The Consumer Credit (Advertisements)

What's in store in 2014?
Stephen Groom
Predictions coming up….
• Consumer rights big bang
• EU data protection reform
• Children's online games/apps
• Consumer credit advertising
• Big data-new data portability rights
• Intellectual property-new parody exception
• Nuisance calls and spam
• Prize promotions in Northern Ireland
• Cosmetic surgery and interventions ads
• The death of OBA cookies?
Consumer Rights Act 2014 ("CRA") #1
• Implements the Consumer Rights Directive (2011/83/EU) and introduces
other "Consumer Bill of Rights" measures
• Not to be confused with:
Consumer Rights Directive (2011/83/EU) ("CRD") to be partly implemented by the CRB
Consumer Bill of Rights precursor to the CRB
Consumer Rights (Payment Surcharges) Regulations 2012 in force since April 2013
Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013
implement most of the CRD due for sign-off soon
Consumer Protection from Unfair Trading (Amendment) Regulations not yet signed off
• CRA to replace and supersede eight measures including …
Supply of Goods (Implied Terms) Act 1973, Sale of Goods Act 1979, Supply of Goods and
Services Act 1982 (B2C), Sale and Supply of Goods Act 1994, Sale and Supply of
Goods to Consumers Regulations, Unfair Contract Terms Act 1977 (B2C) and Unfair
Terms in Consumer Contracts Regulations 1999
Consumer Rights Act 2014 #2
• Specific rights & remedies for consumers buying digital content
• Enhanced rights & remedies for consumers buying goods or services
• Improves consumer protection from unfair contract terms
• Clarifies powers of enforcers to investigate possible breaches
• Makes it easier for consumers and businesses to challenge anti-competitive
market practices
• Headliners for advertisers:
Digital content descriptions must match any description provided, including functionality and
interoperability info required by the CRD
New obligation to ensure that services must comply with all information supplied
Terms relating to price will only be exempt from unfair contract terms rules if they are
"transparent and prominent"
TSOs can attach a range of enforcement measures to orders or4 undertakings
Consumer Contracts (Information, Cancellation and
Additional Payments) Regulations 2013 #1
• Will implement all parts of the CRD not already implemented
• They will supersede
Consumer Protection (Distance Selling) Regulations 2000 and
Cancellation of Contracts made in a Consumer's Home or Place of Work etc.
Regulations 2008
• Like rest of CRD, due to become part of UK law by 13 December 2013 and
in force by 13 June 2014
• Out of scope: similar to existing distance sales regulations eg financial
services, gambling, package travel, package tours
• Cancellation rights exclusions: similar to existing eg concert tickets
• CRD is a maximum harmonisation measure
Consumer Contracts (Information, Cancellation and
Additional Payments) Regulations 2013 #2
• Headline points for advertisers
New 14 calendar day cancellation right instead of 7 working days
Distance sellers must provide a model withdrawal form for consumer use
New "14 calendar days after cancellation" deadline for returning goods
Revised pre-contract disclosure requirements
Pre-ticked boxes expressly prohibited
Trader must ensure that the consumer "explicitly acknowledges" that there
is an obligation to pay
Confirmation of the contract must be sent to the consumer on a durable
medium (as defined)
Consumer Protection from Unfair Trading (Amendment)
Regulations 2013
• Implements Article 27 of the CRD
• Introduces new rights of redress for consumers in respect of "prohibited
• These include rights :
"to unwind"
to a discount
to damages
• Prohibited practice must have been a "significant factor" in the consumer's
Consumer rights big bang in 2014-predictions
• 13 December 2013: Consumer Contracts (Information, Cancellation and
Additional Payments) Regulations 2013 ("CCRs") signed off
but not
 Consumer Protection from Unfair Trading (Amendment) Regulations
("CPUTARs") or
 Consumer Rights Bill
• Demands for consolidation of all these and Consumer Rights (Payment
Surcharges) Regulations 2012 rebuffed but
• 13 June 2014: CRA, CCRs and CPUTARs in force
EU data protection reform
21 October 2013: after 18 months of discussions "compromise
draft" regulation signed off by LIBE committee of Euro MPs including
new "mandatory" icons
25 October 2013: EU summit agrees that signing off
on the new Data Protection Regulation by "early 2015" is a priority
November 2013: Greece, holding the EU Presidency from 1/1/14, did not include
the measure in its list of priorities
December 6, 2013: next vote of Council's Justice Ministers on data protection
reform: will EU Commissioner Reding's hopes of agreeing the measure before Euro
elections in Spring 2014 be realised?
Even when signed off, the measure provides for a 2 year lead-in period.
EU data protection reform prediction
• 6 December 2013: EU Ministers achieve no consensus on fast tracking the
inter-institutional negotiation process
• Spring 2014: measure is not finalised before the Euro elections
• March 2015: after many more twists and turns a marginally more businessfriendly Regulation is signed off
• March 2017: the new Regulation comes into force
Children's Online Games/Apps
• April 2013: OFT announces an investigation into methods used in online
games to encourage children to make purchases
• October 2013: OFT publishes "Children's Online Games: Report and
The output of its investigation is distilled into 8 proposed principles
• OFT proposes to take action under the Consumer Protection from Unfair
Trading Regulations ("CPRs") against traders in breach
• Trading Standards Institute comment: helpful guidance but Principles should
be more clearly linked to the relevant legislation and
• rename the "Principles" "Best Practice Principles to ensure Legal
Compliance in the Sector of Online and App-based games."
Children's Online Games/Apps-predictions
• March 2014: Following the OFT report consultation, the published
Principles are more closely aligned to the CPRs and renamed "Best Practice
Principles for Compliant Online and App-based Games"…
• and are accompanies by Guidance after concerns expressed in consultation
responses that the OFT's notes to the Principles need further explanation
• June 2014: following a period of grace Trading Standards make it clear that
enforcement action will be taken against games operators who breach the
Principles and thereby breach the CPRs
• October 2014: Trading Standards launches the first prosecution against an
online game operator for an "aggressive practice" in breach of the CPRs
based on a breach of Principle 6
Consumer Credit advertising #1
• April 2014: The Financial Conduct Authority takes over from the Office of
Fair Trading the role of regulating the UK consumer credit industry
• October 2013: Financial Conduct Authority published a further consultation
paper on its high level proposals for the new regime
• The Consumer Credit (Advertisements) Regulations 2004 and 2010 will
be repealed and become part of the new FCA "Consumer Credit
Sourcebook" ("CCS")
• Being clear, fair and not misleading will be the backbone to the FCA
approach to consumer credit advertising
• The CCS adds guidance on aspects of the CCARs such as that statements
about the speed of granting credit will be regarded as an "incentive"
triggering the need to include an APR
Consumer credit advertising #2
• FCA proposes to introduce a new risk warning for high cost, short term
• FCA will also in its rules reflect OFT Guidance on cold-calling and other
unsolicited marketing activities:
firms must identify themselves and the purpose of the communication and
make sure it is an appropriate time of day
FCA may in the future consider banning cold calling
• Debt management companies ("DMCs") must not pass themselves off as a
charitable, not for profit, government or local government organisation
• Before accepting leads from lead generation businesses ("LGBs"), DMCs
must ensure that LGBs' websites and financial promotions comply with legal
Consumer credit advertising-predictions
• 1 April 2014: FCA takes over the regulation of consumer credit and new
rules for short term credit promotions come into force
• 1 September 2014: FCA responds to increasing concerns over nuisance
calls promoting short term credit by carrying out its threat to propose a ban
on unsolicited direct marketing telephone calls promoting these products
• 1 April 2016: after a two year interim regime the new consumer credit
regime comes fully in force and the Consumer Credit Sourcebook rules on
advertising replace the CCARs
Big Data-new portability rights
• November 2012: UK government challenged businesses to provide
consumers with easy access to electronic data which was held on them
• 25 April 2013: after a disappointing response, a backstop power to compel
businesses to do so was introduced at ss 89-91 of the Enterprise and
Regulatory Reform Act 2013
• Initially the industries affected are energy, mobile phone, current account
and credit card services
• HMG will review progress in March 2014
• Predictions:
April 2014 -HMG launches a review
November 2014 –"Midata" regulations introduced to consumer apathy
"Inspired by" advertising
• Parody and copyright:
2011: Hargreaves Review green lights relaxation of copyright exceptions to allow
June 2013 : IPO publishes draft secondary legislation
"copyright is not infringed by any fair dealing with a work for the purposes of
caricature, parody or pastiche"
• Prediction:
• 1 December 2014- Copyright, Designs and Patents (Amendment ) Act 2014
introduces this amendment but the need to show fair dealing creates more
rather than less challenges for "inspired by" advertising
Nuisance calls and spam
• Mass cold calling and spamming by PPI mis-selling claim management
companies ("CMCs") is giving rise to serious concerns
• Inquiries by:
Nuisance Calls All Party Parliamentary Group-see Oct 2013 Report
Commons Culture Sport and Media Select Committee –Report soon
• Private member's bill proposes "opt in" call regime instead of "opt out"
• Numbers registered with TPS approaching 20,000,000 -TPS Assured launched
• MoJ/Treasury propose new penalties for use of info derived from practice
• ICO knocked back on appeals against monetary penalty notices("MPN")
now seeks change of s.55A/55B DPA threshold: deliberate or negligent
"serious breach.. likely to cause substantial damage or distress"
• HMG now looking at lowering the MPN threshold
Nuisance calls and spam-predictions
• January 2014: CMS Committee Report recommends lowering of threshold
for imposition of MPNs to "serious nuisance or annoyance"
• March 2014: numbers registered with TPS reach 20 million (83% of UK
residential fixed lines)
• May 2014: Financial Services (Banking Reform) Act passed, including
empowering the FCA to impose fines up to £500,000 for the exploitation of personal data
derived from cold calling practices in breach of the Claims Management Regulator's
• June 2014: draft legislation tabled to reduce MPN threshold to "serious
nuisance and annoyance"
• December 2014: new threshold in force
And the rest…
• Prize promotions and lotteries in Northern Ireland
Prediction: December 2014 -NI Executive finally aligns its
gambling legislation with Great Britain and allows purchase-to-enter
prize draws
• Cosmetic Surgery and Interventions
Prediction: September 2014 - following the DoH April 2013 Report, a
new regime is launched including a public register of all practitioners
and an advertising code prohibiting time limited deals, BOGOF, refer a
friend and cosmetic procedures as prizes
Behavioural targeting
Predictions: 2014 - rumours of the "death of cookies" prove unfounded
but still no fines imposed on cookie users who breach consent law
Face Forward 2014
Sum up
• New consumer rights laws– no real simplification, material associated
costs and more exposure for all businesses selling to consumers,
particularly online
• Telemarketing – by the end of 2014 we will know if it has a viable future as
a sales channel and whether landlines have a viable future as a non sales
communication medium
• Data privacy – EU reforms still some way off, but will existing data
protection laws impacting direct marketing and OBA weather the current
enforcement/credibility crisis?
• Advertising law enforcement – will trading standards step up to the plate?
• Intellectual property – creative free-for-all unlikely after new parody right
comes on stream
Any questions?
Stephen Groom
Osborne Clarke London
T +44 (0) 207 105 7078
M +44 (0) 207 105 7079
[email protected]

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