The UK Government will appoint a Consumer Advocate with powers to sue on behalf of consumers, the rules for selling digital downloads will change and the law of misrepresentation will be simplified, according to plans published on Thursday.
The Government said that it will also publish a Consumer Rights Bill that will go further than a forthcoming EU Directive on consumer rights. Formal consultations on the Bill's elements will be conducted over the period 2010 to 2012.
The plans are outlined in a wide-ranging White Paper written by the Department for Business, Innovation and Skills (BIS), A Better Deal for Consumers – Delivering Real Help Now and Change for the Future.
E-commerce protection for consumers
From 2010 a single complaints register, called the Enhanced Intelligence System, will be created to serve anyone encountering an online scam, breach of consumer laws or other problems with online transactions. It will form part of current advice service Consumer Direct. The information will be available for use by the police, Trading Standards and the Office of Fair Trading (OFT).
The enforcement powers of these bodies will be reviewed, according to the White Paper, and there may be changes to the UK's anti-hacking law, the Computer Misuse Act.
"For example, the OFT and Trading Standards need to be able to act against online scammers in the UK even if they are targeting consumers overseas and we need to consider whether abuse of personal data should be a breach of consumer law and whether current laws adequately allow enforcers to act against such scammers, for example, in the way they use 'spyware' and 'malware' attached to some commercial websites," says the White Paper.
"The powers of the OFT and Trading Standards Services to require internet service providers to close down websites used for illegal purposes may also need to be clarified," it says. "Finally, the Government will consider whether to empower the OFT, in particular to prosecute online offences under the Fraud Act and the Computer Misuse Act."
The role of the Consumer Advocate
A Consumer Advocate will be appointed "to bring a national profile to improving the co-ordination of education and information campaigns." The Advocate will also be empowered to bring legal actions on behalf of a group of consumers following a breach of consumer protection law.
"The Advocate will liaise with relevant enforcers and seek to help the business in question to propose a satisfactory compensation package on a voluntary basis," says the White Paper. "For the few cases where a business is not prepared to provide compensation voluntarily despite having been found liable of a breach of consumer protection law, the Government will consult on equipping the Advocate with an effective and workable power to take collective actions to obtain compensation on behalf of a group of consumers."
"Subject to this consultation the power will be to allow the Consumer Advocate to take forward a collective action following a breach of consumer protection law once a significant number of named consumers have agreed to join the action to obtain compensation," it says.
"There would however be a possibility for other consumers to join the action at a later stage after exact liability had been established but before the final compensation awards had been made," it adds.
The Government consulted on the possibility of allowing private bodies to take representative actions for breaches of consumer law in 2006. The conclusion of that consultation was that, although there was support from a number of consumer organisations, there was a lack of clear evidence for introducing representative actions.
The Government commissioned further research in 2008 which suggested that there is a gap between successful enforcement action and adequate consumer compensation and that representative actions by an independent publicly-funded figure could be a way to meet this gap alongside attempts to deliver compensation though public enforcement.
The Civil Justice Council (CJC) produced a report on Collective Actions (559-page / 2.3MB PDF) in November 2008 as formal advice to the Lord Chancellor. The report recommended the introduction of a generic collective action that could be brought by a wide range of representative bodies.
The Government said that it is currently considering in detail the recommendations made by the CJC and intends to issue its formal response before the summer recess.
The Consumer Advocate would also have powers to distribute compensation to UK consumers from ill-gotten funds seized by overseas enforcement agencies, and to tackle unfairness in consumer credit agreements.
The Government says that the Advocate will be appointed in 2010.
Raising awareness of consumer rights
Government research has found a low level of awareness of consumer rights. Consequently, BIS said that it is working with Consumer Focus, the Office of Fair Trading and Consumer Direct to develop a campaign to improve awareness of consumer rights, and to direct consumers to Consumer Direct as the source of online and telephone advice and support on consumer issues.
The campaign will "reach its peak" in September 2009 during National Consumer Week, according to the White Paper.
"Our intention is to work in partnership with retailers in store and online to convey these messages, complemented by a media campaign," it said. Meanwhile, SMEs will be encouraged to educate and train their staff about their duties to consumers.
Digital downloads and consolidating commerce laws
The European Commission published a plan for a Consumer Rights Directive in October 2008. That Directive would replace four existing consumer Directives, on doorstep and distance selling, unfair contract terms and sale of goods and associated guarantees. Among the changes it will introduce is an EU-wide 14 day cooling-off period for distance sales, during which time a consumer can reject goods purchased online for any reason. That contrasts with the UK's current seven working-day cancellation period.
The White Paper, though, expresses Government frustration at the limitations of the proposed EU Directive, noting that it does not cover sales of services or digital downloads.
"The Government would have preferred the Directive to include sales of services and 'digital' products," it says. The Government said it will use the Directive "as the basis for a wider reform to consolidate the various pieces of legislation on the sale and supply of goods and services to consumers into one measure to make it more accessible to consumers, business and their advisers."
The Government says it will take this Directive as an opportunity to replace three current Acts: the Supply of Goods (Implied Terms) Act 1973; the Sale of Goods Act 1979; and the Supply of Goods and Services Act 1982. It will also remove "unnecessary distinctions between goods and services contracts (and combined contracts) and between different types of transaction, for example, sale, hire or hire purchase."
Further, the Government will "Make business to consumer sales law separate from business to business sales law but consider updating business to business law to keep it in line."
The regime for unfair contract terms for consumer contracts will also be simplified and clarified and wider protections for consumers will be considered.
Redress for consumers
The Government does not intend to introduce a private law right of action under the Unfair Trading Regulations (CPRs) that came into force last May. However, it is tasking the Law Commission and the Scottish Law Commission "to advise on a possible restatement and simplification of the law on misrepresentation, incorporating developments in case law to make it more transparent and accessible to business and consumers."
The Law Commissions will also be asked to look at the law on duress "in order to clarify whether aggressive commercial practices under the CPRs should be automatically classed as a form of illegitimate pressure."
Credit card and lender reforms
The White Paper also proposes reforms to the regulation of credit and store cards to put consumers more in control of their borrowing and to help guard against people running up credit and store card debts they can’t pay off. The Government says that it will ban unsolicited credit card cheques which can tempt consumers unaware of the high interest rate charges to borrow money they cannot afford.
The review will also examine if restrictions should be placed on the raising of interest rates on existing debts; if minimum monthly repayments should be raised to combat debt levels; if the practice of increasing borrowers’ credit limits without their prior consent should be banned; and what order debts built up on a credit card should be paid off.
New requirements will be introduced on all lenders to check consumers’ creditworthiness before they borrow; to explain financial products fully including the consequences of failure to repay; and to comply with new OFT guidance to tackle irresponsible lending.