actually selling products to consumers themselves, will still have to take the CPRs into account if their business is directly connected with the sale or supply of a product to consumers. It is important to note that it is not just practices which occur during a commercial transaction which may be affected. Practices which occur before or after commercial transactions may also be affected.

The products to which the CPRs apply are defined as "any goods or services". Whilst this covers run of the mill physical products like hairdryers, televisions, and cars it also covers less tangible things like membership of a club, or a right to use a holiday apartment, or provision of broad-band services, or provision of credit from a finance company or even the purchase of property.

Consequently the application of the CPRs is anticipated to be very wide.

Enforcement and penalties

The OFT, Local Authority Trading Standards Services and the Department of Enterprise, Trade and Investment in Northern Ireland will all have a duty to enforce the CPRs.

Enforcement Officers may use their powers to inspect goods and enter business premises to investigate possible breaches of the CPRs. Where they have reasonable cause to suspect that a breach of the CPRs has occurred they will also be able to require traders to produce documents relating to their business but not those which are legally privileged.

Enforcement officers may also seize and detain goods relevant to their investigations. Any intentional obstruction of an enforcement officer or making a deliberately false statement to an officer is a criminal offence.

Civil Enforcement - Enforcement Orders

In addition to the OFT and Trading Standards Services, other bodies such as the Financial Services Authority, will be able to apply to the Court for an Enforcement Order to prevent a breach or breaches of the CPRs.

If an enforcement order is obtained, any breach of it could be a contempt of court which could result in up to 2 years imprisonment and/or an unlimited fine.

Criminal Offences

There are several criminal offences under the CPRs: contravention of the general duty not to trade unfairly; misleading actions; misleading omissions; aggressive commercial practices; specific unfair commercial practices (except numbers 11 and 28 on the list at the end).

Businesses should note that both companies and individuals can commit offences under the CPRs.

Penalties

If you are found guilty of an offence under the CPRs then you could face on conviction in the Magistrates' Court, a fine not exceeding £5,000; on conviction on indictment in the Crown Court, a fine or imprisonment not exceeding 2 years, or both.

Defences

The well recognised but important defence of "due diligence" is the main defence available to businesses for breaches of the CPRs. To argue this defence successfully, it must be shown that the commission of the offence was due to a mistake, reliance on information given by another person, the act or default of someone else, an accident or another cause beyond the accused's control. It must also be shown that all reasonable precautions were taken and all due diligence was exercised to avoid committing the offence or to avoid someone under his control committing it. It is not sufficient to show due diligence procedures were in place, it is also necessary to show they were applied in practice.

Significantly, there is no defence to a breach of the general prohibition, but to be guilty of this offence a person must have knowledge of or be reckless as to the breach.

What should businesses be doing now?

Understand the Regulations! Businesses should ensure that they have sufficient policies and procedures in place to comply with the CPRs and that they are being put into practice. Now is the time to start reviewing business practices so that improvements can be made if required in time.

Where there is any doubt as to whether a business's practices infringe the CPR's, businesses are advised to consult guidance from the Department of Trade and Industry, the Office of Fair Trading and possibly industry guidance and relevant Codes of Conduct or ourselves to be entirely sure that they are compliant.

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