Corporate law

Coronavirus: unfair trading, trading standards and consumer rights

Stories abound in the media about some unscrupulous traders taking advantage of the current Coronavirus crisis, for example, by escalating prices. Charging over £100 for a £3.00 bottle of hand sanitiser is a high profile example. 

There are plenty of regulations in place to try and ensure that consumers are treated honestly and fairly. The Competition and Markets Authority (CMA) regulate and investigate anti-competition and unfair trading practices for the protection of consumers. Anti-competition practices, such as colluding to fix prices, are prohibited because competition helps consumers to get goods and services at lower prices and promotes good customer service. This is because businesses that provide the best services will be more successful. In addition, the Unfair Trading Regulations exist to prohibit businesses from behaving unfairly in their dealings with consumers.  

What is unfair trading?

Unfair trading is the term used to describe behaviour from a person or a business, who is selling a product or service, and behaves in a way which is deemed by the law, to be unfair.

Types of unlawful behaviour include:

  • deliberately making a false statement about a product or service to mislead the public
  • saying something needs replacing or is broken when it isn’t – a washing machine for example
  • omitting to provide important information that might affect the person’s decision whether or not to buy
  • being aggressive in their attempt to sell
  • lying about their track record or their membership of trade bodies, to make themselves seem more credible.

Are the restrictions on competition relaxed due to Coronavirus?

The law enables the Government to exclude usually prohibited practices relating to business competition, if it’s in the public interest to do so. In response to Coronavirus the Government has relaxed usually prohibited activities for certain products and services. This is to ensure the consistent and continued provision of essential products and services and to prevent or mitigate supply chain disruption. It’s key to ensure supply chains are supported when there is so much disruption to labour supply and normal working practices. Allowing supermarkets to work together at this time, is an important plank of the Government’s policy, to ensure shops maintain a good supply of food.

The full list of current practices which are usually prohibited, but are now allowed, are listed at the end of this article. This mostly relates to the sharing of information on stock, logistics and labour availability and limiting or enhancing access to stores and products. Any such activity must be relevant to, and address the effects or likely effects, of Coronavirus and be notified in writing to the Secretary of State. 

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Pricing during Coronavirus

Key information to which the exemptions do not apply, and therefore cannot be shared between providers, is cost and pricing information. This is in order to limit the risk of an agreement of the inflation of prices across the board, to maintain competition in pricing and therefore value to the public. The CMA has warned that it will not tolerate unscrupulous businesses exploiting the crisis as a ’cover’ for non-essential collusion. An example of this might be exchanging information on longer-term pricing or business strategies, where this is not necessary to meet the needs of the current situation.

How are consumers being protected during the Coronavirus crisis?

The CMA has issued a statement to traders to warn against exploiting the public and taking advantage in light of the current crisis. It warn traders to behave responsibly and not to inflate prices or make misleading claims about products – particularly in relation to the efficiency of personal protective equipment (PPE). This also applies to members of the public who re-sell goods on online marketplaces. 

What can I do if I think a company is exploiting the public during the crisis?

The CMA has launched an online service which you can access here. where you can report a business that you think is behaving unfairly during the current crisis. This might be the inflation of prices, providing misleading information about products, or experiencing problems with cancellation, obtaining refunds or exchanges. Whilst the CMA will not respond to individual reports, it is monitoring all the information provided and will take action where appropriate. 

Online consumer rights 

Each year the volume of online purchases increases and in the current Coronavirus situation, clearly, online is the only method available for most purchases which are not deemed essential (such as food or medicine). Consumers generally have a right to withdraw from a purchase within 14 days of receiving the goods, although this varies depending on the nature of the purchase and delivery. Consumers have the right to a refund within 14 days after the trader receives the goods back, although again this can vary, depending on how the goods are delivered back to the trader. 

Where a product received is not of satisfactory quality, consumers are entitled to a refund within 30 days and generally a repair or replacement after this time. If the repair or replacement cannot be provided within a reasonable period of time, a refund (full or part depending on the circumstances - such as how much use of the products the consumer has enjoyed) should be provided. In light of the current crisis, what is considered a reasonable time will likely be longer than usual and will depend on the individual circumstances. These might include the reasons for any delay, issues in obtaining parts and whether the circumstances were out of the control of the trader and as a result of the Coronavirus crisis.

Refunds may be reduced for a couple of reasons:

  • to account for any enhanced delivery cost incurred by the trader as a result of the choice of the consumer
  • due to any use by the customer of the goods beyond what would have been necessary to establish the nature of the fault or lack of functionality.

The consumer may also have to bear the cost of the return. 

If any services have been provided during the cancellation period, the trader will be entitled to charge for any such services received. The cost of a partially received service will depend on any written contract that may contain pro-rated rates. If there isn’t a contract, and you make a claim, the case would be decided by assessing the loss to the trader in providing that service. If you have a dispute involving consumer rights, you may need to consult a solicitor.

If a service has been purchased or a contract entered into, for which a deposit has been paid and that service can no longer be provided, the terms of the contract will be key to establishing your legal rights. Click here to read our article on this topic: Coronavirus: questions relating to contracts

List of practices, usually prohibited, but now allowed due to Coronavirus

Groceries

  • co-ordination of limiting purchases of particular items
  • sharing of labour and facilities
  • co-ordination of the range of groceries to be supplied to simplify the supply chain
  • sharing of information relation to stock levels , logistics providers and labour availability; co-ordination of assistance such as opening times and prioritisation of deliveries  for particular groups such as critical workers and the vulnerable
  • co-ordination of temporary closure of stores or opening hours of stores.

Dairy

  • collaboration between dairy farmers and producers, so they can avoid surplus milk going to waste
  • sharing labour and facilities, plus temporary co-operation to reduce production or to identify hidden capacity for processing milk into other dairy products, such as cheese and butter.

Healthcare

  • information sharing in relation to capacity for providing health services including the availability, or lack of, of staff and facilities
  • co-ordination of the deployment of staff between NHS bodies and independent providers
  • sharing or loan of facilities for the provision of health services
  • joint purchasing of goods, materials, vehicles, facilities and staff.

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