Tag: consumer law

Time for a regulatory review of online contracts & practices

The Consumer Protection Act 2007 was a major reform of Irish consumer law with predictably European foundations, but has had very little impact in Ireland. It is rarely enforced in any meaningful way and the lack of court cases mean it is underdeveloped, despite the Act having wide-ranging provisions, extensive criminal offences and enforcement powers and even rights for consumers to seek damages for its breach.

Given the scope of the legislation, which covers marketing, sales, pricing and contract practices, it is not hard to find consumer situations in Ireland where the Act applies but is not enforced or respected. Undisclosed advertorial, for example, is a frequent and ongoing source of controversy that came into focus with undisclosed celebrity and sportsperson endorsements but has become a bigger issue with the rise of social media influencers. Regular calls to “do something” or to provide “clarity” on the rules are usually framed in the terms of non-binding ASAI rules rather than the actual legal provisions of the Act which have a direct bearing.

Another consistent issue is contract and subscription services that can be set up online or in-app but which have complicated or disproportionately inconvenient cancellation requirements, the main culprits being online publications and utility companies. There is no fair reason for requiring someone to ring up to cancel, or to write in by post for example, other than to capitalise on inertia. In one example I have seen, customers can cancel by clicking a link in their account but that merely prompts the trader to call the customer to confirm – an unnecessary extra step which does nothing more than provide the trader with another opportunity to cajole the customer not to cancel, but which also raises contractual difficulties in determining the cancellation period.

The Act prohibits a range of commercial practices, including aggressive commercial practices. These are practices which, if by harassment, coercion or undue influence, would be likely to:

cause significant impairment of the average consumer’s freedom of choice or conduct in relation to the product concerned, and
cause the average consumer to make a transactional decision that the average consumer would not otherwise make.

This may not immediately seem relevant to cancellation practices, but the Act goes on to say that in determining whether the commercial practice employs harassment, coercion or undue influence, a number of things shall be taken into account, including the imposition of onerous or disproportionate non-contractual barriers by the trader when the consumer wishes to terminate the contract, exercise a contractual right or switch to another product or trader.

In 2011, the Bulgarian Supreme Court found that burdensome termination requirements effectively trapped consumers in automatic renewals of a service, amounting to an aggressive commercial practice. It is worth noting that, in Ireland, aggressive consumer practices are not just prohibited, they are a criminal offence. The penalties under the Act can be serious, ranging up to a fine of up to €5,000 or imprisonment for up to 12 months on summary conviction or up to €60,000 and 18 months on indictment.

The history of Irish regulatory law and enforcement, particularly in consumer law, suggests that prosecutions will continue to be rare and even if brought to conviction penalties will be at the low end of the scale. However, Irish consumers are entitled to a more activist consumer regulator monitoring terms and conditions and trader behaviours, particularly given that the lack of class action structures in Ireland means that the civil remedies in the Act are usually not cost-effective to invoke, devaluing another incentive for traders to improve behaviour. I have had District Court cases with awards of aggravated damages in the region of 25% due to misleading commercial practices, but the consumers involved had significant contractual claims to begin with. For most, private enforcement of a breach of the Act will not be worthwhile.

The merger of the under-resourced Competition Authority with the under-resourced Consumer Agency to form the Competition and Consumer Protection Commission has continued the trend of insufficient enforcement and monitoring of both areas of the law, but the emphasis remains on competition and merger control.

The Commission has only published lists of consumer protection enforcement measures taken up to the end of 2016 and for that year it reports 40 enforcement actions, but which cover only 7 categories of consumer law breaches and only three categories of remedial action (none of which were prosecutions). From 2012 to 2016 one major Irish retailer appears on the enforcement list 40 times, with some entries relating to multiple offences. Only one conviction is recorded, in the 2012 enforcement list. It would appear that fixed payment notices and other minor measures are a mere cost of doing business, rather than something that leads to an improvement for consumers.

The most commonly enforced rules are those prohibiting the car “clocking” and price display regulations. However, a significant amount of consumer disposable income is likely now spent on daily transactions, particularly through mobile internet use, which involve lengthy contracts with detailed terms and conditions. It is time for a detailed study of these terms and practices to check for compliance with the Act and a number of other relevant pieces of consumer legislation.

Undisclosed advertorial in blogs and social media

It is commonly misconceived that blogging and social media are regulation-free publishing forums. In fact, most of the laws that apply to traditional publishers apply equally to blogs and, sometimes, social media posts. Particularly important is the prohibition on undisclosed paid promotion in editorial content, also known as “advertorial” or “surreptitious advertising”.

Readers will be familiar with advertorial content in printed publications: it is usually surrounded by a border that marks it apart from proper editorial content and is headed by phrases like “Commercial Feature” or “Advertisement”. Whatever method is used by the publisher to differentiate it from other content, it is usually clear that someone has paid for it to appear.

Marking such content apart is good, ethical editorial practice in the interests of consumer protection. The Advertising Standards Authority of Ireland code of standards requires this:

Advertisement promotions should be designed and presented in such a way that they can easily be distinguished from editorial material.

The ASAI is an industry-run, self regulatory body and can only impose sanctions on its own members. It is sometimes accused of being toothless but most major companies and advertisers tend to comply with its rulings. However, because it is an industry body not backed by legislation and which can impose sanctions on members only, it is commonly believed that there is no specific legal prohibition on this conduct. An article in the Irish Independent earlier this week said:

There are no strict guidelines for bloggers and influencers when featuring sponsored content, but according to the Advertising Standards Authority of Ireland, sponsored online content “must clearly state that the material is a marketing communication”.

This is not the case, failing to identify paid editorial content is a criminal offence.

The relevant law is section 55(1)(q) of the Consumer Protection Act 2007 which states that, among other practices, a trader shall not “use editorial content in the media to promote a product (if a trader has paid for that promotion) if it is not made clear that the promotion is a paid promotion”.

The Consumer Protection Act implements the European Union Unfair Commercial Practices Directive which categorises this type of advertising as conduct that “shall in all circumstances be regarded as unfair“. This means that it is “blacklisted”: no case-by-case assessment is necessary. (Surreptitious advertising on television is prohibited elsewhere by the Television Without Frontiers Directive.) It might not be sufficient to merely identify advertorial with a simple phrase or logo: the Hungarian Competition Authority found that editorial content which included a slogan “Sponsored by Vodafone” was not enough to identify the nature of the arrangement between the publisher and the advertiser.

The prohibtion applies to the “media”, which is not defined but it appears widely accepted that this includes blogs and even social media accounts. In the UK, for example, the then Office of Fair Trading carried out a targeted campaign some years ago requiring PR companies and celebrities to be transparent about their endorsements. The basis of this clamp down on undisclosed advertising was the UK equivalent of section 55 of the Consumer Protection Act.

The definition of “trader” in the Consumer Protection Act is wide enough to cover both the advertiser and the publisher/blogger and indeed some enforcement action in other Member States has been against both parties. In Ireland, the Competition and Consumer Protection Commission (formerly the National Consumer Agency) can prosecute breaches.

The penalties include a fine of up to €4,000 on summary conviction (or €60,000 on indictment) and/or jail. The Act provides for increased fines on subsequent conviction and daily fines if the conduct continues after conviction. The Irish courts tend not to impose significant fines for consumer law breaches of this nature and anyone prosecuted for such an offence in Ireland is likely to face a fine in the hundreds of euros if convicted or could benefit from an alternative to conviction (certainly for a first offence). Consumers can also bring an action for damages, though it might be difficult to establish loss.

It seems unlikely that the Commission will become active in this area unless it receives complaints. However, anyone can apply directly to the Circuit Court or the High Court for an order to stop someone who is in contravention of the prohibition, perhaps making private enforcement by competitors more likely than by the Commission.

Is the Law Society trying to regulate blogs?

Restrictive rules on advertising by solicitors contain important exemptions to protect the right of solicitors to comment on legal and other issues. Is the Law Society interpreting the rules in a way would restrict those exemptions and increase their oversight of comment by solicitors?

Advertising by solicitors is very tightly restricted by the law and regulated by the Law Society of Ireland. I have written about some of the restrictions before. Most of the rules regulate the tone of advertising; what might be termed “ambulance chasing” through advertising, for example, is not possible in Ireland. None of the UK-style personal injury ads you might see on daytime television are possible in Ireland. Even this, quite mild and professional, form of ad would most likely result in trouble for an Irish solicitor daring to upload it.

The Irish rules may or may not be a good way to regulate advertising by lawyers. They do, at the very least, clash with the demand that the professions be more competitive. But the rules do recognise a very important exemption: comment. Exemptions are included in the Solicitors Advertising Regulations that should ensure no overreach in their application that would regulate or prohibit genuine comment.

The Regulations only apply to an “advertisement”, defined as being almost any type of communication “which is intended to publicise or otherwise promote a solicitor in relation to the solicitor’s practice” but “excluding a communication which is primarily intended to give information on the law”. So, a communication must be both intended to promote a solicitor and not be primarily intended to give information on the law for the Regulations to apply.

This is quite a large exemption and obviously seeks to make a distinction between traditional advertising and, for example, news updates or comment. If a communication by a solicitor is primarily intended to give information on the law it is not an advertisement, is not governed by the extensive rules and restrictions contained in the Regulations and, importantly, is not subject to oversight by the Law Society. That oversight is significant: a breach of the Regulations is a disciplinary matter which can potentially have serious consequences for the solicitor involved.

One catch-all provision in the Regulations, for example, prohibits an advertisement which is likely to bring the solicitors’ profession into disrepute. It is quite difficult to know precisely what is covered by that prohibition (the Law Society does not publish decisions made under the Regulations) but it is quite easy to envisage an individual or organisation who dislikes a communication from someone who happens to be a solicitor making a complaint to the Society under this heading of the Regulations.

Last Friday the Law Society published a surprising practice note on advertising. The headine refers to legal advice columns, so you might think it applies only to regular pieces in local papers where readers send in questions, for example. It suggests that where the solicitor is paying to have the column appear or is simply reproducing the content, the exemption does not apply and the column might be an advertisement. This is fair enough: such a column should be identified as advertorial or a commercial feature by the publisher. In fact, paying for editorial content to appear in a newspaper without making it clear to readers that it is a paid feature is a criminal offence for all businesses, not just solicitors.

However, the practice note makes a number of significant leaps when interpreting the Regulations. It refers to an exemption “set down in regulation 12” and refers to the contents of regulation 12 as being a test. In fact, the exemption is contained in the definition of “advertisement” in regulation 2(a). Regulation 12(a) adds to or gives examples of the exemption, it does not limit it. Paragraphs (b) and (c) do limit the exemption by clarifying that the distribution of free legal books may, for example, constitute advertising even though the publication might be information on the law.

The danger in this practice note, which one must assume the Law Society will apply in interpreting the Regulations, is that it sets a far more restrictive scope to the comment exemption in the Regulations. The paid advice column is not a difficulty, but many solicitors now publish blogs, for example, and some pay to do so. Many solicitors have websites which may constitute advertising in their entirety or may include information on the law but either way are likely to be paid for by the solicitor.

Where an article does not satisfy this test, that is, if it has been paid for by or on behalf of the solicitor, or where it has enjoyed repeated publication, the article is subject to the regulations in the normal way.

I do not accept this. Rather, the article might be subject to the Regulations. This blog is published using WordPress.com who I pay for mapping a domain name to it. Is it a series of legal articles written by me where part of the space in which it is published is paid for by me? Possibly, depending on your view of domain name mapping to a free blogging platform and whether the former constitutes “space” in which the blog is published. Is it an advertisement? Certainly not. It is not intended to be and it constitutes information on the law.

Regulation 12 is not a “test” of whether or not a communication by a solicitor is commercial or non-commercial. The test is in the definition of “advertisement” itself. The practice note is, perhaps inadvertently, further evidence of how the the Regulations are out of date. These anachronistic advertising rules do not appropriately accommodate or regulate blogging, social media or other contemporary means of communication.

The Regulations are already the subject of infringement proceedings by the European Commission who allege that they breach the Services Directive, which required that Member States ease restrictions on advertising by professionals. Despite this, the Law Society has recently been publishing practice notes which reinforce the existing Regulations and present to solicitors an interpretation of them more restrictive than the Regulations themselves. Complete reform of the the Regulations is long overdue.

Time to end willful ignorance on tobacco packaging and lobbying

Controversy over the submissions of the Law Society on proposed plain packaging law for tobacco products continues.

It seemed, initially, that the Law Society was going to take the concerns raised by myself and a number of colleagues seriously. I was told that certain things would be looked into and a proposal was going before the Council of the Law Society in relation to lobbying. But we were also referred to as a “vested interest” (!) by the President of the Law Society who subsequently dismissed our views as “conspiracy theories” and has effectively refused to look into the issue any further.

A member of the Council of the Law Society has written an article which is distinctly dismissive of our concerns, despite the following admission:

it’s important to note that what this column knows about IP law could be written on the back of a plain cigarette packet with room for several “SMOKING KILLS” reminders, so we are not taking sides here

When they appeared before the Oireachtas Joint Committee on Health & Children, the President and Director General were also at paints to point out that IP was not an area they specialised in. The problem with the submissions is that if they are examined with any reference to people who do have knowledge of IP law it is plainly obvious that the submissions do take sides.

So it is useful to add to the debate a contribution from Dr Matthew Rimmer, a leading Australian IP academic, which has been published here.

In its efforts to thwart the introduction of plain packaging of tobacco products in Ireland, Big Tobacco and its allies like the Law Society of Ireland have marshalled a number of arguments, similar to those which decisively rejected in Australia. It is disappointing that the Law Society of Ireland has been promulgating a number of myths promoted by Big Tobacco. It should better than to uncritically adopt the rhetoric and the talking points of the tobacco industry … Rather than listen to Big Tobacco’s phony arguments about trade and intellectual property, Ireland should introduce the plain packaging of tobacco products to protect the common good and the public health of its people.

Financial Services Ombudsman: a preference for “talk” over rights?

Late last year the Financial Services Ombudsman made some remarkable comments about High Court judgments affecting his office. He acknowledges that powerful agencies should be accountable to the courts, but believes that judicial decisions have been inconsistent and/or incoherent. The tone of the comments is alarming, given that the Ombudsman deals with complaints made by consumers.

The Ombudsman provides a form of binding arbitration which does not impose costs (either up front or as a consequence of losing) and so it is obviously attractive to consumers. However, the sting in the tail is that a decision of the Ombudsman can only be appealed to the High Court, which would otherwise only deal with cases worth more than €75,000.

An appeal from a decision of the Ombudsman must be lodged within 21 days. The Ombudsman’s website helpfully informs visitors that parties wishing to appeal should contact the Central Office of the High Court. Appeals are not simple: they will probably involve complicated issues of fact and law. The complainant may not have had legal or professional advice during the course of the complaint but would reasonably seek at this stage.

The Ombudsman is affronted by the outcome of some of these appeals.

He said findings that he should hold an oral hearing if there was a “conflict of material fact” in a case were “not compatible” with the operation of his office. “If we have to hold an oral hearing in every such case, I hope our political establishment has the intellectual honesty to abolish the office because otherwise it is simply a charade,” he said.

This is a surprising argument: it is not “compatible” with the operation of his office to hold oral hearings, so therefore decisions saying that oral hearings might be necessary are incoherent or, at least, somehow incorrect. When dealing with these appeals the High Court is considering issues of fair procedures and the correct application of the law, not the convenience of a State body. Whether or not the holding of oral hearings is compatible with the Ombudsman’s office is a question for the executive, not the courts.

Mr Prasifka said if the logic of one judgment was followed, “potentially every one of the thousands of decisions made since we have set up is constitutionally challengeable”.

One might think that such a decision suggests that the practice or the law needs changed. Instead, the Ombudsman takes the view that these decisions are “incompatible” with his office and therefore wrong. By contrast, he believes that financial institutions should “learn” from their experience of complaints decided on by his office. He does not appear to consider the possibility of financial institutions taking the view that decisions by his office are “incompatible” with their own business (as, in fact, seems to be the attitude of certain financial institutions).

The Ombudsman, however, appears to betray his true feelings by suggesting that perhaps the Ombudsman system just won’t work in Ireland because “rights are much too important”. This is an extraordinarily dismissive attitude to the rights and interests of complainants. One must wonder what is more important than rights? Perhaps bureaucratic efficiency or satisfying some particular group over the interests of individual rights holders. Bear in mind: the statement was made by the “most powerful office of the ombudsman in the world”.

The Ombudsman was subsequently interviewed on RTÉ’s This Week radio show. First, however, Padraic Kissane was interviewed and discussed his extensive experience of Ombudsman complaints. He said that he had dealt with a number of identical complaints to the Ombudsman that resulted in inconsistent decisions.

[The banks] take the view that they really have nothing to lose by getting a case referred to the Ombudsman because … the win percentages of the Ombudsman for complainants is so low in Ireland, compared to the UK for example, and I have seen and have in my files inconsistent decisions from the Ombudsman’s office relating to the identical terms and conditions of an application and they were both within three months of each other. So it’s the inconsistency of the whole issue.

Mr Kissane refers to the “win percentage” for complainants. The win percentage for financial institutions has gone from 63% in 2009 to was 73% in 2012.

A significant issue for the operation of an office like the Ombudsman is that while it purports to be in the interests of consumers by providing a cost-effective means to pursue a complaint, the reality is that it is pitting those consumers against seasoned professionals. Not only that: consumer complaints are being arbitrated by an office that does not want to be constrained by having to respect the rights of the people who generate the complaints.

This is, in many respects, the contemporary blueprint for justice. The Personal Injuries Assessment Board is another low-cost, modern alternative to courts but one which again encourages individuals to enter a forum, alone, in which they are faced with heavyweight professionals. There are calls for the establishment of a similar body to deal with medical negligence claims. It is popular, if not populist, to essentially seek the removal of lawyers from the equation, but does that protect the interests and rights of citizens? In addition: each time a new dispute resolution forum is established the supposed failings of the courts system remain unaddressed.

One of the consumer’s rights is the right, already referred to, to appeal a finding of the Ombudsman to the High Court. Whether to do so is a serious question. Such an appeal would not be expensive and risky. Many would seek legal advice and services and might not have had those services when first dealing with the complaint. So the complainant and their lawyers have only 21 days in which to weigh up the situation and make a decision.

Given the Ombudsman’s statements about High Court decisions it might not be surprising that he does not appear to be in favour of people taking such appeals.

If anyone thinks that we’re inconsistent they should come and talk to us and in certain cases where people have come to talk to us about this we found that on a closer examination there are actually important differences between the cases and that explained by and large the different result. But look, we always seek to improve our decision making and anyone who has a concern about that is really free to come and talk to us.

I don’t know how available the Ombudsman’s staff are to people who want to “come and talk” but it would seem to be an unhelpful approach to suggest that people who have 21 days in which to decide whether to appeal a decision should first consult the other side in this manner.

Stop the madness

The Sunday Independent reported yesterday on the infamous “Kilkenny trust” that supposedly allows you to scrub a property free of bank debt, as if by magic. It was reported earlier in the Summer that certain business people, including Bill Cullen, were using the mechanism.

Given the privacy of the operation it is difficult to ascertain from news reports what has been going on but, helpfully, Karl Deeter attended a presentation about the scheme and has blogged about it here. I am not a trust specialist but, in my professional opinion, it looks mad.

I had a few questions of my own reading the post:

Why are they recruiting people to enter into the trust? Usually, legal and accounting mechanisms are put in place by a combination of accountants and solicitors to help their clients achieve a certain goal. It is unusual for non-professionals to go about recruiting people to join a scheme like this and, as Karl points out, the don’t seem to have professional indemnity insurance to protect clients when things go wrong. However, I note that they charge a fee themselves.
They get you to set up “a private trust in private”. What does the second use of the word private achieve?
What is meant by getting a notary to create a “Court of Record”? I’ll tell you: nothing. It makes no sense. A court of record is a court, and notaries don’t “create” courts. In fact, the only notaries in Ireland are notaries public who are only involved in transactions with an international dimension. There is no international dimension to these transactions so a notary should not be involved. The most an Irish notary public might do is verify some document or signature but, again, a notary public only does this for use abroad and a solicitor or commissioner for oaths would suffice.
They say that only your folio number goes into the trust. This makes no sense. A folio number is a record number for registered property and has no life or value apart from the property. You couldn’t sell or rent your folio number separately from the property, so how could you transfer it into a trust on its own?

Most of the rest of what they say involves banking and mortgages and Karl has pointed out that it doesn’t add up. I’m sure other solicitors and barristers would notice flaws in the proposal by reading his post (comments welcome here too). Karl reaches the sad but unavoidable conclusion:

This has all of the hallmarks of something that is either ‘too good to be true’ or perhaps ill thought out and where the absence of a challenge to date is being taken as evidence that ‘it works’ which is not how the legal system operates. The moving of an asset to a trust doesn’t mean a legal charge suddenly doesn’t exist, it doesn’t mean that there was never a lien or a contract between two parties, if using trusts to stop creditors was that simple we probably would have heard of it before now.

Of the people at the meeting none of them seemed highly literate financially, several disclosed that they were borrowers of sub-prime lenders and the common thread was that they were all vulnerable and perhaps willing to believe something too easily, because I have learned from experience that when a person is drowning that even if you throw them a rock and say it will float that they are willing to give it a try.

Try using the law before changing it

I have a letter in the Irish Times today which is superficially about food labelling but is really about our approach to legislation in Ireland.

Before changing the law, one should check to see what the law already is. [Existing consumer law contains] wide-ranging provisions which should be more than adequate to combat improper use of food labelling terms, without having to wait for a departmental report to be commissioned, translated into a Bill, debated, passed, signed and enforced.

Professor Dermot Walsh has an article in the same newspaper about criminal investigations and Garda powers of detention. The issue has far more serious implications for society and individuals, but is connected.

IT WAS ONLY a matter of time before the inordinate delay in bringing criminal charges in respect of the financial mismanagement in this country would spawn calls for expanded Garda powers of detention.

It is a familiar refrain in which the political and law-enforcement authorities seek cover under what can appear a superficially attractive option. The reality is that it represents at best a lazy, outdated and blunt approach to criminal investigation, and at worst an oppressive device that sacrifices fundamental values of personal liberty and due process to the voracious appetite of an autocratic State.

Before the last general election there was much discussion of what was wrong with our system of politics in Ireland. The idea of a Constitutional Convention was floated as a forum in which these problems could be discussed and solutions proposed, although it is highly unlikely that the Convention being established by the current Government will have any significant effect.

I would submit that one of the problems with our system of politics is the rush to change the law whenever an issue arises. This is perpetuated through lobbying, with organisations developing policy issues into campaigns for legislative change which, if achieved, are seen as a win. Hot topics lead to calls for someone to do something and a politician steps forward with a new law: someone has done something.

Recent Ministers for Justice went through a phase in the mid to latter part of the last decade of introducing significant criminal laws on an almost annual basis. These were announced as harsh measures to tackle gangland crime and any practical or civil liberties concerns were dismissed. The latest problem in Limerick city would fall from the national media headlines once each law was passed. Someone has done something. But did these laws have a significant effect or did they just enable the political class to surmount the latest PR hurdle? The remarkable passage of the Criminal Justice (Amendment) Act 2009 is a case in point and has all the hallmarks of a pig in a poke.

Professor Walsh concludes that something more than just amending the law is required:

Instead of proceeding blindly down the familiar road of expanding police powers of detention, the Government might be better advised to step back and consider just how effective or ineffective these measures have been over the past 40 years.

Of course, that requires more work. Work that is usually labour-intensive and expensive. Work that does not necessarily culminate in launches and press conferences. Work that involves actually using and enforcing laws before adding to them. Work that might involve lengthy study, such as that carried out by the Criminal Law Codification Advisory Committee, which is now to be abolished by Minister Shatter.

A new law is a sticking plaster, but a cheap and quick one that gets positive coverage. Someone has done something. Until we require more of our legislators, this might be the best we will get.

Battle of the Bakers: Round 2 (and an interesting update re Round 1)

I had assumed that the McCambridge v. Brennan brown bread case was solely one of intellectual property infringement but the judgment of Mr Justice Peart, which has now been published, shows that there is more to it (an Irish Times report of the case is here).

Indeed, Peart J notes that McCambridge do not “have any proprietary rights as such over that type of re-sealable bag, its shape or indeed the shape and size of the loaf of bread inside.” The company itself accepted that it does have such proprietary rights, nor rights over the shape and colour or ingredients of the bread itself.

Notwithstanding that, Peart J agreed that the overall impression on consumers satisfied the conditions for passing off (a form of action used to protect unregistered intellectual property rights).

[I]t would take more care and attention that I believe it is reasonable to attribute to the average shopper for him or her not to avoid confusion between the two packages when observed on the shelf, especially when these are placed adjacently or even proximately so.

Peart J indicated that an injunction should be granted to prevent further passing off. However, the interesting element of the case comes next: he also considered whether McCambridge are entitled to an injunction under section 71 of the Consumer Protection Act 2007 on the basis that Brennans were engaging in a misleading commercial practice.

The Minister for Jobs, Enterprise & Innovation recently announced a planned overhaul of consumer legislation, arguably ignoring that the 2007 Act was supposed to be just that (I wrote about it here in April 2011). The 2007 Act was quite significant, but appears to have been barely used, particularly by the National Consumer Agency. Indeed, Peart J states that they held a watching brief in McCambridge v. Brennan but, strangely, adopted “a neutral position”.

(The failure of the Agency to adopt a position is reminiscent of the refusal of the Data Protection Commissioner to involve his office in the EMI v. eircom case. Ironically, he recently went on to order eircom to halt the three-strikes system which resulted from that case.)

Peart J decided that McCambridge were not entitled to an injunction under section 71, apparently (my interpretation) on the basis that the design of its packaging was not a commercial practice involving marketing or advertising.

Peart J was to hear the parties in relation to the exact terms of his proposed injunction, but the decision to grant an injunction has since been appealed to the Supreme Court by Brennans.

As stated, my interpretation of Peart J’s comments (at paragraph 45) is that an injunction was not available because packaging was not “marketing or advertising”. I would have thought that the European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 were aimed at preventing misleading advertising and that the (quite similar) provisions of the 2007 Act were of broader application such as would capture packaging. The 2007 Act is the Irish implementation of the Unfair Commercial Practices Directive which, in the UK, was implemented by statutory instrument. Guidance from the UK’s Office of Fair Trading gives the following example of a prohibited practice:

A trader designs the packaging of shampoo A so that it very closely resembles that of shampoo B, an established brand of a competitor. If the similarity was introduced to deliberately mislead consumers into believing that shampoo A is made by the competitor (who makes shampoo B) – this would breach the [Regulations].

Of course, Peart J had decided that Brennans’ passing off was not deliberate, and so could not have found them to have intended to “deliberately mislead consumers”. Nevertheless, it appears to be a case where the views of the Consumer Protection Agency would have been of use.

InjuriesBoard.ie: “lawyer-free zone”, or competitor?

Officially, the Personal Injuries Assessment Board (the “Board”) is just another boring statutory body performing a function on behalf of the State. However, the Board has often exceeded that mandate since its creation by acting as a vocal critic of the legal profession. Arguably,the Board also operates as a commercial entity in competition with lawyers, albeit a very strange form of competition where the aim is to deprive lawyers of fees rather than to earn those fees for itself.

I mentioned recently that a wide range of restrictions apply to advertising by solicitors, despite the fact that the Board advertises in a manner not dissimilar to the personal injury solicitors familiar to viewers of UK television. (An example of the latter is below; I have been unable to find InjuriesBoard.ie ads online.)

Indeed, after a few years of operating under its official name, the Board began to style itself InjuriesBoard.ie, a form of branding very much in line with what one might expect from an online claims agency.

An online claims agency like Claims.ie, perhaps? In 2010, InjuriesBoard.ie made a complaint to the Advertising Standards Authority of Ireland under its self-regulatory code on the basis that users might believe Claims.ie was the website of the Board. It also complained that it was not clear who was running Claims.ie or from where. The complaint was upheld, though Claims.ie did not respond to it. The ASAI referred the case to the National Consumer Agency, presumably with a view to enforcement action under the Consumer Protection Act 2007.

Part of the Board’s complaint related to Google adwords, which really is a matter for the courts (in fact, it is very much a live issue for the courts). The Board was correct in stating that it is unclear who is behind Claims.ie, but contact details are provided. The site appears to be run by a company called Claims Ireland Limited but there is no company registered in Ireland with that name (there are two registered business names for “Claims Ireland”). So, the operator may have some difficulties under the Companies Acts or related legislation, which is a matter for the Companies Registration Office and the Director of Corporate Enforcement. Nevertheless, the Board was the organisation to take up the complaint and its choice of forum was the relatively powerless ASAI.

When making a complaint to the ASAI, the complainant must indicate if there is a commercial or other interest in making the complaint. For consumers, the answer will be no. A practical difference in treatment is that a consumer complaint is confidential, whereas the ASAI publishes the name of corporate complainants. The ASAI does not generally entertain complaints between competitors but may do so if a consumer interest is at stake.

What was the Board’s interest: commercial or consumer? The Board’s own website says that individuals may engage an agent to conduct a claim on their behalf. (Why anyone other than a solicitor would take on that role, given the regulatory and liability consequences, is unknown.) If the Board’s complaint was not a case of staking its commercial territory, and instead was acting in the interest of consumers, why does it otherwise go to such great lengths to discourage consumers from engaging independent professionals, the identity and reputations of which are well known?

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.

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:

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).