New regulations allowing consumer law enforcers to seek injunctions stopping consumer detriment are starting to bite.
Topic: Consumer protection
Who: The Office of Fair Trading, Data Protection Agency Services Limited and John Ineson
When: July 2002
Where: The UK
Following the Office of Fair Trading's publication in April 2002 of its "Stop Now Orders Guidance" explaining the workings of the Stop Now Regulations, the OFT has not been tardy in using its new powers as two recent cases show. The April 2002 guidance document reminds readers that the Stop Now Orders (EC Directive) Regulations came into force as long ago as 1 June 2001. They impose no new legal obligations on businesses, but provide a new and potentially more effective way of helping to protect consumers from harmful business practices. They cover doorstep selling, timeshare, unfair contract terms, consumer credit, distance selling, package travel, package holidays and package tours, misleading and comparative advertising, sale of goods rights, TV broadcasting activities and advertising of medicinal products for human use.
Bodies empowered to take action by way of applications to the court for "Stop Now" injunctions against traders found to be breaching regulations operative in the above areas include not only the OFT, but also the Information Commissioner, the Director General of Telecommunications and every trading standards service operated by local authorities in Great Britain. The guidance emphasises that there will be no rushing off to court for injunctions without giving businesses an opportunity to respond and mend their ways. At the very least, the note indicates, two weeks will be allowed for a process of consultation before any court application is contemplated. Nevertheless, there are increasing numbers of reported cases where "Stop Now" orders have been obtained from the courts.
In one case a business calling itself Data Protection Agency Services Limited (“DPAS”) was injuncted after implying that it was an official data protection body and that recipients of their mailings were legally obliged to register with them at a cost of £95 plus VAT. This was, of course, highly misleading as DPAS had no official authorisation at all. Notification with the Information Commission is a process involving applications by data controllers direct to the Commission and a fixed fee of only £35, with no VAT payable.
In a separate case in late July 2002 a "Stop Now" order was granted by Bradford County Court against John Ineson of Skipton in North Yorks and two companies of which he was an officer, Blake Hamilton Limited and Property Associates (UK) Limited. The advertisements which were banned from further publication misleadingly claimed that people could earn up to £50,000 a year distributing mailshots.
Why this matters:
With further proposals on their way to beef up still further the powers of the OFT and others to apply for "Stop Now" orders against misleading and unfair advertisers and traders, it is clearly only going to be a matter of time before more mainstream advertisers, (as opposed to the fringe operators which have been at the wrong end of orders of this kind so far), face this threat of regulatory action. The Information Commission is also expressing interest in using Stop Now powers to bypass the time-consuming and laborious procedure it currently has to follow to police breaches of the Data Protection Act.