Giving consumers a private right of redress against rogue traders could cause problems for lawyers.
The draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 propose to afford consumers protection by giving them a private right of redress against rogue traders. It is hoped this will empower consumers, reduce regulatory costs for business, lighten the burden on the Office of Fair Trading and provide a range of economic benefits. This seems all well and good.
However, on closer scrutiny it is clear the regulations are set to have a detrimental impact upon business – and lawyers in particular.
The Department for Business, Innovation & Skills proposes to widen the definitions of ‘consumer’, ‘trader’ and ‘product’ in 2008 regulations. It is proposed that any organisation which contacts any individual, regarding any claim or liability, in whole or in part, shall be a ‘trader’ offering a ‘product’ to a ‘consumer’.
If an individual takes issue with being contacted by lawyers or insurers regarding any claim, and alleges they feel distressed by it, that individual can seek to recover the settlement and compensation for alleged distress.
It is, of course, a positive step for consumer law where the regulations allow an honest consumer to sue a rogue trader for aggressive or misleading practice. But it is a step too far to allow a rogue individual to sue a legitimate business.
The regulations seek to significantly erode the absolute right of any business to exercise its civil rights of redress; and to bestow on tortfeasors and criminals a new right to sue any business, their solicitors, insurers or agents, which seek to exercise such right, by asserting that they feel aggrieved. This surely cannot be what parliament intended.
You may consider that these regulations will not apply to your business, because of course you do not undertake any aggressive or misleading practices. But that will not stop an unscrupulous defendant to whom you write from asserting that they feel aggrieved by being asked to pay for their wrongdoing, and making a claim against you and/or your client. Defendants who are willing to commit theft and fraud, to drive their vehicles without insurance, or ‘to flash for cash’ will not think twice about making a spurious claim against your business.
Sadly, consumer groups are already advising defendants such as shoplifters, fraudsters and employees who have stolen from their employers, to sue law firms and other businesses who have sought to recover their clients’ losses in a perfectly legitimate manner. This ‘advice’ is offered on the internet. Retailers, fuel providers, coffee shop chains, bookmakers and media services providers are being targeted, and it will come as no surprise if the insurance sector is targeted next.
The ‘example’ of being misled or bullied into making a payment given by BIS as an attempt to justify the proposed widening of the definitions is not of an old lady bullied into buying a new roof she neither needs nor can afford. It is of a young mother receiving a demand to pay £100 when her child took a drink from a store.
This example is grossly misrepresented. CCTV shows it was the mother who stole the drink. The woman in this example would be entitled under the proposed regulations to sue the business simply by misrepresenting the facts and asserting that she feels aggrieved. The reality is that she created this situation by her own dishonest action.
Defining thieves, fraudsters and uninsured drivers as consumers makes their crimes even more attractive. The rewards will appear greater and the risk far less.
A thief, a fraudster or an uninsured driver is not a consumer. Let us maintain the definition of ‘consumer’ as an individual who legitimately purchases goods or services from a business. A claim for damages is not a ‘product’. Whatever happened to coming to equity with clean hands?
Vanessa Willett is company solicitor at Retail Loss Prevention Limited