Damages for misleading commercial practices

The Consumer Protection Act 2007 was a significant piece of reform legislation which has largely gone unnoticed and under utilised.National Consumer Agency

The National Consumer Agency uses the Act as part of its enforcement function and it has been reported that the NCA has initiated proceedings under the Act against Associated Newspapers (Ireland) Limited arising out the infamous Sunday Tribune wrap-around published by the Irish Mail on Sunday. In 2009, Tesco unsuccessfully sought an injunction against Dunnes Stores to prevent allegedly misleading advertising, partly under the provisions of the Act (more here).

However, there are a number of aspects of the 2007 Act that consumers can rely on. I recently obtained exemplary damages under the Act on behalf of a client in a District Court action where the client had been misled. The case concerned a contract with a tradesman for goods and related installation works where the goods had been delivered but the works not completed, despite having been paid for in full. The plaintiff was forced to engage a third party to complete the works and obtained judgment against the tradesman for the cost of doing so.

Prior to being hired by the plaintiff, the tradesman represented that he was an agent of a manufacturer (which happened to be the third party later engaged by the plaintiff to complete the works). The plaintiff assumed that he could call on the manufacturer to step in if the agent failed to complete the works. The tradesman was not an agent of the manufacturer; hence the manufacturer had no liability to the plaintiff and had to be paid for completing the works.

The 2007 Act lists four categories of commercial practice:

  1. unfair commercial practices;
  2. misleading commercial practices;
  3. aggressive commercial practices; and
  4. prohibited commercial practices.

The latter two categories are more serious and engaging in them is a criminal offence. A wide range of behaviour can constitute a misleading commercial practice and, if it would encourage a consumer to enter into a contract, the 2007 Act provides remedies. Engaging in a misleading commercial practice is not an offence (unless it relates to consumer information regulations) but does give rise to a right of a consumer to seek damages, including exemplary damages.

In this instance, the trader’s representation that he was an agent of the manufacturer was a factor which influenced the plaintiff’s decision to contract with him and exemplary damages of €500 were awarded against the trader as a result, adding 18% to the total award.

The Act makes for interesting reading and covers a wide range of commercial practices. It is likely that the extent to which the Act affects everyday marketing and sales is not widely appreciated, though the NCA has published a guide.

Here are some interesting examples: it is prohibited to

  • represent that a product is able to cure an illness, dysfunction or malformation, if it cannot;
  • use advertising to encourage children to purchase a product or to persuade a parent or adult to purchase it for them;
  • persistently fail to comply with a customer’s request to cease unjustified contact.

A number of other prohibitions might be particularly relevant in light of current economic conditions:

  • a representation that the trader is about to cease trading or move premises, if the trader is not;
  • a representation that describes a product as “gratis”, “free”, “without charge” or anything similar, if a consumer has to pay anything other than necessary and reasonable costs;
  • operating, running or promoting a competition or prize promotion without awarding the prizes described or reasonable equivalents;
  • explicitly informing a consumer that if the consumer does not purchase a product, the trader’s job or livelihood will be in jeopardy.

The maximum penalties for breaching these prohibitions, on a first summary conviction, are a fine of €3,000 or imprisonment for up to 6 months (or both). Subsequent convictions for offences under the Act carry maximum penalties of €5,000 or 12 months’ imprisonment (or both).

Advertisements

One thought on “Damages for misleading commercial practices

Comments are closed.