Unfair Practices

Unfair Commercial Practices Overview

Prior to the Consumer Protection Act 2007, there was no general prohibition on unfair commercial practices.  The Consumer Protection Act, implementing the EU Directive, provides that a consumer practice may be unfair, if it is contrary to the requirements of professional diligence and it materially distorts or is likely to materially distort, the economic behaviour of the average consumer whom it reaches or to whom it is addressed, with regard to the goods or services concerned.

The unfair commercial practice is such that contrary to the requirements of professional diligence, it is likely to appreciably impair the average consumer’s ability to make an informed choice in relation to the product concerned and be likely to cause the average consumer to make a decision which he would not otherwise make.

Professional diligence means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers, measured with reference to honest market practice and the general principle of good faith in the trader’s field of activity.

In sectors where there are existing codes or requirements, they will usually provide the standard of professional diligence for that sector.  For example, financial services are subject to detailed codes of practice which will define the required standard of performance in many circumstances.


EU Unfair Commercial Practices Directive

The Consumer Protection Act 2007 provides a general prohibition on unfair commercial practices and sets out a range of sample unfair practices. It replaced the narrower Merchandise Marks Acts, which had become outdated.  An unfair commercial practice is one, which contrary to the requirements of professional diligence, materially distorts or is likely to distort the economic behaviour of the average consumers.

The legislation provides specific rules in relation to misleading practices and aggressive practices, which are likely to cause the average consumer to take a transactional decision that he or she would not otherwise have taken. The legislation sets out 23 types of misleading commercial practices and 8 types of aggressive commercial practice that are considered to be unfair in all circumstances.

The EU Commission has provided an online database known as the UCPD database and has published guidance, which seeks to promote the uniform application and enforcement of the Directive.  It publishes cases and materials from various States.


State Role in Consumer Protection

States may regulate commercial practices for the purpose of the protection of consumers, where there are no EU provisions dealing with the relevant specific aspects of unfair practices.  Where there are specific EU provisions, they take precedence.  States may provide authorisation / licensing schemes and codes of conduct.

In the area of financial services and real property, states may provide further consumer protection interest beyond that provided by the Directive.  Accordingly, the Central Bank Codes of Practice are not limited in any way by the Directive and legislation.


Scope of EU Unfair Commercial Practices Law

The Consumer Protection Act applies to transactions between businesses and consumers. A business or trader is defined as a person who is acting for purposes related to his trade, business or profession. It may be an individual, a company or their agent.  It may be a participant in the public or private sector.

European case law has held that public bodies undertaking quasi-commercial functions are businesses for this purpose.  Entities may be businesses, notwithstanding that they are not for profit or that they pursue charitable purposes if they sell goods or provide services.

A consumer is a natural person (i.e. not a company or other corporate), who is acting wholly or mainly for purposes unrelated to his trade, business or profession.  The person need not be resident or situated in the State.

The legislation does not apply to transactions between traders, to which separate and similar legislation applies. It appears that the legislation does not apply to transactions where consumers provide goods or services to a business.  This may occur in the context of an exchange transaction.  In which case, it is arguable that the transactions as a whole must be considered.


Commercial Practices

Commercial practices comprise conduct, whether by act or omission, a course of conduct or representation by the trader, in relation to a consumer transaction.  This includes conduct or representation made or engaged in, before, during or after the commercial transaction. It covers post contract servicing and after sales relationships and phases.

Commercial practices may embrace any aspect of the promotion or marketing of goods. They include regular advertising and marketing, and also promotions, discounts, competitions and the broadest range of marketing practices. Marketing and promotion may be online or through social media. It may include the design and packaging of goods.

A representation is any visual, written or descriptive representation by a business.  It includes commercial communications, marketing, and advertisements.  It includes the terms or form of a contract, notices or other documents used or relied on by the business in connection with a consumer transaction.

A transaction refers to the supply of a service or product.  Supply primarily means a sale, but also includes leasing, the grant of security, awarding by chance, effecting a transfer, offering or agreeing to supply or exposing or displaying for supply.

Marketing may not be readily apparent as such. Indeed, marketing may constitute an unfair commercial practice by reason of its opaque nature. Communications which appear to be informative may be promotional.


Definition of Unfair Commercial Practice

The Consumer Protection Act defines a commercial practice as unfair, if it is contrary to the requirements of professional diligence in that it either infringes the general principle of good faith in the trader’s field of activity or falls short of the standard of skill and care that the trader may reasonably be expected to exercise in respect of consumers.

It must be likely to cause appreciable impairment of the average consumer’s ability to make an informed choice in relation to the product concerned and cause the average consumer to make a transactional decision that he would not otherwise make.

The reference to professional diligence does not limit the legislation to traditional professional bodies.  It applies to the sale of goods and services generally.  In a broader sense, it refers to the duty to render and exercise due skill and care. The reference to good faith reflects continental legal principles.


Goods

The commercial practice may relate to any goods or services, including immovable property rights and obligations.  The legislation, reflecting its European origins is in confusing terms, in that “goods” includes movable and immovable property and “products” include goods and services.

Goods are defined to include real and personal property of any nature and description. They include

  • animals, minerals, trees and crops, gas, electricity, water, ships, aircrafts, and vehicles;
  • computer software, whether stored in digital format or content stored electronically in a format which is not digital;
  • tickets or like evidence of rights of attendance at a particular time and place or for transportation;
  • vouchers, coupons or other documents or things intended to be a substitute for a money payment, in whole or in part, for a product or otherwise exchanged for a product; and
  • any description of interest, present, future or contingent, or obligation arising out of, or incidental to goods.

Services

Services, for the purpose of the legislation, include most forms of economic activity whereby an intangible benefit is conferred. They include any service or facility provided for gain or reward.  They include

  • services and facilities for banking, insurance, loans, credit, and finance;
  • amusement, cultural activities, entertainment, instruction, recreation or refreshment;
  • accommodation, transport, travel, parking or storage;
  • care of persons, animals, and things;
  • membership in a club or organisation or any service or facility provided by them; and
  • any rights, benefits, privileges, obligations, and facilities which are to be provided, granted or conferred in the course of services.

The legislation does not apply to service as an employee.


Limits of Legislation

The legislation does not apply to all commercial activities and practices.  Communications aimed at investors, such as statements and annual reports, are outside the legislation.  National rules on marketing, advertising and otherwise relating to the protection of human dignity, the prevention of sexual, racial or religious discrimination or the depiction of nudity, violence or antisocial behaviour are not covered or affected.

The legislation does not affect the rules in relation to anticompetitive behaviour.  These are regulated separately under competition law. It does not apply to the expression of intellectual property rights, the health and safety aspects of products and licensing requirements.  It does not affect contractual grounds for the negation of contracts including mistake, misrepresentation and undue influence. They are outside the scope of mandatory harmonisation and continue to be regulated by national law.


Sample Unfair Commercial Practice Matters I

An unfair commercial practice may relate to any one or more the following non-exhaustive list of matters, which are set out in the legislation. It may relate to the main characteristics of a product, including any of

  • its geographical origin or commercial origin;
  • its availability including, its availability at a particular time or place or at a particular price;
  • its quantity, weight or volume;
  • its benefits or fitness for purpose;
  • the results to be expected from it;
  • the risks it presents to consumers;
  • its use or prior history;
  • its composition, ingredients, components or accessories;
  • the specifications of the product, including the grade, standard, style, status or model of the product;
  • the after-supply customer assistance available to consumers in relation to the product;
  • the handling of consumer complaints in relation to the product;
  • the method or date of the product’s delivery, supply or provision, or in the case of goods, the date of the product’s manufacture;
  • the results and material features of tests or checks carried out on the product;
  • in relation to a service, its execution or performance;

Sample Unfair Commercial Practice Matters II

An unfair commercial practice may also relate to any one or more of the following further matters which are also set out in the legislation.

  • the existence or nature of a product;
  • the price of the product;
  • the manner in which the price is calculated or the existence or nature of a specific price advantage;
  • the need for any part, replacement, servicing or repair in relation to the product;
  • the existence, extent or nature of any approval or sponsorship, direct or indirect, of the product by others.

An unfair practice may also relate to the nature, attributes or rights of the trader including, without limitation the following:

  • his identity, qualifications, assets or status;
  • his affiliation or connection with others;
  • the existence, extent or nature of any industrial, commercial or intellectual property rights the trader may have;
  • any award, distinction, approval or sponsorship, direct or indirect, the trader may have received;
  • the extent of the trader’s commitments;
  • the trader’s motives for the commercial practice;
  • the nature of the trader’s supply process;
  • the legal rights of the consumer, whether contractual or otherwise or matters relating to when, how or in what circumstances those rights may be exercised.

Aggressive Commercial Practices

Unfair commercial practices include aggressive commercial practices.  An aggressive commercial practice will have elements of harassment, coercion and undue influence.  It must be such as to cause significant impairment of the average consumer’s freedom of choice or conduct in relation to the product.  It must be likely to cause the average consumer to make a transactional decision, which he would not otherwise make.

Aggressive commercial practices range from duress to undue influence.  Undue influence is defined as exploiting a position of power in relation to a consumer so as to apply pressure. It may, but does not necessarily, involve using or threatening to use physical force, in a way that significantly limits the consumer’s ability to make an informed choice in relation to the trader’s product.


Nature of Aggressive Commercial Practices

What constitutes an aggressive practice will depend on the circumstances and on the context.  Factors to be taken into account in determining whether a commercial practice involves harassment, coercion or undue influence include:

  • the timing, location, nature, and persistence of the practice;
  • the use of threatening or abusive language or behaviour by the trader;
  • the exploitation of the consumer’s misfortune or circumstance when the trader is aware that the judgment of the consumer is impaired as a result of the gravity of the misfortune or circumstances, in order to influence the consumer’s transactional decision;
  • the imposition of onerous or disproportionate non-contractual barriers by the trader when the consumer wishes to terminate the contract, exercise a contractual right or switch to another product or trader;
  • the use of threats by the trader to take action or initiate proceedings against the consumer, when the trader has no legal basis for taking such action or initiating such proceedings, or
  • the use of threats by the trader to do something unlawful.

Black Listed Terms I

The Consumer Protection Act sets out a list of misleading and aggressive practices which are prohibited.  They are so-called blacklist items.  There is no need to consider the particular circumstances.  They are deemed unfair in all circumstances.

The following are blacklisted misleading commercial practices

  • a representation that trader has an approval, authorisation, and endorsement that he does not have
  • making such a representation, when the trader is not in compliance with that approval, authorisation or endorsement;
  • a representation that the trader is a signatory to a code of practice, if the trader is not;
  • a representation that the trader is about to cease trading or move premises if the trader is not;
  • a representation that the trader has an approval, authorisation or endorsement, that it does not have;
  • so, representing, when the trader is not in compliance with that approval, authorisation or endorsement;
  • a representation that the supply of a product is legal, if it is not or creating such an impression;
  • a representation that a product is able to facilitate winning in games of chance;

Blacklisted Terms II

The following are further blacklisted misleading commercial practices

  • a representation that a product is able to cure an illness, dysfunction or malformation, if it cannot;
  • a representation that describes a product as gratis, free, without charge or anything similar, if the consumer has to pay anything, other than the necessary and reasonable cost of responding to the representation and collecting the product or having it delivered;
  • a representation that a commercial practice of the trader has an approval, authorisation or endorsement, that it does not have
  • making such a representation when the trader is not in compliance with the approval, authorisation or endorsement;
  • a representation that a code of practice has an approval or other endorsement that it does not have;
  • displaying a quality, standard, trust mark or symbol or an equivalent type of mark or symbol, without having obtained the necessary authorisation to do so;

Blacklisted Terms III

The following are further blacklisted misleading commercial practices

  • making an invitation to purchase a product without disclosing the existence of any reasonable grounds which the trader may have for believing that it will not be able to supply or procure another trader to supply, the product or an equivalent product at the price specified in the invitation or to do so for a reasonable period of time or in reasonable quantities, having regard to the scale of any marketing or advertising of the product;
  • making an invitation to purchase a product, then demonstrating a defective sample of the product, refusing to show or display the product to the consumer, refusing to take an order from the consumer for the product or refusing to deliver the product to the consumer within a reasonable period of time, with the intention of promoting a different product (so-called bait and switch)
  • making a false representation that a product is available only for a limited time or on particular terms for a limited time, in order to elicit an immediate decision from a consumer, depriving the consumer of a sufficient opportunity or time to make an informed choice in relation to the trader’s product;

Blacklisted Terms IV

The following are further blacklisted misleading commercial practices

  • undertaking to provide after-sales service to consumers with whom the trader has communicated prior to the transaction in a language which is not an official language of the relevant state in which the trader is located and then making such service available only in another language without clearly disclosing this to the consumer before the consumer is committed to the transaction;
  • making a representation or creating an impression that a right given to consumers under the legislation is a distinctive feature of the trader’s promotion or supply;
  • using editorial comment in the media to promote a product, if a trader has paid for that promotion if it is not made clear that the promotion is a paid promotion, whether in the content itself or in any oral, written, visual or descriptive representation in the promotion;
  • making a representation to a consumer that is materially inaccurate in relation to the nature and extent of risk to the consumer’s personal security and that of other members of the consumer’s household, if the consumer does not purchase the trader’s product;
  • promoting a product, similar to that of another manufacturer, in such a manner as to deliberately mislead or deceive a consumer into thinking that the product is manufactured by that manufacturer when it is not;
  • making a representation to a consumer that is inaccurate to a material degree in respect of marketing conditions or in respect of the possibility of finding a product, with the intention of inducing the consumer to purchase a product on conditions less favourable than normal market conditions;

Blacklisted Terms V

The following are further blacklisted misleading commercial practices

  • Operating, running or promoting a competition or prize promotion without awarding the prizes described or reasonable equivalents;
  • making a representation or creating an impression that a consumer has won or will win a prize or other equivalent benefit if there is no prize or equivalent benefit, or in claiming the prize, the consumer has to make a payment or incur a loss;
  • including in marketing material, an invoice or any similar document seeking payment from a consumer for a product that the consumer has not ordered;
  • making a representation or creating an impression that the trader is not acting for purposes related to the trader’s trade, business or profession when the trader is so acting, or that the trader is acting as a consumer, when the trader is not;
  • making a representation or creating an impression that after-supply service in relation to a product is available in a relevant State other than the one in which the product is supplied when it is not so available.

References and Sources

Irish Texts

Consumer Law Rights & Regulation    Donnelly & White (2014)

Consumer Protection Act 2007 Annotated  Bird (2008)

Consumer Rights Long (2004)

Commercial & Consumer Law: Annotated Statutes O’Reilly, P (2000)

UK Texts

Consumer Sales Law: The Law Relating to Consumer Sales and Financing of Goods 3rd ed

John MacLeod, James Devenney (2019)

Electronic Consumer Contracts in the Conflict of Laws 2nd ed Zeng Sophia Tang (2018)

The Law of Consumer Redress in an Evolving Digital Market: Upgrading from Alternative to Online Dispute Resolution Pablo Cortes (2017)

Blackstone’s Statutes on Commercial & Consumer Law 2017-2018 Francis Rose

Consumer and Trading Standards: Law and Practice 2017 Bryan Lewin, Jonathan Kirk

Woodroffe and Lowe’s Consumer Law and Practice Woodroffe and Lowe’s Consumer Law and Practice 10th ed Geoffrey Woodroffe, Chris Willett, Christian Twigg-Flesner (2016)

Butterworths Trading and Consumer Law Looseleaf Annual Subscription Deborah L. Parry, Roland Rowell (2016)

Butterworths Commercial and Consumer Law Handbook 8th ed Richard B. Mawrey, Tobias Riley-Smith (2015

Consumer and Trading Standards: Law and Practice 4th ed

Legislation

Sale of Goods Act 1893 56 & 57

Sale of Goods and Supply of Services Act 1980

The 2011 Report of the Sales Law Review Group,

Consumer Protection Act 2007 19/2007

Competition and Consumer Protection Act 2014 29/2014

Orders Re Price Display (retained

Prices Act 1958.

Prices (Amendment) Act 1965

Prices (Amendment) Act1972

Orders made under Prices Acts 1958 and 1965 were carried over on repeal of the 1958 and 1965 Acts by 19/2007

Prices and Charges (Tax-inclusive Statements) Order 1973, S.I.

Charges (Hairdressing) Display Order 1976, S.I. No. 156 of 1976

Retail Prices (Food in Catering Establishments) Display Order 1984, S.I. No. 213 of 1984

Consumer Information (Advertisements) (Disclosure of Business Interest) Order 1984, S.I. No. 168 of 1984417

Consumer Information (Advertisements For Concert Or Theatre Performances) Order 1997, S.I. No. 103 of 1997

Retail Price (Diesel and Petrol) Display Order 1997, S.I. No. 178 of 1997

Retail Price (Beverages in Licensed Premises) Display Order 19/2007

Consumer Information Act Orders

Consumer Information (Advertisements For Airfares) Order 2000, S.I. No. 468 of 2000

Consumer Protection Act 2007 (Commencement) Order 2007,S.I. No. 178 of 2007

Consumer Protection Act 2007 (Establishment Day) Order 2007,S.I. No. 179 of 2007

Consumer Protection (Fixed Payment Notice) Regulations 2007,S.I. No. 689 of 2007

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2011, S.I. No. 560 of 2011

Consumer Protection (Consumer Information) (Articles of Precious Metals) Regulations 2012, S.I. No. 143 of 2012

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2012, S.I. No. 435 of 2012

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2013, S.I. No. 409 of 2013

Consumer Protection Act 2007 (National Consumer Agency) Levy Regulations 2014, S.I. No. 458 of 2014

Consumer Protection Act 2007 (Competition and Consumer Protection Commission) Levy Regulations 2015, S.I. No. 457 of 2015

European Communities (Cooperation Between National Authorities Responsible for the

Enforcement of Consumer Protection Laws) Regulations 2006, S.I. No. 290 of 2006 [Minister

European Communities (Cooperation Between National Authorities Responsible for the

Enforcement of Consumer Protection Laws) (Amendment) Regulations 2008, S.I. No. 316 of 2008  European Communities (Single-Member Private Limited Companies)European Communities (Protection of Consumers in Respect of Contracts made by Means of Distance Communication) (Amendment) Regulations 2010, S.I. No. 370 of 2010

European Communities (Court Orders for the Protection of Consumer Interests) Regulations 2010, S.I. No. 555 of 2010

European Union (Protection of Consumers in respect of Timeshare, Long-term Holiday Product, Resale and Exchange Contracts) Regulations 2011, S.I. No. 73 of 2011

European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) Regulations 2012, S.I. No. 485 of 2012 [

European Union (Public Limited Companies) (Directive 2012/ European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) Regulations 2013, S.I. No. 122 of 2013

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2013, S.I. No. 160 of 2013

European Communities (Cooperation between National Authorities Responsible for the Enforcement of Consumer Protection Laws) (Amendment) (No. 2) Regulations 2013, S.I. No. 200 of 2013

European Union (Consumer  nformation, Cancellation and Other Rights) Regulations 2013, S.I. No. 484 of 2013

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2014, S.I. No. 250 of 2014

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2014, S.I. No. 336 of 2014

European Union (Protection of Consumers in respect of Timeshare, Long-term Holiday Product, Resale and Exchange Contracts) (Amendment) Regulations 2014

European Union (Alternative Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 343 of 2015

European Union (Alternative Dispute Resolution for Consumer Disputes) (No. 2) Regulations

2015, S.I. No. 368 of 2015

European Union (Traded Companies — Corporate Governance Statements) Regulations 2015, S.I. No. 423 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 500 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2016, S.I. No. 32 of 2016

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2016, S.I. No. 336 of 2016

Competition and Consumer Protection Act 2014 (Commencement) Order 2014, S.I. No. 366 of 2014

Competition and Consumer Protection Act 2014 (Establishment Day) Order 2014, S.I. No. 367 of 2014

Consumer Protection Act 2007 (Grocery Goods Undertakings) Regulations 2016, S.I. No. 35 of 2016

Consumer Protection Act 2007 (Competition and Consumer Protection Commission) Levy Regulations 2016, S.I. No. 479 of

2016

District Court (Consumer Protection Act 2007) Rules 2009, S.I. No. 106 of 2009

European Communities (Unfair Terms in Consumer Contracts) Regulations 1995, S.I. No. 27 of 1995 [

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2000, S.I. No. 307 of 2000

European Communities (Certain Aspects of the Sale of Consumer Goods and Associated Guarantees) Regulations 2003, S.I. No. 11 of 2003

European Communities (Protection of Consumers in Respect of Contracts Made by Means of Distance Communication) (Amendment) Regulations 2005, S.I. No. 71 of 2005

European Communities (International Financial  European Communities (Cooperation Between National Authorities Responsible for the Enforcement of Consumer Protection Laws) Regulations 2006, S.I. No. 290 of 2006

European Communities (Distance Marketing of Consumer Financial Services) Regulations 2004, S.I. No. 853 of 2004

Circuit Court Rules (Consumer Protection Act 2007) 2008, S.I. No. 585 of 2008

European Communities (Court Orders for the Protection of Consumer Interests) Regulations 2010, S.I. No. 555 of 2010

European Communities (Unfair Terms in Consumer Contracts) Amendment) Regulations 2013, S.I. No. 160 of 2013

European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013, S.I. No. 484 of 2013

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2014, S.I. No. 250 of 2014

European Communities (Unfair Terms in Consumer Contracts) (Amendment) Regulations 2014, S.I. No. 336 of 2014

European Union (Alternative Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 343 of 2015

European Union (Alternative Dispute Resolution for Consumer Disputes) (No. 2) Regulations 2015, S.I. No. 368 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2015, S.I. No. 500 of 2015

European Union (Online Dispute Resolution for Consumer Disputes) Regulations 2016, S.I. No. 32 of 2016

European Union (Consumer Information, Cancellation and Other Rights) (Amendment) Regulations 2016, S.I. No. 336 of 2016