With the advent of the national and transnational conglomerates, it was imperative that laws were enacted for protecting the consumer against the might of the firm. Most firms tend to have better resources and more knowledge of the market as well as the legislative environment and this puts the average consumer at an inherent disadvantage. Furthermore, in case of disputes, absence of consumer protection laws can lead to costly legal actions, which are not good for either the consumer or the firm. In addition, the distribution system has become complex and the manufacturer is transparent to the end consumer. Therefore, as a part of retaining consumer confidence, the grievance redressal system must clearly identify the first point of contact as well as the alternative recourse available to the consumer. The legal framework, which looks at defining the parameters within which all sellers of goods and services to consumers must operate, is what constitutes consumer protection. In the absence of such a system, the courts (or arbitrations) would be the only recourse. Therefore, to ensure that the market place operates reasonably efficiently and that the rights and duties, along with relevant finer points (including time frames, exchange policies and warranties), consumer legislation has been implemented in the United Kingdom and the larger EU.
1 Consumer Laws in the United Kingdom:
United Kingdom is in a unique position in the European Union and indeed the world. The consumer in the United Kingdom is governed by two sets of consumer protection legislation i.e. the United Kingdom legislation, and the European Union legislation. The internal differences between the constituent nations of the UK do not affect these laws and both the United Kingdom and the European Union laws must also be complied for businesses operating in the retail consumer space in the United Kingdom.
Within the European Union it was envisaged that the European Union must endeavour to enforce uniform consumers laws, given that the European Union allows companies to operate in borderless economies.
However, all law was not drawn up as a premeditated legal provision and some of the current protections offered to consumers of goods in the United Kingdom have been as a result of important rulings – otherwise known as case law and over the years these have been incorporated with the specific acts as revised from time to time.
2 Brief discussion on Consumer Legislation:
The United Kingdom legal framework for consumer protection has been divided into different sections. Some laws have a general application and some have specific relevance. These have been developed given the special nature of the industry it applies to (such as the consumer credit act (1974)), as well as with the changing nature of the way business is conducted (The Data Protection act 1998 and the Distance Selling Regulations 2000).
Purchase decision for goods starts not with the physical act of purchase but with the search for information. However, if this information were itself misleading or incorrect, then the purchase decision would also have been in error. To ensure that the information dissemination (or advertising goods and services) is within permissible norm, the British Codes of Advertising and Sales Promotion have been established. From a seller’s perspective, there are additional laws, which s/he must comply with (such as the Sale of Goods Act 1979, The Unfair Contract Act 1977 and 1999 regulations, which are additional regulations for sale of goods. Together, all these laws provide the overall framework through which consumer interests are protected. There are other interesting issues raised by Morrison and Firmstone (2000) who have looked at the issue of trust in the context of regulatory change in consumer protection laws. While these are beyond the scope of this study, such issues can explain to an extent as to why laws exist in their current form.
2.1 British Code of Advertising, Sales Promotion and Direct Marketing
(ASA 2003) The Advertising standards authority, a self-regulating body formed by the advertising industry, looks at preventing offensive or misleading advertising. For the purposes of this study, the prevention of misleading information is more relevant. The Advertising Standards Authority acts in the interest of the consumer by preventing misleading information from continued circulation in the Public domain. The ASA receives complaints from members of the public and consumers, and then it evaluates the complaint. Upon a decision being reached, the advertiser (the seller) is advised to continue or desist from continuing with the information. In case the ASA judgement is not followed, media organisations are asked to prevent publication of the said information and on continued violation of the order, the erring business is reported to the office of fair trade, which has the authority to take legal action on the errant firm. From a consumer perspective, this is the only non-legislative avenue for complaints redressal available.
2.2 The Consumer Credit Act 2006 (Opsi 2006)
In the United Kingdom, the disproportionate negotiating powers between financial institutions and their customers has been addressed here. The 2006 amendments to the act seeks ensure that the creditors (sellers) have to provide the debtors (buyers of the service) with clear and honest representation of the actual terms and conditions. Even in cases where the debtor has signed a contract, and the credit agreement is inherently unfair; such agreements can be challenged and complaints can be made to the OFT. The act lays down the responsibilities of the financial institution with regards to both the communications with the services buyers as well as with regards the terms and conditions of credit arrangements. This act (along with amendments) seeks to regulate the credit business through a licensing regime where the Office of Fair Trade (OFT) is a part of the enforcement framework.
2.3 The Consumer Protection Act 1987
The primary act which looks at the fundamental aspects of purchase of goods with respect to the committed quality is the Consumer Protection Act 1987 (DCA 2006 and BAILII 2005). The act offers protection to the consumers from two aspects: the first is in terms of the quality goods and services and the second in terms of the information supplied with the goods or services are accurate. This means that it is the seller’s responsibility to ensure that the good are as per acceptable quality norms (including product safety). Furthermore, any and all information, as prescribed by the law (such as consumer price, multi currency price if applicable for EUR and GBP, hazard warnings, directions for use, safety etc.) must be accurate. Promotional information such as advertising facts about the product (including comparisons with competition) must also be accurate and verifiable. However, there are cases where the product / service does not meet the prescribed standards. The act defines the manufacturers (or sellers) or distributors liabilities if the goods sold are found to be defective (not as per acceptable standards in the consumers hands). The OFT in all cases is the enforcing authority and keeps a check on traders though unilateral action such as investigations without / without complaints (Makers UK Ltd v Office Of Fair Trading  CAT 13 (23 June 2006)).
2.4 The Data Protection Act 1998
In the last ten years, the world of consumer commerce has changed drastically. Not only does the customer not have to go to a traditional shop to buy goods, the payment does not have to be made in cash and a significant portion of all commercial transactions are carried out in the electronic form (Schu 1997). This electronic payment system involves transfer of the buyer’s data to the retailer (Personally Identifiable Information) – The data protection act 1998. Provisions of the act allow for safeguards against processing the purchaser’s information when the processing of such information may be detrimental to the buyer’s interests or even for purposes of direct selling. In case the seller misuses such information, then there are provisions for penalty. This becomes critical in cases such as medicine buying where the mere disclosure of such information may lead to prejudices, causing financial harm to the buyer.
2.5 The Distance Selling Regulations 2000
“A distance contract is one where there has been no face to face contact between the consumer and a representative of your business, or someone acting indirectly on your behalf, such as in a showroom or a door to door sales person, up to and including the moment that the contract is concluded.” (OFT 2000) Since the advent of the superstores, the biggest change in buying goods has been phone orders and, with the invention of the Internet, the boom in online shopping. From a consumer perspective, such buying methods pose a particular challenge, as there is no physical interaction with the seller or even a physical inspection of the goods. To protect consumers against unfair practices in this regard the OFT has formulated a guideline for distance sellers (which include those selling over the internet, digital TV, mail order, including catalogue shopping, phone, and fax – Source OFT). The distance selling guidelines are important as there is unlikely to be a situation (in the mentioned selling methods) where an exhaustive question and answer session gives a buyer precise and accurate information (Reed 2004). For this reason, as per the Distance Selling Regulations (2000), sellers must:
- Give consumers clear information including details of the goods or services offered, delivery arrangements and payment, the supplier’s details and the consumer’s cancellation right before they buy (known as prior information) and also provide this information in writing
- The consumer has a cooling-off period of seven working days.
The information provided is over and above what is required as per other consumer acts such as the Consumer Protection Act (2006). The cooling off period pre supposes that the information provided during a non-personal sale cannot be complete. Hence, the buyer should have the right to rescind the purchase should they find that the product or service is not as per their needs, even if there is no deficiency in goods or services on part of the seller.
2.6 The Sales of Goods Act 1979 and others
All the acts discussed under this section look at the rights of the consumer and consumer protection. However, other than the rare case of Dell Computers (Dell at http://www.dell.co.uk), almost no manufacturer deals directly with the buyers of its goods and services. Therefore, while the customer has ready access to the seller (or reseller as the case may be), there is little or no access to the manufacturer (MacIntyre 2004 Ch 9, 10). Often it is the case that the after sales service may be provided by a third party (such as car dealers for car servicing). To get over these problems, and to instill a degree of responsibility on the seller, there is a group of legislations, which regulate the sellers. These are Sale of Goods Act 1979, Supply of Goods and Services Act 1982, Sale and Supply of Goods Act 1994 and The Sale and Supply of Goods to Consumers Regulations 2002 (DTI 2006 and Dabydeen 2004).
Under these acts (DTI 2006), the responsibility for goods sold lies with the seller. Among other requirements (which are as per the Consumer Protection and other acts above 2.1 to 2.5), the consumer can claim damages for upto six years for non-performance of contract (which includes defective goods or services) as well as a repair and refund option within the stated warranty period.
2.7 Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)
All sales of goods and services are subject to terms and conditions. In the interest of speedy transactions, the mere act of accepting goods after payment have been made is taken as an acceptance of the terms and conditions with respect to the sale as well as use of the goods or services. In most cases the consumer may not be qualified enough to judge the precise implications of such terms and conditions which are automatically enforceable. In rare case, some terms and conditions may even be unfairly biased against the buyer. To prevent such surreptitious legal bias against the consumer, regulation 5(1) of the act states that a contract is unfair “if, contrary to the requirement of good faith, it causes a significant imbalance in the parties rights and obligations arising under the contract, to the detriment of the consumer”.
The act also prevents the use of overly technical / legal terms where the meaning of such terms becomes unclear to the buyer and thus imposes a plain language requirement on the seller. This act, however, applies only to consumers and not to negotiated individual contracts or business contracts. Since the most widespread use of consumer contracts is in the retail finance space, this area is jointly handled by the Financial Services Authority (FSA) and the OFT (OFT 2006).
3 Analysis of consumer protection in the United Kingdom and Conclusions
Clearly the consumer has a lot of recourse from the point where they gather information which help them in their decision making process (with respect to the intended purchase), through the purchase itself and onto the after sales service and satisfaction. The laws focus both on the consumer rights, information and education, while at the same time attempting to ensure that the systems, which the sellers use, are designed to comply with the legal requirements. Furthermore, there are self-regulatory bodies like the ASA who are responsible for making sure that appropriate, accurate and acceptable information is conveyed in advertising.
Issues like unfair competition or collusion between two businesses at the cost of consumers (Argos and Littlewoods v/s OFT  CAT 13 (29th Apr.2005)) are thre responsibility of the OFT. Significantly, in Case of Argos and Littlewoods v/s OFT, significant multi million pound fines have been levied as a deterrent. However as the case suggests, the fines do not have a calculation table. This leads to unnecessary litigation where the fine and not the decision are appealed. This will continue to be a challenge for consumer protection as there is a significant amount of subjectivity involved in determining the “quantum” of offence.
Overall, such regulations are adequate for most regular consumer purchases of goods and services and as such are clear enough for resolution by governmental departments like the OFT and the FSA (Howells and Weatherill 2005). However, consumer law will continue to evolve as the European Union expands and begins to cater to the requirements of all member states. Consumer protection is a multi faceted problem. As business avenues and indeed the way business is conducted between retail consumers and larger firms, continues to evolve, the regulations must continually change to keep pace with newer commercial developments.