Companies and their directors are reminded of the need to exercise caution in respect of their sales tactics following recent convictions for aggressive sales practices. A company, and one of its directors, have been successfully prosecuted for breaches of reg.7(1) Consumer Protection from Unfair Trading Regulations 2008 (CPUTR).1
An elderly and vulnerable customer put down a deposit on a reclining chair from a company specialising in mobility products, but she cancelled her order the following day. The company initially said it would give a full refund of the deposit, then wrote to her saying it would only partially refund – and only if she kept the payment confidential. Other customers had similar complaints.
The Court of Appeal upheld the convictions of both the company, and the director concerned. Notably, the Court of Appeal said there had been consent and connivance by the director because he both knew the material facts that showed an offence had been committed, and had consented to the company carrying on business on the basis of those facts.
Due diligence defence
Whilst there is a ‘due diligence’ defence available under CPUTR, this was not relied on by the company or the director. The due diligence defence requires proof (to the civil standard) that the defendant took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence.
Taking legal advice and sending a solicitors’ letter (from a highly reputable firm, in this case) did not alter the reality that the director was guilty, through connivance, of an aggressive commercial practice.
What does this mean?
Companies and their directors need to take care to avoid the commission of offences under CPUTR. Where there is a breach of CPUTR, consumers have a statutory right to ‘unwind’ a sale within 90 days and claim a refund or discount (subject to exceptions). Seeking to exclude or ignore such a right may lead to criminal prosecution.
In light of this, directors should review their company’s sales policies and processes, train relevant staff and monitor for breaches, otherwise they risk a criminal conviction and substantial fines for aggressive commercial practices.
How can we help?
We provide business organisations with expert commercial and company advice on all their commercial and company law issues. If you have any concerns about the legality of a sales practice, or any other issue relating to your business operations, contact the experienced company and commercial solicitors at Herrington Carmichael for specialist advice.
For further information or to discuss the issues raised by this article, please contact Mark Chapman or Matt Lea on 01276 686222.
1 R v Waters [2016] EWCA Crim 1112