To promote a common framework of consumer protection, the European Commission passed the Unfair Commercial Practices Directive in 2005. As a Directive, it has to be implemented in each member state within a time limit of two years.
There are two sets of regulations in the UK. The Government created the Consumer Protection from Unfair Trading Regulations 2008 which comes into force on May 26. These prohibit unfair commercial practices that are defined as practices that contravene a requirement of professional diligence and materially distort the economic behaviour of the average consumer. A commercial practice is unfair if it is listed in Schedule 1 of the regulations which are termed Commercial practices which are in all circumstances considered unfair. Schedule 1, paragraph 20, reads: Describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar, if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.
The Institute of Sales Promotion (ISP) believes that this wording prevents the use of the word free in relation to free gifts with purchase. In doing so, it is bringing the UK into line with the rest of the European Union where most countries do not allow items given away with purchase to be described as free gifts, but as premiums. The word free is only possible in relation to free samples and gifts that do not require more than the cost of a stamp or phone call, such as an absolutely free mail-in. The Consumer Protection Service of the European Union provides the following example which it believes is contrary to the Directive: Advertising in a mail-order catalogue stating the customer will receive a free gift, e.g. a pair of sunglasses, when this only applies to those ordering other products.
The Consumer Protection Service of the European Union identifies a free gift with purchase as contrary to the Directive. However, this does not stop existing promotional mechanics. It simply means the word free cannot be used in relation to them. For example, ‘buy one get one free’ (BOGOF) will not be acceptable, but the mechanic will remain legal and have to be described as, ‘two for the price of one’.
The Government’s interpretation However, the ISP’s interpretation is not shared by the British Government or by the Office of Fair Trading. They are maintaining the view that the wording in the Directive only outlaws inflated charges for responding to a free offer such as postal or telephone charges.
The ISP understands that all the regulators from other European Union countries take the view expressed by the ISP. So where does this leave us? What some fail to realise is that giving legal advice is often about practicalities as well as strict legalities. The Committee of Advertising Practice (CAP) has decided to maintain the status quo until either the British Government changes its mind or court action takes place which requires a change of practice.
The ISP believes that the British response has been to ignore what the Directive says and continue with the existing approach to the word free until and unless action is taken against us requiring us to change our practices.
But European marketers who deploy campaigns across the continent must note that all regulators from other European Union countries take the view expressed by the ISP that this wording prevents use of the word free in relation to free gifts with purchase.
The second set of regulations from the Directive that cover B2B marketing is less demanding. The Business Protection from Misleading Marketing Regulations prohibits advertising which misleads traders. Many of the factors which will determine whether advertising is misleading are used to apply in relation to the Trade Descriptions Act a piece of legislation which has been repealed along with a large number of other items of pre-existing UK consumer protection legislation.
What is clear is that the European approach to legislation which is to express matters in general terms leaving the courts and official bodies to interpret them is going to cause confusion for the business world and as Sir Humphrey Appleby is believed to have said, Months, if not years, of fruitful work for lawyers.
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