Who: Consumer Protection Partnership including Competition and Markets Authority, Financial Conduct Authority, National Trading Standards and Citizens’ Advice.
When: January 2015
Law stated as at: 4 February 2015
The Consumer Protection Partnership (“CPP”) was formed in 2012. Its members comprise all the key bodies seized with the task of enforcing and giving guidance on UK consumer protection laws, including laws impacting advertising and marketing.
The membership roster includes the OFT’s successor body the Competition and Markets Authority, the Financial Conduct Authority, National Trading Standards and Citizens’ Advice.
Formed at the time of the impending scrapping of the Office of Fair Trading, the CPP was intended to help make better, “joined-up” use of the more limited resources being made available for enforcement of consumer protection laws.
The CPP’s “Priorities Report 2015″ identifies its strategic priorities for scrutiny and action in 2015. It also mentions its previous priorities for 2013-2014.
Mass marketing scams: well-known scams included lottery mailings, PPI mis-selling claims services, false competition wins, offers of phoney jobs and Green Deal and cash voucher scams. Often targeted were vulnerable or disadvantaged consumers and SMEs.
To help combat these, the CPP organised a “Mass marketing scams action plan” whose actions included training postal staff to spot suspect mailings and, through a dedicated “Scams Team,” organising the distribution to local authorities of “suckers’ lists” so that the authorities could intervene to warn victims. The data protection implications of this are to say the least interesting!
Mobile phones and technology: after working with Ofcom on a “harms matrix”, the CPP determined that due to the work of other enforcement authorities in the area, there was nothing the CPP could usefully add. Home repairs and improvements: one of the concerns here was a wide range of “accreditation” and “approved trader” schemes offering varying levels of protection and access to redress, with consumers having limited means of distinguishing between these and making an informed choice.
A review of these schemes was undertaken in 2014 and Trading Standards is currently developing a draft plan for an umbrella scheme that could provide more transparency, with several leading trader schemes already interested in signing up.
The key strategic priorities for 2015 are as follows:
Leading the way in consumer detriment here were:
– Subscription traps: usually delivered by way of a pop-up window or banner ad on a website and designed to entice consumers into signing up for an apparently low cost or free trial of a product (Raspberry Ketone is a common example).
Consumers often do not realise that they have signed up to a costly and recurring monthly payment.
A new development has been for these scams to extend beyond physical products, with low cost help offered by so-called “copycat” sites with an application process, for example, leading to consumers inadvertently signing up to costly monthly newsletters.
– Use of personal data: it was not clear to the CPP whether many consumers fully understood how the personal data market worked in the online ecosystem, how it is captured and by whom
– Ads on social media and search engines: recent research showed that 41% of consumers still cannot distinguish between a natural search result and a paid-for advertisement, whilst related problems with “copycat” websites charging for services such as applying for an EU E111 European Health Insurance Card which are freely available from the official site, show that there are continuing opportunities for unscrupulous advertisers to lure consumers onto their sites.
On the social media advertising front, the CPP expects a rise in abuse of social media advertising mirroring the misuse of search engine advertisements seen in the “copycat” website problem. The misuse of Facebook advertising is seen as posing a significant threat given that Facebook’s user base is even larger than Google’s.
Unfair contract terms
Top of the CPP charts here were:
– Unfair cancellation terms: here the CPP is particularly concerned about onerous terms for cancelling contracts, such as overlong cancellation periods or significant fees, in various sectors including gyms, training courses and mobile phones. CMA Guidance says, the CPP Report reminds us, that consumers should be allowed to leave a contract without penalty if there is an increase in subscription price.
– Consumer rights at retail level: a recent BIS Consumer engagement and detriment survey indicated that although 82% of UK consumers felt well protected by consumer law, many are not aware of their actual rights. 67% did not appreciate that that even without a specially bought extended guarantee, they can have a broken down fridge repaired or replaced without charge for up to 18 months after purchase.
Also only 43% of consumers were aware that the advertised price of airline flights must include all taxes, fees and charges, whilst the UK European Consumer Centre (who he? Ed.) (“ECC”) identified UK retailers as the least likely in the EU to correctly identify the period during which a consumer can have a defective product repaired free of charge. Oh dear.
Although this landscape may be improved by the arrival of the Consumer Rights Act (“CRA”) in October 2015, the CPP says, somewhat ungrammatically:
“There is potential for changes in legislation for consumers to be unclear about their rights.”
An awareness programme is promised in the run-up to the CRA coming into force.
Two areas within the travel sector are identified as particularly problematic:
– Holiday products: timeshares are considered to be an “emerging threat” by the ECC, with the selling process and exploitation of loopholes in current legislation being seen as just two of a number of problems.
– Car hire: common problems here include non-damage related supplementary charges and vehicle condition.
Quality of services
Here the CPP is particularly concerned about third party intermediaries including switching websites, brokers and energy efficiency advice providers who purport to help consumers get a good deal in financial and essential services. In order to get the best deals, consumers may have to supply data about their previous use of services and there may be no guarantee that that this data will be used responsibly.
Citizens Advice experiences suggest that some of these sites are taking advantage of consumers through the following practices:
• portraying themselves as lenders rather than brokers;
• passing on personal details to third parties;
• charging for partially completed applications.
Why this matters:
The CPP report is an informative bellwether of the current state of the consumer protection landscape or should we say “scamscape,” as seen by the leading UK enforcement bodies.
Clearly the CPP’s members have a busy year ahead. For the full report, including the steps the CPP intends to take to combat these practices click here.