Unfair trading practices

Disclaimer: While every effort has been made to ensure the accuracy of the information contained in the Pink Book, we regret that we cannot be responsible for any errors. The Pink Book contains general information about laws applicable to your business. The information is not advice and should not be treated as such. Read our full disclaimer.

The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) encompass legislation preventing business practices that are unfair to consumers.

The aim of the legislation is to make it easier for customers to compare the products and services provided by businesses, and to make informed purchasing decisions. This is particularly relevant to the tourism sector, where the customer is unable to see the product before making a booking or deciding to visit.

The Business Protection from Misleading Marketing Regulations 2008 tighten restrictions relating to how companies compare their products to rival products from other companies.

Do the regulations apply to me?

Yes, if you are either:

• Advertising your business using any form of media (including online and social media).

• Making statements about your facilities to the public.

What constitutes an unfair trading practice?

The aim of the CPRs is to provide a framework for determining whether certain practices are misleading, aggressive or lack due diligence on the basis that they would alter the behaviour of the average customer. In other words, if it can be determined that the customer made a purchase that they otherwise would not have done if they knew the full facts of the matter, then the business has engaged in unfair practices.

This covers engaging in misleading practices such as making false or deceptive statements in marketing material, or omitting important information that would have a bearing on the customer’s purchasing decision.

Examples

False and deceptive statements could include statements made about:

• The quality of accommodation (see also Practices banned outright, below).

• The amenities or services available.

• The location of the premises.

For example, it would be a false statement if you advertised that your accommodation was ‘five minutes from the beach’, when it is actually a half-hour drive, while a misleading claim would be that ‘the art museum has the best collection of Turner paintings in the UK’ when only one is on public display.

Similarly, if you omitted to notify customers that you were undertaking refurbishment work that either closed facilities or generated considerable noise or dust, or that you had to pay for rides within a theme park in addition to the admission charge, this could be deemed to be misleading.

Another aspect to be aware of in this area is the provision of food and descriptions of dishes on menus. For example, it would be a false statement if you say you provide a ‘champagne breakfast’ but you actually serve prosecco, or that all meals are organic if the produce used is not certified to be organic. Similarly, it would be misleading to state that seafood is sourced locally if that means that it came from a local supermarket.

Practices banned outright

While much of what constitutes an unfair practice has to be determined through case law, the legislation lists 31 practices that are banned outright. These include:

• Displaying a quality mark (such as an accommodation grading scheme mark) without having the necessary authorisation. This includes displaying a quality mark that is out-of-date.

• Falsely claiming that a premises or product has been approved or endorsed by a public body such as VisitEngland.

• Falsely stating that an offer will only be available for a limited time.

• Luring the consumer by advertising special prices for a product you cannot offer, or with the intention of selling the customer a different product.

So, if you display on your premises an incorrect VisitEngland star rating, or an outdated tourist board rating such as a Crown or Diamond classification and grading, this is regarded as a breach of the regulations.

In addition to the CPRs, the Business Protection from Misleading Marketing Regulations 2008 tighten the legislation relating to comparison marketing. These regulations specify that companies must not use advertising to:

• Compare products or materials that are not designed for the same period.

• Confuse people as to the advertiser and the competitor.

• Present imitations or replicas of products bearing a protected trademark or trade name.

• Take unfair advantage of the reputation of competitors’ trademarks, trade names, other distinguishing marks, or country of origin information.

Examples

Unfair comparisons could include:

• Taking out an advertisement that unfavourably compares the cost of staying at a neighbouring hotel with staying at your hotel, if you fail to mention that the neighbouring hotel is a five-star property while yours is a three-star.

• Comparing your admission charge with that of another attraction, if their admission includes the use of all facilities but visitors to your attraction have to pay extra to use them.

• Comparing your low-season rate with a competitor’s high season rate.

• Describing your guesthouse as ‘the Torquay Hilton’, even if you consider this to be a tongue-in-cheek description.

Online reviews and endorsements

If your website allows customers to post reviews, the CPRs prevent you from managing or presenting the reviews you receive in a way that misleads your customers. This means that you cannot write or commission fake reviews. ‘Commission’ includes asking friends to write reviews and offering inducements to customers in return for writing positive reviews.

It also means that, in order not to mislead your customers, the review section of your website must accurately reflect your customers’ views, regardless of whether they are positive or negative. Your process for collecting, moderating and publishing reviews must not hinder their impartiality, and you must publish all genuine and lawful reviews. For example, you cannot pick and choose which customers you ask to provide a review when they depart – you must either invite all of them or none – and you cannot choose which reviews to publish on your site.

For more detail, see the Competition and Markets Authority (CMA) online information: Giving a balanced picture: dos and don’ts for online review sites.

Note: The Government has announced that it will be strengthening the law on fake reviews by introducing new legislation that will make it illegal to:

• Commission someone to write or submit a fake review.

• Host consumer reviews without taking reasonable steps to check they are genuine.

• Offer or advertise to submit, commission or facilitate fake reviews.

It is not illegal to pay a person or publication to promote your business online; however, potential customers need to know that the endorsement has been paid for. For example, while it is legal to pay a blogger to write a piece about your business, it must be clear that you have paid for this endorsement. This can be done by adding a statement such as ‘Advertisement Feature’ or ‘Advertisement Promotion’.

The CMA has issued further guidance on this topic: Online endorsements: being open and honest with your audience.

Enforcement and penalties

Your local Trading Standards office is responsible for enforcing the regulations.

Anyone who breaches the regulations can be prosecuted for a criminal offence by a local Trading Standards office, be subject to a fine, and/or – in extreme cases – a prison sentence of up to two years. In addition, it could lead to a civil claim: see Misrepresentation, below.

Defence against a charge of unfair trading

Possible defences against a charge of unfair trading include:

• You made an honest mistake and were not given the opportunity to remedy the situation (for example, you thought that you had the oldest pub in the region).

• Your statement was based on information supplied by a third party.

• The statement was made by some ‘other person’, such as a guidebook or newspaper article (‘other person’ does not mean any of your employees).

However, in any defence, you would still have to show that you took all reasonable care and exercised all due diligence to check that the facts were true in any publication or statement. You should keep written records of those efforts so that you can prove what you did (for example, a copy of your brochure or information sheet marked to show the checks that you made).

Engaging in unfair trading practices can not only result in a criminal prosecution (see Enforcement and penalties, above) but it may also result in a civil claim being brought against you by any person who has suffered loss as a result of a false statement. This stems from what is referred to in law as ‘misrepresentation’.

When misrepresentation occurs

Misrepresentation occurs where a party is induced to enter into a contract by certain statements that later turn out to be untrue. With respect to tourism businesses, these could again include statements regarding:

• Quality;

• Amenities;

• Location.

For example, if Mr Anderson and his family had booked into a bed and breakfast with an assurance that it was only ‘five minutes from the beach’ but it turned out to be a half-hour drive, he would be able to either:

• Refuse to continue with the booking and claim damages from you for any losses incurred as a result.

• Continue staying with you but claim damages for his and his family’s, distress and disappointment.

Other considerations

For any promotional material, you should also bear in mind the following:

• Advertising codes (for broadcast and non-broadcast media): these are issued by the Committee of Advertising Practice (CAP) and require advertisements and sales promotions to be legal, decent, honest and truthful. Advertising codes also deal with specific issues, including the availability of products at the advertised price and VAT inclusion in prices.

• The requirements of the Package Travel and Linked Travel Arrangements Regulations 2018: see the Holiday Packages section for more information.

Many operators advertise and market their business through social media – for example, having a Facebook account for the business and/or a Twitter profile attached to their website.

It is important to realise that while you may use a far more relaxed or ‘chatty’ style of communication when using social media than you would in print or on your main website, everything that you post via social media must still comply with all aspects of the CPRs. It is therefore essential to re-read anything that you are about to post on social media to ensure that it is accurate, is not open to misinterpretation and does not make unfair comparisons.