The Consumer Protection from Unfair Trading Regulations 2008

03/06/2008

What you need to know about the new directive

A new Consumer Protection Law came into effect in May 2008 that places greater restrictions on the way advertisers can engage with consumers within social media areas. It places greater emphasis on advertiser transparency by banning the practice of falsely advertising on social media sites, creating fake blogs and pretending the blogger is a consumer.

The IAB head of regulation, Nick Stringer, outlines everything you need to know about the new regulations below.

1. What is the Consumer Protection from Unfair Trading Regulations 2008?

The Consumer Protection from Unfair Trading Regulations 2008 is a set of UK regulations to protect consumers from unfair, misleading or aggressive marketing practices. It implements an EU wide law - the Unfair Commercial Practices Directive – to harmonise consumer protection law across Europe. There is also the Business Protection from Unfair Trading Regulations 2008 which is specific to B2B practices.

Open quote The new regulations provide greater clarity for advertising online, ensuring that it remains honest and does not confuse the consumer. Media owners and advertisers will need to be very clear in how they promote brands and products online so as not to get captured by the rules.Close quote - Nick Stringer, IAB's Head of Regulatory Affairs

The new regulations replace many detailed rules around trade descriptions and misleading price indications. In addition to a ban on unfair commercial practices, the new law includes a ‘blacklist’ of 31 practices that will be unfair in all circumstances.

2. When do they come into force?

Both new regulations have become law and are already in force – as of 26 May 2008. Advertisers and media owners will need to ensure that campaigns and promotional marketing material meet the new regulations.

3. What do they mean for online advertising?

The new law is technology neutral. In other words it is not specific to the digital and online world. However, any practice used online which is deemed unfair, misleading or aggressive will fall foul of the new rules.

This means if an advert or piece of marketing is a disguised commercial practice it will be captured. So, imitating a consumer or not being up front about an advertiser’s intention within a piece of marketing is no longer allowed. To this extent, misleading ‘word of mouth’ or ‘buzz’ marketing becomes an offence, as well as fake blogs or ‘astroturfing’. Online product placements will need to be made clear to the consumer.

Among the specific 31 banned practices are the following:

  • Spam: Making persistent and unwanted solicitations by telephone, fax, email or other remote media except in circumstances or to enforce a contractual obligation.
  • Unclear Advertorials: Using editorial in the media to promote a product where a marketer has paid for the promotion without making it clear to the consumer.
  • Targeting children: Including in an advert a direct exhortation to children to buy advertised products or persuade their parents or other adults (‘pester power’) to buy advertised products for them.
  • Use of the word ‘free’: Describing a product as ‘free’ or ‘without charge’ if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for deliverly of the item.

    For clarity, this does not capture ‘Buy One Get One Free Offers’ but would capture ‘bundling’ situations when part of the bundle is described as free when in practice there is an expense in acquiring the larger bundle (eg in communications services).

4. What are the penalties for breaching the new laws?

In theory, the Office of Fair Trading (OFT) will have the duty to enforce the new regulations and individuals (not just businesses) who breach the law can be punished by up to two years in prison or a hefty fine.

In practice – for advertising - it is the Advertising Standards Authority (ASA) that will administer the new rules because there is an effective system of self-regulation already in place (the Committee of Advertising Practice Code – CAP Code). The new rules are being included in the revised CAP Code.

For further information please contact Nick Stringer, Head of Regulatory Affairs at the IAB, on 07957 691803 or at nick@iabuk.net .

For specific advice on the new regulations visit:

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