Consumers should be able to sue for compensation

Consumers are losing some £3.3 billion a year to underhand sales practices and should have the right to take traders who behave unlawfully to court in order to win compensation, a watchdog has argued.

New research from Consumer Focus, the independent watchdog, indicated that as many as three out of five people claimed to have been victims of sales techniques outlawed by recently introduced customer regulations.

According to the study, the most common sharp practices involved consumers being told they had won a prize but who were then obliged to pay high phone charges or postage in order to receive the low-value reward.

Bogus claims about free items and closing down sales were also a problem, as were persistent sales calls that resulted in people having to buy or sign up to something simply to get rid of the salesman.

In May 2008, the Consumer Protection Regulations were introduced as part of the most radical overhaul of consumer protection law in four decades.

Under the regulations, businesses have a duty not to trade unfairly and not to use misleading statements or omissions.

They are also forbidden from employing aggressive sales practices, such as techniques that depend on harassment, coercion and undue influence.

Other prohibitions include advertising products when the business knows there is insufficient stock to meet demand and falsely claiming that customers would get a better deal if they signed up immediately.

As the new laws stand, trading standards officers have the authority to take the most serious offenders to court. Those convicted in a magistrates’ court can face penalties of up to £5,000, while those found guilty in a Crown Court can be fined £5,000 and/or handed a two-year prison sentence.

But Consumer Focus believes that the regulations would have more force if customers were allowed to sue traders who acted illegally in their dealings with them or if enforcement agencies, such as the Office of Fair Trading, were given the power to seek compensation on behalf of consumers.

In the survey of about 3,000 people, four out of five respondents who had lost money wanted the opportunity to go to court.

Philip Cullum, deputy chief executive of Consumer Focus, said: “In spite of new rules banning unfair sales practices, some traders are still doing very well out of unsuspecting consumers.

“In some cases, they are counting on the fact that if the loss is small, consumers will be less likely to complain or take action, so many carry on misleading. It is a scandal that consumers cannot get justice when they have been wronged.”

Hugh Collins, Professor of English Law at the London School of Economics, added: “As a point of legal and moral principle, consumers who suffer loss should have the opportunity to obtain compensation in the courts from those who caused it. The government should rectify this problem.”