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On May 26th 2008 the biggest changes in consumer protection laws in 40 years came into effect in the UK.
Based upon European Directives, the changes are also likely to be adopted across the continent in short order. The level of awareness about what these changes mean for online merchants, advertisers and ad agencies is minimal.
Unfair trading practices in 31 different categories will be banned, including many which are rife in the 'cheap end' of online trading. These include not disclosing the hidden costs in 'free' offers, not revealing that editorial content was paid for by an advertiser, and falsely advertised 'closing down sales' which aren't. The full list of totally banned practices is...
1. Faking credentials
2. You’re not who you say you are
3. Your endorsement is not real
4. Not being true to the terms of the endorsement
5. Special offer – not in stock
6. Limited time only (when it isn't) - the internet cowboy's favourite!
7. Illegally selling goods
8. Presenting rights given to consumers in law as a distinctive feature of the trader’s offer.
9. Falsely claiming that a product is able to cure illnesses, disfunction or malformations.
10. Promoting a product you don’t want to sell
11. Scare tactics
12. Creating extra paperwork - for example, requiring a consumer who wishes to claim on an insurance policy to produce documents which could not reasonably
be considered relevant
13. Being honest about advertorials
14. Faking goods
15. Claiming that the trader is about to cease trading or move premises when he/she is not.
16. Passing on materially inaccurate information
17. Forcing the deal
18. Falsely claiming or creating the impression that the trader is not acting for purposes relating to his/her trade
19. Advertising to children
20. Pyramid schemes
21. Claiming that products are able to facilitate winning in games of chance.
22. Claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes
23. Describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar if the consumer has to pay anything
24. Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize
25. Creating the impression that the consumer cannot leave the premises until a contract is formed.
26. Conducting personal visits to the consumer’s home and ignoring the consumer’s request to leave or not to return
27. Making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media
28. Using guilt to make sales
29. Asking for payment when they didn’t ask for the product
30. Talking the same language
31. Misleading after-sales information
Company officers found guilty of these and other practices could be sentenced to up to two years in prison or a £5,000 fine. A recent pre-change case where a high profile CEO anonymously posted flattering reviews of himself and his company's products in an internet forum would now potentially result in prosecution.
As in all introductions of new laws, the powers-that-be (in this case the UK Office of Fair Trading) will be looking for test cases, and no doubt someone will be made an example of.
We welcome these changes, for the simple reason that rogue traders using these questionable practices distort the market. They introduce unfair competition against online merchants who play by the rules and offer their customers value and an ethical approach. As long as regulation doesn't discourage the creativity and agility og internet businesses, things should gradually improve.
The only issue that remains is unintentional breaking of the law by otherwise ethical traders. As we know, ignorance of the law is no defence. You can wise up about the changes by going over to the Office of Fair Trading.
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