UK Consumer Protection Unfair Trading Regulations That Might Affect Advertising, Links, Affiliates & Product Launches

Lets preface this by I am not a lawyer, and I am aware that that is a very long headline and title.

Judith at SEO Chicks was looking at the new UK Unfair Trading Regulations

Here is a link to the official guidance (PDF).

What follows are my own notes whilst reading through the document, which I thought some readers might find useful, though you should read it in full if you trade from the UK (maybe 400+ subscribers)

6 BANNED PRACTICES (SCHEDULE 1)

(7) Falsely stating that a product will only be available for a very limited
time, or that it will only be available on particular terms for a very limited
time, in order to elicit an immediate decision and deprive consumers of
sufficient opportunity or time to make an informed choice.

A trader falsely tells a consumer that prices for new houses will be
increased in 7 days time, in order to pressurise him into making an
immediate decision to buy.

That hits 50% or more of long page sales letters and many Product Launch Formula tactics such as closing the doors then reopening just a few days later after a “recount” of total sold.

How about those “slightly damaged” copies offers for physical products?

(10) Presenting rights given to consumers in law as a distinctive feature
of the trader’s offer.
A stationer sells pens. He advertises on the following basis: ‘Pens for
sale. If they don’t work I’ll give you your money back or replace them.
You won’t find this offer elsewhere’. If the pen is faulty at the time of
purchase the consumer would be entitled to a refund, repair or
replacement under contract law. The trader’s emphasis on the unique
nature of his offer to refund or replace would breach the CPRs.

Careful when wording guarantees either as a merchant or affiliate

(11) Using editorial content in the media to promote a product where a
trader has paid for the promotion without making that clear in the
content or by images or sounds clearly identifiable by the consumer
(advertorial).
A magazine is paid by a holiday company for an advertising feature on
their luxury Red Sea diving school. The magazine does not make it clear
that this is a paid-for feature – for example by clearly labelling it
‘Advertising Feature’ or ‘Advertorial’. This would breach the CPRs.

It looks like disclosure in the content is becoming law for things like paid posts and reviews on blogs.

It could be argued that this also applies to affiliate links.

(14) Establishing, operating or promoting a pyramid promotional scheme
where a consumer gives consideration for the opportunity to receive
compensation that is derived primarily from the introduction of other
consumers into the scheme rather than from the sale or consumption of
products.
A trader operates a holiday club which offers consumers, on payment of
a membership fee, the opportunity of earning large amounts of money by
recruiting new members to the club. The other benefits of club
membership are negligible compared to the potential rewards of earning
commission for

Pyramids, but this might also affect products sold as resale rights, especially if that is the only option, or closed affiliate programs.

(20) Describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar if
the consumer has to pay anything other than the unavoidable cost of
responding to the commercial practice and collecting or paying for
delivery of the item.
A trader advertises a ‘free’ gift. He then tells consumers that in order to
receive their ‘free’ gift they need to pay an extra fee. This would breach
the CPRs.

Careful how you word those bonuses, not only in your reviews or emails, but especially email headlines and Adwords.

(22) Falsely claiming or creating the impression that the trader is not
acting for purposes relating to his trade, business, craft or profession, or
falsely representing oneself as a consumer.
A second-hand car dealership puts a used car on a nearby road and
displays a handwritten advertisement reading ‘One careful owner. Good
family run-around. £2000 or nearest offer. Call Jack on 01234 56789′.
The sign gives the impression that the seller is not selling as a trader,
and hence this would breach the CPRs.

Are you really just the average Joe making a fortune, or do you have an army of staff or outsources doing everything.

(30) Explicitly informing a consumer that if he does not buy the product
or service, the trader’s job or livelihood will be in jeopardy.

If your house burns down, be careful how you word a firesale.

7 MISLEADING PRACTICES (REGULATIONS 5 AND 6)
7.1 The CPRs prohibit misleading actions and misleading omissions (as
detailed in regulations 5 and 6),16 which cause or are likely to cause the
average consumer to take a different decision.
7.2 A practice can mislead by action or omission or both. These prohibitions
aim to ensure that consumers get from traders, in a clear and timely
fashion, the information they need to make informed decisions relating
to products. In addition, in some commercial practices (referred to as
‘invitations to purchase’) certain specific information must be given to
consumers, unless apparent from the context.

7.6 These are actions that mislead by:
• containing false information OR deceiving or being likely to deceive
the average consumer (even if the information they contain is
factually correct),17
and
• the false information, or deception, relates to one or more pieces of
information in a (wide-ranging) list (see below),
and
• the average consumer takes, or is likely to take, a different decision
as a result.

Which crappy traffic stats package are you using to inflate numbers?

Comments on the following are in bold inline:-

7.7 The list of information mentioned above includes the main factors
consumers are likely to take into account in making decisions relating to
products, for example the main characteristics of the product and the
price or the way it is calculated. The full list follows:

(a) the existence or nature of the product
You really are just a simple guy, and not a marketer trying to sell his ebook written on Elance.
(b) the main characteristics of the product
The whole truth, not the convenient truth
(c) the extent of the trader’s commitments
(d) the motives for the commercial practice
Does this afect loss-leaders, upsell, downsell process?
(e) the nature of the sales process
(f) any statement or symbol relating to direct or indirect sponsorship or
approval of the trader or the product
Testimonials
(g) the price or the manner in which the price is calculated
Include +VAT (Geotarget) on sales pages for Clickbank?
(h) the existence of a specific price advantage

Are you split testing your pricing? This might affect you

(i) the need for a service, part, replacement or repair
(j) the nature, attributes and rights of the trader or his agent
(k) the consumer’s rights or the risks he may face.

The ‘main characteristics of the product’ include:

(a) availability of the product

Thinking of using scarcity?
(b) benefits of the product
Get 1,000,000 subscribers overnight
(c) risks of the product
Did we forget to tell them about Google bans?
(d) execution of the product
(e) composition of the product
(f) accessories of the product
(g) after-sale customer assistance concerning the product
(h) the handling of complaints about the product
(i) the method and date of manufacture of the product
(j) the method and date of provision of the product
(k) delivery of the product
(l) fitness for purpose of the product
(m) usage of the product
(n) quantity of the product
(o) specification of the product
(p) geographical or commercial origin of the product
(q) results to be expected from use of the product
(r) results and material features of tests or checks carried out on the
product.

You need real proof…

The ‘nature, attributes and rights of the trader or his agent’ include:

(a) identity
(b) assets
(c) qualifications
(d) status
(e) approval
(f) affiliations or connections

Here is that disclosure thing again

(g) ownership of industrial, commercial or intellectual property rights
(h) awards and distinctions.

Misleading Omissions (regulation 6)
Giving insufficient information about the product
7.12 Practices may also mislead by failing to give consumers the information
they need to make an informed choice (in relation to a product). This
occurs when practices:
• omit or hide material information, or provide it in an unclear,
unintelligible, ambiguous or untimely manner,
and
• the average consumer takes, or is likely to take, a different decision
as a result
7.13 A misleading omission can also occur where a trader fails to identify the
commercial intent of a practice, if it is not already apparent from the
context. The presence of a price, or of a statement making it clear that
the practice is commercial (for example: ‘this is an advertisement’), are
examples of how commercial intent could be made clear.
OFT931 35
7.14 When deciding whether a practice misleads by omission, the courts will
take account of the context.18

Commercial intent = more disclosure

7.33 Information that is deemed to be material in invitations to purchase is set
out in regulation 6(4), which is summarised below:
• the main characteristics of the product – for example, what it is and
what it does – to the extent appropriate to the medium used by the
invitation to purchase and the product
• the identity of the trader, such as his trading name, and the identity
of any other trader on whose behalf the trader is acting
• the geographical address of the trader or traders

The geographical address has been required since December 2006 (si3429)

The document goes on to cover such things as

  • Professional Diligence
  • Material Distortion
  • Compliance and Enforcement covering
    • education, advice and guidance
    • established means
    • codes of conduct
    • civil enforcement
    • criminal enforcement

This document covers business or “trader” to consumer regulations, and specific that this does not cover business to business transactions where the product is intended for ultimate business use. If a product is sold to wholesale, then on to a consumer, a lot of this still applies.

I have no idea how this applies to foreign traders doing business with the UK, or where they have a satellite office in the UK or Europe.

I am not a lawyer, and note that the linked document is only guidance and not the full version.
I may very well be reading into this more than the law intended, but this seems to compliment SI3429 which has been largely ignored by many online businesses, and I assume isn’t enforced effectively for this to be the case over a year since publication.
So far I have only spent a couple of hours on the 88 page document and this blog post (speed reading the key information I need). You should read the document in full to extract the information you need.

I know Tim Nash knows a few lawyers who specialise in this kind of thing.

Update

Tim has just published an overview of which legal notices you might be expected to publish on your site. It is aimed at people in the UK and possibly Europe and many such regulations are universal.
Remember, I am not a lawyer, and nor is Tim

Update 2

It took a couple of weeks, but there now seems to be some mainstream online media attention to these new regulations.

Adage points out that this came into force across Europe in January though only goes into some of the most mainstream forms of WOMM.

Paid Content (UK) also focuses on the more corporate sector

Peter Parks has condensed things down to lots of bullet points.

Over on Daily Blog Tips, 10 Essential Legal Points For Bloggers covers other legal matters. I think Tims post is beter on legal paperwork, but it does cover a few other angles. It was written by lawyer Steve Imparl so has some level of credibility, I am going to have to delve into his blog archives to see if there is some more meaty content.

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Comments

  1. says

    Did I hear my name mentioned:)

    A couple of generic points which might be important but note IAMNL

    Ignorance is no excuse in the British legal system.

    Your honour how was I to know telling people I made 20 million pounds last year when I only made a fiver

    simply wont wash

    Second just because you haven’t been caught doesn’t mean you won’t as UK business shifts more towards the web so to will trading standards efforts.
    When in doubt write it down, I think it’s a safe bet to be looking at having a disclaimer page on every site even if it simply states that the site has affiliate links.

    With that I’m off to clean up my disclaimer policies and declare that Cindy is not quite who she seems :)

    • says

      I have been doing quite a bit of work on these regulations including putting on a conference with the UK Government representative who has been drafting and advising them – we are running it again on 11th June (www.singlelaw.com)….pause there and laugh because on 26 May when the UK version of the regulations are in force I will not be allowed to do that – merge the comment with some “advertorial” or subtle or not so subtle plugs for a service or product.

      It will be a criminal offence but probably used as a last resort for persistent offenders.

      A disclaimer will not work but if someone is outside the jurisdiction and happy to avoid holidays in the UK in future they may be able to avoid the strong arm of European Justice I suppose.

      Concerns in the UK have been over issues such as are “buy one get one free ” (BOGOF) offers still okay – yes they are. Being careful however to make sure what is “free” is definitely free. Issues over conduct of salesmen who go door to door -so training for staff is useful under the new regulations. A couple of companies have asked me to do some training in house on the regulations. Also viral marketing is likely to be a problem under the regulations. The Government has issued guidance and also updated its general guidance on “Price indications” so anyone interested in how this affects pricing of goods should have a look at that too.

  2. says

    There are so many companies, which opens their branches in India.

    They work as UK based company and earn money as UK standards, still they are not performing work in UK.

    The main reason is people from India and other Asian countries are now becoming more and more stronger in software field in compare to rest of the world.

    Still companies can create job opportunities in UK by hiring candidates from overseas.

  3. says

    Some interesting points there and Tim’s post has given me the kick up the backside to go and create such a policy for my blogs with advertising on (been meaning to for ages!).

  4. says

    Thanks for the information, it’s very helpful! :) Now I just need to get to work on some official sounding policies…

  5. says

    I am glad they haven’t done this in the US. It sounds as if this it’s going to be difficult to comply with these laws, because there is room for interpretation. Reminds me a little of Google Adsense TOS.

    Hope this kind of regulation never hits the States. Thanks for letting us know about it. Stumbled…

  6. says

    I am curious as to how any of this would apply to say a network marketing firm too. Affiliates aren’t much different.

  7. says

    Wow, that’s pretty crazy stuff. Thank God there are enough international waters – otherwise us blog pirates would soon have no more jobs – arrr!

  8. Luke says

    OK, so they are trying to separate commercial from non commercial content? That seems to be key here.

    The things about impersonation, fake qualifications, fake scarcity etc, well I’m glad to see those laws, even though I’m a marketer. I think those things are just shortcuts from creating quality content and value. And you don’t tend to find these things coming from reputable merchants (but maybe some of their affiliates).

    The one killer there though, is the commercial-intent-to-be-declared-at all-times angle. I don’t like that at all. Not stating commercial intent is at the heart of the affiliate-product-review business model, which consumers don’t know are funded by commissions.

    Interesting.

    Affiliates would be hurt more by this. Not so much merchants.

    Luke

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