Legislation governing what is permissible when advertising and marketing to businesses and consumers has just undergone radical and wide-ranging change.
On May 26 2008, two new Regulations came into force in the UK the Consumer Protection from Unfair Trading Regulations 2008, and the Business Protection from Misleading Marketing Regulations 2008, between them representing the biggest shake up in this area for over 20 years.
The purpose of the new laws is to harmonise the implementation of advertising and marketing activities across the EU, offering one consistent legal framework across all member states so as to define and outlaw all unfair commercial practice.
Both pieces of legislation have the immediate effect of sweeping away existing rules in this area, and clarifying and tightening what is and is not allowed in marketing and advertising campaigns.
But while these new laws may be clear and unambiguous about what is permitted, many marketing professionals appear to be taking the risk of underestimating the potential impact on their activities.
The new laws are certainly designed to trap those guilty of sharp practice and aggressive tactics. But there are also significant practical implications for perfectly reputable businesses, with marketing directors and other senior staff facing potential criminal sanctions for slipping up.
It might be tempting for example, for a firm specialising in business-to-business marketing to ignore new rules on consumer protection. But they would be well advised to ensure they have grasped the essence of the Consumer Protection from Unfair Trading Regulations 2008, and done their best to understand where it might be relevant to their sector.
The Consumer Protection Regulations mean that for the first time in the UK, there is a list of 31 particular types of marketing activity that will break the law.
For example, it is now illegal for a promotion to state ‘buy now while stocks last’ if the product’s availability is actually unlimited in practical terms. It is also now illegal to present as a distinctive feature of your product something that you are legally obliged to offer. In the case of prize promotions, offering a prize and not in the end awarding it will be one of the ‘always unfair’ practices that break the law. And for the first time, UK law specifically addresses the notion of ‘vulnerable consumers’. If your ad is clearly targeting children, older people or tourists, for example, and is possibly taking advantage of their vulnerability and lack of understanding then you will have a higher standard to meet.
As a B2B marketer, there are many potential areas of activity where consumers could be deemed to be affected beyond your primary business target. For example, an incentive scheme aimed at resellers or distributors of a product, urging them to sell your product rather than a competitor’s, could in some circumstances potentially encourage unfair or misleading practice by the reseller.
Consequent mis-selling could in some cases be argued under the new laws to be the responsibility of the original incentivising party. This possibility is as yet untried in court. So marketers should consider taking expert advice if they are in doubt over particular incentive scheme mechanics.
The new Business Protection from Misleading Marketing Regulations 2008 are naturally of even greater relevance to B2B marketers. The Regulations are the first time that the business marketing sector has had a piece of legislation aimed specifically at it, having previously been covered by certain sections of the now repealed Trade Description Act 1968.
The Regulations are at heart, designed to outlaw advertising which is misleading, or which ‘deceives or is likely to deceive the traders to whom it is addressed or whom it reaches, and by reason of its deceptive nature, is likely to affect their economic behaviour’.
Advertising might be deemed to contravene the new act on the basis of the availability of the product it concerns, the nature of that product, its method and date of manufacture of the product or fitness for purpose.
More stringent enforcement is a key part of the new regulations. The Trade Descriptions Act has historically been enforced by Trading Standards Officers. They typically have a huge workload, with limited resource and enforcement budget. Now, there are many more bodies with the authority to enforce these rules from the Office of Fair Trading to the Consumers’ Association. Therefore, the risk of challenge is increased.
Businesses and their legal advisers need to bear in mind that fines can be imposed not only on companies but in certain cases on senior managers as well. So businesses should take the time to understand how all this new law might affect them. They should be aware, for example, punishments for non-compliance include fines of up to £5000 per offence in the Magistrates’ Court and potentially even imprisonment.
In conclusion, given the potential ramifications of the new law, B2B marketers would do well to liaise with their legal departments to review the new legislation and assess its impact on their businesses and marketing campaigns.
