The purpose of this new law is to harmonise the implementation of advertising and marketing activities across the EU. A single principle across all member states will help to define and to outlaw unfair commercial practices.
As the legislation is still in draft form, a large number of businesses are unaware of how this legislation might affect them, or of the risks it represents to the unwary. Many people assume that the law is only aimed at sharp practice and highly aggressive marketing tactics. Most respectable businesses do not consider it relevant to them. However, these new regulations have the potential to affect every UK business.
The Trade Descriptions Act 1968 is, in many areas, insufficiently explicit. This new legislation spells out particular illegal practices in detail. The old principle of preventing advertising and marketing from being misleading remains, and there is a great deal of new information to understand and comply with.
In many ways the new system will do what the old laws did, but with different terminology and different penalties.
For the first time in the UK there will be a list of 31 particular types of marketing activity that will always be contrary to the law. Previously, some of these were covered by self-regulatory codes such as the ‘CAP’ code of advertising, sales promotion and direct marketing, administered by the Advertising Standards Authority. They will now break the law, no matter how innocent the intention. The law will also be media-neutral; this means it will apply wherever there is a marketing message in whatever form it appears.
Under the new law it will be an offence for a business to represent itself falsely as a consumer, which has implications for viral marketing. For example, if an agency puts out a message in the form of a blog posing as a consumer, that will break the law. So could ‘buzz’ marketing, which involves hiring actors to go into a bar and talk up certain products, for example. These changes to the law will force advertising and marketing agencies to rethink how they approach these activities.
There could be interesting consequences too where there is an ‘invitation to purchase’. If an ad is deemed a clear invitation to purchase as defined in the regulations, there are a number of disclosure requirements that are new to UK law. You will now need to include a full description of an advertised product. This could make things more challenging for a banner ad on the web or an ad in text message form where there isn’t the option to disclose much information.
There will be some wriggle room here, but just how much isn’t yet clear.
A promotion that says ‘buy now while stocks last’ may be making a false statement if the product’s availability is actually unlimited in practical terms. It will be illegal to pretend the consumer has no time to choose.
It will also be illegal to present something you are legally obliged to offer as a feature of your product. For example you cannot hold out a consumer’s cancellation right as distinctive to your product or service if it does not go beyond the statutory cooling off rights and is therefore something the consumer is entitled to as a matter of course. The right can be mentioned, but you have to be careful how you market the message.
In the case of prize promotions, offering a prize and not in the end awarding it will be one of the ‘always unfair’ practices that break the law. Does this mean that whatever the extenuating circumstances, you cannot legally offer a prize and then withdraw the offer at a later date? This could make it difficult if for any reason you need to cancel a promotion, even for force majeure reasons beyond your control. Promoters will need to take a view on just what sort of risk is involved in individual cases.
This is the first time that UK law has specifically addressed the notion of ‘vulnerable consumers’. If your advert is clearly targeting children, older people or tourists for example, and is possibly taking advantage of their vulnerability and lack of understanding then you will have a higher standard to meet.
The question is, does this apply to an ad that targets all people, including the vulnerable? Or an ad targeting only the vulnerable? It is not clear yet whether this will have the effect of dumbing down all advertising.
This legislation will give teeth to a number of self-regulatory codes. If you break a code, the question now is have you simply failed to comply, and will get your knuckles rapped, or have you also committed an unfair practice? It is going to be arguable, but the latter sounds possible. Enforcement is also a key part of the new regulations. The Trade Descriptions Act has been enforced by Trading Standards officers. They typically have a huge workload, and things can slip through the net. Now, there are many more bodies with the authority to enforce these rules from the Office of Fair Trading to Which?. Therefore, the risk that the authorities spot an infringement is increased.
Nick Johnson is a partner and Stephen Groom is head of marketing and privacy law at Osborne Clarke.