Consumer Rights Law Essay PDF

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consumer rights essay question answer for exam....

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LL5007 Consumer Rights Law Assessment 2: critical legal research and evaluation (coursework (50% weighting)).

Submission Date

10th May 2021 by 3.00 PM via WebLearn (extended to 17th May 2021)

Weighting

50% of final grade for this module

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2,000- 2,500 words

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12

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1.5

Referencing:

REFERENCING SOURCES USING THE OXFORD STANDARD FOR CITATION OF LEGAL AUTHORITIES (OSCOLA)

Bibliography:

Full bibliography at the end of the written work

Word limit

Maximum word limit is 2,500 (do not exceed it)

CHOICE OF QUESTION: 2) A critical analysis of the law on unfair commercial practices in the context of the hotel industry (or any other industry).

WORD COUNT COUNT:: 2749

CRITICAL ANAL ANALYSIS: YSIS: THE UNF UNFAIR AIR COMMERCIA COMMERCIAL L PRACTICES OF AIR TRANSPOR TRANSPORT T BOOKING WEBSITES.

This essay will be critically analysing the law used to govern unfair commercial practices in the air travel industry, more specifically, concerning comparative airline booking websites that help consumers find the best deals, such as Skyscanner, Kayak, Lastminute.com, Expedia, EasyJet, Ryanair and Travel Supermarket. These websites are operated by major corporations and regularly partake in unfair commercial practices (UCPs) such as misleading consumers, displaying no price transparency, pressure selling tickets and skewed rankings according to commission paid. Are these companies breaching the Consumer Protection from Unf Unfair air T Trading rading Regulations [2008] 1 (CPUTR). This question will help determine whether these companies are going against the Consumer Protection Act [1987]2 and potentially breaking the law whilst doing so. This will furthermore, help analyse whether the Competition and Markets Authority (CMA) is doing their job properly or they need to implement harsher laws that actually protect consumers from being taken advantage of.

1 Consumer Protection from Unfair Trading Regulations (CPUTR) [2008] 2 Consumer Protection Act 1987

The Unfair Commer Commercial cial Pr Practices actices Directive 2005 2005/29 /29 3 (UCPD) was imposed by the CPUTR. The UCPD aimed to help consumers be confident in what and who they purchase from and also simplify the consumer protection law, making it much more understandable for a consumer. A consumer is an ‘individual acting for purposes that are wholly or mainly outside that individual’s business 4’, in this context, someone who purchases airline tickets from a comparison website. According to the UCP, these comparison websites will be considered traders as they are someone ‘who is acting relating to their business whether acting personally or through another person acting in the trader’s name or on the trader’s behalf 5’.

Directly aiming advertisements and marketing relating to goods and services at consumers are considered as unfair commercial practices according to the CPUTR and this is prohibited, yet many booking websites are specifically targeting customers. Unfairness can be classified into three categories under the CPUTR. Namely, misleading actions (reg 5), misleading omissions (reg 6) and aggressive practices (reg 7).

Misleading actions are defined as practices that contain false information and can be considered deceptive by the average consumer because of the way it is presented. By marketing tickets in a certain manner that causes confusion amongst consumers, failing to clearly point out what they are purchasing and also causing them to make a transaction that they normally would not have made, airline booking websites are in breach of regulation 5 of the CPD. Online comparison websites such as Skyscanner and Hotels.com insist that consumers are being offered “secret prices” whilst booking if they sign up to their mailing list and book quickly in order to redeem this offer. Consumers are then led to believe that they are being offered a great discount, when in fact, these are the airline’s normal prices and the retail price has been deceptively made to look much more than the actual cost [reg.5 (4)], (by including optional charges etc), in order to lure customers in.

3 Unfair Commercial Practices Directive 2005/29 (UCPD) 4 accessed 13 May 2021 5 accessed 13 May 2021

Airline booking websites usually compare weekend flight tickets for popular routes to standard weekday tickets, making it seem as if there is huge discount on the flight. This is known as misleading as they are not comparing the same types of tickets. People who tend to use comparison websites to book airline tickets are much more likely to be price sensitive and these booking websites target them and make them believe they are getting a bargain. These UCPs are the reason behind many consumers taking transactional decisions that they would not have otherwise.

Tour our Services GmbH v T Team4 eam4 T Trravel GmbH [2013] 6, an In the case of CHS T advertising brochure was published by Team4, claiming that the hotels advertised were ‘exclusive’, when in fact, they were not. Due to this, CHS decided to make a complaint that the statement infringed the prohibition on UCPs, and the court held that the "the misleading nature of a commercial practice derived solely from the fact that it was untruthful or was likely to deceive the average consumer in relation to the nature, or main characteristics, of a product or a service and was likely to cause that consumer to take a transactional decision that he would not otherwise have taken. When those features were found, the practice was to be regarded as misleading and therefore unfair pursuant to art.5(4). and it had to be prohibited in accordance with art.5(1).7" Motor Depot Ltd v Kingston Upon Hu Hullll City Council

[2011] 8is a good example of being prosecuted because of misleading as they were advertising vehicles for sale as interest free. After further investigation, City trading standards manager stated that they “were monitoring the site and finding that the cars offered on the interest free site were being offered for less within the Motor Depot group. They were inflating the cash price, so customers weren’t seeing the benefit of the interest free offer.”9

The decision held in R. v X Ltd [2013] 10 stated that Commercial practice can derive from a single incident and transactional decisions are not limited to the formation of a contract which helped consumers achieve more rights that could help them protect 6 CHS Tour Services GmbH v Team4 Travel GmbH [2013] C-435/11 7 CHS Tour Services GmbH v Team4 Travel GmbH [2013] C-435/11 8 Motor Depot Ltd v Kingston Upon Hull City Council [2011] EWHC 3257 9 'Car Dealer Fined For Misleading Customers' (Yorkshirepost.co.uk, 2021) accessed 13 May 2021. 10 R. v X Ltd [2013] EWCA Crim 818

themselves. In order to help consumers, the EU commission and consumer protection authorities made it mandatory for websites to provide consumers with clear information on discounts and that there is complete price transparency. Achieving price transparency was vital as an EU-wide screening of 560 e-commerce websites revealed that 60% of websites display irregularities in compliance with EU consumer law11. Many online booking websites are being deceptive and taking advantage of vulnerable consumers due to the lack of policing e-commerce sites that are part of consumers daily lives and they are clearly breaching the regulations set out under the CPUTR 2008.

Figur Figurasin asin v Centr Central al Capital Ltd [2014] 12 is another prime example of misleading actions. Important information was stated within the contracts fine print that consumers do not usually read, and they were charged an additional amount for this. Most companies hide additional costs and important information which will likely merit in a different outcome within the small print and mislead consumers as they know that a very small percentage of consumers actually go through the hassle of reading the fine print and traders think this is enough to protect themselves if a consumer chose to challenge them.

Such booking websites also end up breaching regulation 6 which is misleading omissions, which sort of goes hand in hand with regulation 5. Most comparison websites fail to give their consumers important information that is required for them to make an informed choice. Their practice can be deemed as misleading by omission if they choose to omit material information, or they provide material information in an unclear manner which is ambiguous and fails to recognize its commercial intent. Airline booking websites that offer multiple airline services at very competitive prices often fail to be completely transparent about their pricing. They will sell the cheapest seats but they are omitting additional charges in the fine print such as the credit card charges. They will show a comparison between the price of a ticket that is fully inclusive versus a ticket that is only charging for the seat and not 11 accessed 13 May 2021 12 Figurasin v Central Capital Ltd [2014]

everything else that once was considered to be included in the price such as checked inn luggage and pre-selected seats. Consumers are thinking they are getting cheap tickets when in fact they now have to pay separately for many things, for example, on board meals and drinks, luggage fees, pre-selected seats and travel or cancellation insurance. Online booking sites also have other hidden charges that are not displayed but they are added to the total in the end such as booking fees, service charges, airport charges and taxes.

Kelkoo, which is Europes’ largest travel price comparison website conducted a survey in 2011 which analysed the charges that airlines apply to ticket prices depending on their aircraft model and their impact on the final price of the ticket. They found out that ‘on average, additional charges such as fees for card payments or costs for

checking luggage accounted for13’ about “38%” for the UK. Booking websites are required to adequately signal optional price supplements and make it known to the consumer that these charges are optional. This needs to be done in a transparent manner at the start of the booking process. The UCPD states that “failure to provide consumers with clear, appropriate and complete information

relating to the price and any other cost associated with the provision of a service may constitute an unfair practice14”.

Another way that these booking websites are misleading by omission would be displaying flight packages in the ranking of how much commission a company has paid to boost their ranking and views in order to trick consumers into thinking that these are the best tickets in their search criteria and that’s the best deal for their price and ranking. The chances of the rankings being skewed is very high due to these platforms being online as it is all based on commission. Under regulation 6 of the CPUTR, price is considered to most likely always be material and misleading information is required to be material, hence they are again in breach of the regulations outlined. In simple words, such online booking websites are omitting a lot of vital information from consumers that they actually require in order to make an 13 pg 16 accessed 13 May 2021.

14 Unfair Commercial Practices Directive 2005/29 (UCPD)

informed decision and if this information was provided, it is likely that the average consumer would have made a completely different decision.

Fair air air--Tra rading ding v Purley Crea Creative tive [2011]15, is an important case The case of Office of F regarding misleading commercial practices under the UCP directive art 6 (1), as the customer was misled into believing that they had won a price, when in fact the company had given them a false impression of winning, however making it difficult to actually claim the prize as there were many hidden charges such as postage and insurance involved which made it unfair for consumers. Another case that tackled the issue of UCP is the case of Nemzeti F Fogy ogy ogyasztovedelmi asztovedelmi Hat Hatosag osag v UPC

Magyar Magyarorszag orszag Kft [2015] 16. The cable TV services provider charged the customer additional costs that were not initially quoted in the original price for an after sales service and this information prevented the individual from making an informed choice and lead to additional costs. This case was important as it helped the CPUTR 2008 criminalise misleading marketing and UCPs. A law journal17outlined that the new regulations will be punishing those who engage in misleading advertisements with either a fine of up to £5000 or up to 2 years imprisonment. However, large companies’ practices are still considered UCPs, and they have yet to be punished which raises the question as to whether the law is strict enough for large companies such as Booking.com or Hotels.com to take the law around UCPs and consumer protection seriously. Due to these regulations, Ryanair and EasyJet were fined due to their UCPs of not highlighting important cancellation terms which meant consumers were losing money as the information was omitted. Airline booking websites usually partake in aggressive practices such as pressure selling. A practice is regarded to be aggressive where traders use harassment, coercion or undue influence which significantly impairs the consumer’s freedom of 15 Office of Fair-Trading v Purley Creative [2011] EXHC 1237 (Ch) 16 Nemzeti Fogyasztovedelmi Hatosag v UPC Magyarorszag Kft [2015] 17 Cowan Ervine, 'Consumer Redress For Misleading And Aggressive Practices' [2011) Edinburgh Law Review chttps://0- login-westlaw-co-uk.emu.londonmet.ac.uk/mallwluk/app/document? &srguid=i0ad8289e0000016aad3b677f93c5a39a&docguid=1F04619E0 D49011E0AD41819F865FF9F1&hitgu id=1F04619E0049011E0A041819F865FF9F1&ran k=8&spos=8&epos=8&td=10&crumb-action=append&context=44&resolvein=true> accessed 13 May 2021

choice. Such websites tend to send pop up notifications to the consumers screen whilst they are browsing. These notifications are often misleading them and giving them the impression that a lot of customers are looking at the same flight tickets and there is only one ticket left. This pressurises the consumer to make a decision in haste and they do not get the chance to browse for more deals in the fear of missing out on these so-called deals which is generally considered as undue influence which means they are “exploiting a position of power in relation to the consumer so as to

apply pressure”18. They create false impressions of the availability of tickets which causes consumers to make rushed transactional decisions that they otherwise would not have made, hence making it an unfair practice as pressure was used in order to generate a sale. Pressure selling tactics used by airline booing websites deter consumers for looking for better deals which is an infringement of consumer law. The case of R v W Waters aters [2006] 19 displays aggressive practices as the company was bombarding consumers with sales calls and pressuring them to buy mobility scooters and ended up getting prosecuted as they were in breach of the UCPD’s regulations. The 'Edinburgh law review's journal: Consumer redress for misleading and

aggressive practices' emphasises that there are "serious gaps in the law" in the case of aggressive practices as existing causes of action (duress, undue influence and harassment) do not address the specific problems experienced by consumers’20. Fair air air--Trading v Purley Creative [2 [2011] 011] 21 also displayed Cases such as Office of F aggressive practices as they were threatening consumers to give their information to creditors. As well as R v Montague [2015] 22 who scared a vulnerable consumer into purchasing home improvements by bringing up the number of burglaries in his area. 18 Unfair Commercial Practices Directive 2005/29 (UCPD) 19 R v Waters [2006] 20 Cowan Ervine, 'Consumer Redress For Misleading And Aggressive Practices' [2011) Edinburgh Law Review chttps://0- login-westlaw-co-uk.emu.londonmet.ac.uk/mallwluk/app/document? &srguid=i0ad8289e0000016aad3b677f93c5a39a&docguid=1F04619E0 D49011E0AD41819F865FF9F1&hitgu id=1F04619E0049011E0A041819F865FF9F1&ran k=8&spos=8&epos=8&td=10&crumb-action=append&context=44&resolvein=true> accessed 13 May 2021

21 Office of Fair Trading v Purely Creative Ltd and others [2011] EWHC 1237 (Ch) 22 R v Montague (Derek George) [2015] EWCA Crim 902

Taking into consideration all the factors mentioned above, it is conspicuous that the law governing the unfair commercial practices of airline booking websites and CPUTR 2008 needs reform. Many airline booking websites as well as hotel booking websites have constantly breached many regulations, therefore putting consumers in detrimental positions. Despite breaching the regulations, many of these large-scale corporations have not yet been charged with any criminal offences. This raises the question as to whether the CMA are adequately doing their job. Are they being completely ignorant and letting these companies evade the law? The CMA are responsible in the UK to impose and enforce these laws in order to protect the consumers. If small independent businesses were in breach of these regulations, they would most definitely be held accountable and prosecuted. However, evidently this is not the case as these big corporations are still targeting consumers and taking their money deceptively despite this issue being reported on countless occasions. The CMA are not working in the best interests of the consumers. Since the UKs national courts are failing to protect its consumers, the Court of Justice of the European Union (CJEU) needs to be involved as they have the power to reform any inconsistencies regarding this area of law and make it known to these big corporations that no one is above the law and if they carry on with their UCPs, they will be held accountable as they are not exempt. This also raises a concern as to what will happen to the UK when Brexit is fully implemented. If the UK is struggling to enforce laws on its own without the CJEUs help, how will they manage to do so when the UK is not a part of the EU anymore. The law society journal states that "as most consumer protection legislation is already UK legislation Brexit is

'unlikely to have a significant impact on domestic consumer rights in the immediate future 23". Unfortunately, the UK continues to disregard issues and there is no sign of

23 Siobhan McConnell S, 'Consumer Law — What Happens After Brexit?' [2017] Company Secretary's Review accessed 13 May 2021

reform for the enforcement of the law that governs unfair commercial practices as well as consumer protection.

BIBLIOGRAPHY WEBSITES: 'Car Dealer Fined For Misleading Customers' ( Yorkshirepost.co.uk, 2021) accessed 13 May 2021 ( Europarl.europa.eu, 2021) accessed 13 May 2021 'The Consumer Protection From Unfair Trading Regulations 2008' ( Legislation.gov.uk, 2021) accessed 13 May 2021 'The Consumer Protection From Unfair Trading Regulations 2008' ( Legislation.gov.uk, 2021) accessed 13 May 2021 'R V X Ltd [2013] EWCA Crim 818 — Regs 2, 8, 9 And 12 And Para 12 Of Sch 1 CPUTR.' (Consumercrime.co.uk, 2021) accessed 13 May 2021 'London Metropolitan University Library Catalogue' (0-login-westlaw-co-uk. emu. londonmet.ac.uk. 2021) accessed 13 May 2021

JOURNALS: 'Brexit Is 'Unlikely' To Affect UK Consumer Rights' [2017] Company Secretary's Review accessed 13 May 2021 Ervine C, 'Consumer Redress For Misleading And Aggressive Practices' [2011] Edinburgh Law Review accessed 13 May 2021 Siobhan McConnell S, 'Consumer Law — What Happens After Brexit?' [2017] Company Secretary's Review accessed 13 May 2021

'Unfair Competition And Comparative Advertising...