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Fairness and Consumer Decision Making under the Unfair Commercial Practices Directive

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Abstract

This article analyses the unfairness concept from the Unfair Commercial Practices Directive (UCPD). It considers why the nature and level of protection is particularly important given the range of coverage of the regime and the Europeanisation agenda. It argues that the UCPD concept provides the potential for a relatively protective approach to consumer decision making. At the same time, it emphasizes that realisation of this potential is partly dependent on recognizing the limits of transparency as a protective tool and in understanding the “professional diligence” and “average consumer” concepts in particular ways. It is further suggested that the protective potential of the regime is not necessarily undermined by the “average consumer” concept or by the “informed decision-making” paradigm of the general unfairness clause. Indeed, the general clause may be capable of extending the protective effects to some extent. Finally, it is suggested that regulators may have a key role to play in maximizing both the level of protection and the prospects for a genuinely common European approach.

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Notes

  1. 2005/29/EC.

  2. Preamble, recital 1.

  3. Recitals 2–4.

  4. Art 11 (1).

  5. Art 11 (2).

  6. E.g., in the UK, see the Consumer Protection From Unfair Trading Regulations (CPUTR) 2008, SI 1277 , reg. 26 and Enterprise Act 2002, s. 212 and Schedule 13.

  7. CPUTR, ibid., regs. 8–18.

  8. UCPD, art 5 (2).

  9. Art 5 (4), (a) and (b).

  10. The full tests for misleading and aggressive practices are laid down in article 6 (misleading actions); article 7 (misleading omissions); and articles 8 and 9 (aggressive practices).

  11. Art 5 (5) and Annex 1.

  12. In certain circumstances, the unfairness concept is, in fact, to be understood in ways nuanced to the situation of vulnerable and other particular groups of consumers (arts 5 (2b) and 5 (3)). There are many important questions as to the scope and limitations of this approach (Wilhelmsson 2007; Willett 2010); but there is no space to consider these here.

  13. Arts 3 (1) and 2 (c).

  14. Like, for example, rules on package travel or sale of goods.

  15. It is certainly more difficult than side-stepping traditional classifications based on the notion of a “contract” or, yet more narrowly, specific categories of contract.

  16. UCPD, art 2 (d).

  17. UCPD, art 3 (1).

  18. UCPD, art 2 (k).

  19. As long as the decision is linked to a practice of the trader.

  20. While the broad definition of “transactional decision making” emphasizes the relational element to the regime, the very existence of a transactional decision requirement does have some potential to place a restriction on levels of protection; although, as suggested below, these risks should not be overstated.

  21. For example, systems display differences in relation to rules, doctrines, principles, regulatory policy, judicial reasoning, lawyer attitudes, legal argument, the “region” of the legal system that the rule is inserted into, etc.

  22. 93/13/EEC.

  23. Paragraphs 7, 17, 22, and 23.

  24. Paragraphs 12 and 18.

  25. For example, paragraph 21 refers to giving consumers the “impression” of having ordered goods when they have not, but it must be decided where on the spectrum between absolute truth and absolute falsehood something must stand before it can be said to give an “impression.”

  26. See Collins (2010), generally, on the greater specification and the increased prospects of European integration this brings.

  27. The point here is that the average consumer concept lies expressly at the centre of the general and sub-general clauses, but is not mentioned as such in relation to the Annex.

  28. In other words, the approach under the Annex may not be as far removed from that under the general and sub-general clauses as is often assumed.

  29. On cross-fertilization, more generally, see Weatherill (2005, p. 122); Willett (2007, pp. 110–118).

  30. Preamble, recital 18 and see the section below on Influencing The Average Consumer and His Transactional Decision Making.

  31. Mediaprint Zeitungs- und Zeitschriftenverlag GmbH Co. KG v "Österreich"-Zeitungsverlag GmbH, C-540/08. The precise question is whether providing the chance to enter a competition if a newspaper is purchased is unfair under article 5 (2); on the basis that such a chance would be a decisive reason for purchasing the newspaper.

  32. 93/13/EEC.

  33. Joined cases Océano Grupo Editorial and Salvat Editores [2000] ECR I-4941, C-240/98, and C-244/98, and Freiburger Kommunalbauten GmbH Baugesellschaft & Co. KG, C-237/02.

  34. However, due to article 3 (9), the internal market clause does not apply to financial services.

  35. See, for example, directives, 85/577/EEC (doorstep selling), art 8; 90/314/EEC (package travel), art 8; 93/13/EEC (unfair terms), art 8; 97/7/EC (distance selling), art 14; and 99/44/EC (consumer sales), art 8 (2). Note, however, the proposed Consumer Rights Directive that would turn to maximum provisions the rules on doorstep and distance selling, unfair terms, and consumer sales (COM (2008) 614 final, art 4).

  36. Joined cases VTB-VAB NV v Total Belgium NV (C-261/07) and Galatea BVBA v Sanoma Magazines Belgium NV (C-299/07).

  37. See n 11 above.

  38. This is subject to limits on the scope of the Directive. For example, it does not cover rules on taste and decency, health and safety, intellectual property, or contract law rules (Preamble, recitals 7 & 9 and arts 3 (2) and 3 (4)). Also, although it indirectly protects competitors from unfair competitive practices, the direct aim is the protection of consumers (Preamble, recital 8). More generally, on the scope of the Directive, see the references in Mediaprint Zeitungs- und Zeitschriftenverlag GmbH Co. KG v "Österreich"-Zeitungsverlag GmbH, supra, n. 31 above, and Zentrale zur Bekämpfung unlauteren Wettbewerbs e.V. v Plus Warenhandelsgesellschaft mbH, C-304/08.

  39. Art 3 (3).

  40. On viewing and understanding contract law in light of the broader regulatory picture see Collins (1999) and Brownsword (2009).

  41. See the Irish Consumer Protection Act 1987, s. 74.

  42. It also appears to be expected that French courts will develop the mistake and “dol” concepts to reflect the notion of unfairness in the UCPD (see Collins 2010, p. 114).

  43. The issue has already been subject to an initial review by the English and Scottish Law Commissions (Law Commission 2008).

  44. UCPD, art 6.

  45. UCPD, art 7.

  46. 84/450/EEC.

  47. See UCPD, art 6 (1) and CMAD, art. 2 (2) (referring more generally to deceiving “the person to whom it is addressed”).

  48. Cf. the CMAD, which referred to the likelihood that the deceptive advertisement would affect the “economic behaviour” of the parties to whom it was addressed (art. 2 (2)).

  49. Statements about rights are expressly said to be covered, as are potentially consequent transactional decisions as to whether to exercise rights (see UCPD, arts 6 (1) (g) and (2) (k)).

  50. Art 2 (1).

  51. See, for example, the UK Administration of Justice Act, s. 40, covering specific types of statement made in the course of pursuit of a debt (but not other types of statement made in this context and no types of statement made in any other context).

  52. On goods, for example, see Hall v Wickens [1972] 1 WLR 1418.

  53. Even if information is provided there is still a misleading omission if it is hidden, unclear, unintelligible, ambiguous, or untimely (art 7 (2)).

  54. UCPD, art 7 (4).

  55. See, e.g., the Distance Selling Directive, 97/7/EC, art. 4; and the Doorstep Selling Directive, 85/577/EEC, art. 4.

  56. Cottee v Douglas Seaton [1972] 1 WLR 1408.

  57. See Spice Girls Ltd v Aprilia, Times 5 April, [2000] EMLR 478 and R v Ford Motor Co. [1974] 1 WLR 1221.

  58. See Collins (2010, p. 104).

  59. See, for example, the example given by Collins (2010, p. 105) of a promotion on a chocolate bar that does not reproduce the full conditions, but does refer to where they can be found.

  60. General Product Safety Directive (GPSD), 2001/95/EC, art. 5; UCPD, art. 3 (3).

  61. The GPSD covers products supplied with services (art. 2 (a)), but not the service element itself.

  62. E.g., the repair, replacement, price reduction, and rescission remedies available for breach of the conformity obligation in the Sales Directive (99/44/EC, arts 2 and 3); and see also the discussion of rights arising in a consumer credit default context in Willett (2010, at 3 (ii)).

  63. 99/44/EC, art 6 (2).

  64. Ibid.

  65. Art 7 (2).

  66. On the role of the active margin see Trebilcock (1980).

  67. The latter, albeit, only through specific rules.

  68. UCPD, art 8.

  69. UCPD, art 9.

  70. UCPD, art 2 (j).

  71. As suggested at the section on Europeanisation above, the ECJ might seek to draw on national traditions in developing an autonomous notion of fairness.

  72. See guideline (a) above.

  73. See guideline (c) above.

  74. See section on Aggression, Choice, and Substance below.

  75. See the UK Administration of Justice Act, s. 40 on harassment of debtors, where the sole focus is on whether the trader puts the consumer in a state of fear, distress, or humiliation. Private law rules are usually concerned only with aggressive behaviour that induces a contract, but even here it is sometimes enough to show subjective inducement, while the UCPD transactional decision requirement is apparently wholly objective (based on the average consumer benchmark).

  76. Protection form Harassment Act 1997, s. 1.

  77. Supra, n. 75.

  78. E.g., parent/child, lawyer/client, and religious adviser/follower (see Allcard v Skinner (1887) 36 Ch. D. 145).

  79. See the Distance Selling Directive, supra, n. 55, art.6; and the Doorstep Selling Directive, supra, n. 55, art.5.

  80. In other words, this would (in cases of aggression) provide a cancellation right in contracts where there is no statutory cancellation right. In those cases, such as doorstep and distance selling where there is a statutory cancellation period, the idea would be that, based on the aggression, the cancellation period should be lengthened.

  81. See the section on The Limits and Potential of Disclosure Rules above.

  82. See Recitals 1 and 4 to the Preamble and Article 1.

  83. See guideline (d) above.

  84. See guideline (a) above on the relevance of “timing, location, nature, or persistence” in assessing whether there has been aggression.

  85. Administration of Justice Act 1970, s. 40.

  86. UCPD, art 5 (2).

  87. “Freedom of choice” can be understood as referring to both the “understanding” and “freedom form choice constraint” elements. The separate references to “informed decision making” and “freedom of choice” in the misleading omissions/undue influence and coercion/harassment contexts, respectively, does suggest, that “freedom of choice” is supposed to refer only to the choice constraint element. At the same time, it may well be an instance of loose drafting; the intention being that “freedom of choice,” while being a concept taking choice constraint into account, also takes account of, and is to be understood as dominated by, the “understanding” dimension.

  88. Of course, one response here is that the sub-general clauses are supposed to be interpreted wholly autonomously from the general clause, and this may well be the case, given that, after setting out the general clause (art 5 (2)), it is provided in a quite separate paragraph (art 5 (4)), that, “in particular,” practices are unfair if they fail the tests under the sub-clauses (these tests then being set out). At the same time, it is not impossible that any uncertainty as to the meaning of the sub-clauses might be interpreted in light of the general clause, and this brings us back to the possible role of the informed decision-making concept in the general clause (and as indicated, ibid., a freedom of choice concept, while taking account of choice constraint, might plausibly give precedence to the “understanding” dimension).

  89. Prior to adoption of the UCPD, a report for the UK government suggested that the general clause be recast so as to express the idea that fairness was about informed decision making and unforced choice (Bradgate et al. 2003, pp. 116–117). This would have made it less likely that the choice concept under the aggressive practices clause could ever be understood as referring merely to informed decision making. Of course, this recommendation was not taken up, and we are left with a general clause that refers only to informed decision making on the consumer side of the equation.

  90. One aspect of this (which cannot be developed here) is whether any such role could apply in relation to existing practices; or whether it is restricted to new practices which result from market and technological developments (Howells et al. 2006, p. 121).

  91. On this approach it is operating as a free-standing basis of a finding of unfairness; rather than (as in the discussion above) as a “big picture,” theoretical backdrop to the sub-clauses.

  92. There is a greater risk of such an interpretation where we are dealing with the general clause as an entirely free-standing concept, with its reference to informed decision making, as opposed to where it is viewed (as above) as a broad explanation for the otherwise autonomous sub-clauses (one of which has a clear reference to a concept—“freedom of choice”—clearly capable of carrying a meaning quite independent from the issue of understanding).

  93. Art 7 (4) (d).

  94. See the behavioural science research cited above at The Limits and Potential of Disclosure Rules.

  95. Art 2 (h).

  96. See discussion of these concepts by Twigg-Flesner et al. (2005, pp. 4–11) and Collins (2010).

  97. Arts 6 (1), 7 (1) and 8.

  98. Trade Descriptions Act 1968, ss. 1 and 14 (goods and services, respectively); Consumer Protection Act 1987, s. 20 (1) (prices); and Administration of Justice Act 1970, s. 40 (harassment of debtors).

  99. Smith v Chadwick (18840 9 App. Cas. 187). (misrepresentation); DSND Subsea Ltd v Petroleum Geo services Ltd [2000] Build LR 530, Dyson J, at 545 (duress); and Royal Bank of Scotland v Etridge (No. 2) [2002] 2AC 773 (undue influence).

  100. Indeed, as indicated above, the same average consumer is also the benchmark for the first phase of the various concepts: where the issue is whether the average consumer would be misled, have his freedom of choice restricted, etc.

  101. Recital 18.

  102. See, for example, Gut Springenheide and Tusky, Case C–210/96; Verein gegen Unwesen in Handel und Gewerbe Köln e. V. v Mars GmbH,C–470/93; Criminal Proceedings against Gottfried Linhart and Hans Biffl, C–99/01; and see Weatherill (2007) for a review of the cases.

  103. Ibid.

  104. Recital 18.

  105. See Freiburger Kommunalbauten GmbH Baugesellschaft & Co. KG, supra, n 33.

  106. Preamble, recital 4.

  107. See cases at supra, n 102.

  108. There should be a particular focus on behavioural economics research, given the increasing acceptance of its value (see European Commission 2009a, b).

  109. Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co. KG v "Österreich"-Zeitungsverlag GmbH, supra, n. 31.

  110. Regulation 2006/2004.

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  1. Consumer Law, De Montfort University, Leicester, UK

    Chris Willett

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Willett, C. Fairness and Consumer Decision Making under the Unfair Commercial Practices Directive. J Consum Policy 33, 247–273 (2010). https://doi.org/10.1007/s10603-010-9128-3

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