2

The Limitations of Consumer Law in Tackling Consumer Harm

I.Introduction

In the EU and the UK, a vast legal framework is available to protect the interests of consumers carving out a number of rights devised to protect them from physical and economic harm.

Despite the promises of consumer law, consistently high levels of consumer detriment are caused by defective goods and services and unfair contract terms.¹ Figures from the OFT dating back to 2008 placed the level of consumer detriment relating to problems with goods and services at around £6.6 billion.² Recent estimates show a steep upward trend. The Citizens Advice Consumer Detriment report,³ based on data gathered from consumers in 4200 interviews, explains:

Overall, the estimated value of consumer detriment in the UK in 2015 was at least £22.9 billion (after deducting compensation) or £446 per adult UK resident, amounting to 2% of consumer spending. The online survey results suggest this figure could be potentially higher.⁴

In the UK, contract law – that is, sales law and unfair terms rules – now contained in the Consumer Rights Act 2015 (CRA 2015) and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), are the primary tools to address economic loss (with which this book is primarily concerned). While the legislation currently in place goes some way to offer protection, it has many limitations. It does not address all situations where consumers may suffer primary economic harm, let alone secondary harm. Secondary harm may consist in time needed to deal with obtaining redress, days off work, etc. Lost earnings from consumer detriment were estimated to be to the tune of £7.2 billion in 2015, while the cost of time lost amounted to an estimated £5.1 billion.⁵ The Citizens Advice Consumer Detriment report showed that in some instances where compensation was obtained, it was not sufficient to cover other consequential losses suffered as the result of the primary harm.⁶ Around £9 billion in compensation was awarded in 2015. This was less than 30 per cent of the costs incurred on average.⁷

One of the reasons why the law is unable to protect all consumers is that enforcement mechanisms, either public or private, rely on breach of statutes or common law violations. Nevertheless, the legal framework as it stands is not always able to catch all types of behaviours and market failures because of the way the law is articulated or interpreted. For example, the way the quality standards for services were devised in the CRA 2015 offers a case in point. According to Willett,⁸ it is not enough for consumers to establish a defective outcome. The business usually escapes responsibility unless the consumer demonstrates that the business’s process did not follow standard business practice.⁹ The fault standard provides limited consumer protection. Where consumers cannot establish fault in the business’s process, potentially high levels of consumer economic detriment will go unremedied.

The consumer theories of harm developed in this book show that harm is still experienced by consumers and should be tackled irrespective of the fact that the legal framework provides a clear route to remedy or redress. The rationale for intervention should not simply be based on whether or not the law condemns a particular behaviour or result, but on the economic harm actually suffered by consumers. This is the point where economics takes the driving seat.

This chapter explores the main limitations consumer law faces in addressing consumer detriment. The main gaps in protection are currently found either in statutes or as a result of policy and case law interpretation of key concepts. Indeed, the main deficiencies of the consumer protection system stem from: (i) the overuse of information as a transparency approach; (ii) the definition of the average consumer used as a reference point for protection and a lack of protection for vulnerable and disengaged consumers; and (iii) more specific gaps in statute coverage, in particular in the way unfair terms are controlled.

The last section of this chapter provides an overview of the enforcement framework in the UK to highlight that the tools of enforcement are also largely responsible for consumer detriment going unchecked. Indeed, access to justice for consumer disputes continues to be problematic in the EU and in national law. This is often because, although consumers may be entitled to some compensation, they do not take the necessary steps to obtain it. This may be because consumers perceive court proceedings to be expensive, time-consuming and burdensome, or result in an uncertain outcome due to their adversarial nature (in the UK). For some consumers, those elements are too great an obstacle. Therefore, many do not even try to seek redress. For others, it is the absence of knowledge of their rights that is responsible for redress apathy.¹⁰ The latest government data also confirms that consumer dispute resolution outside of courts (known as alternative dispute resolution – ADR) is confined to a narrow category of users: predominantly middle-aged males on an average income above £20,000.¹¹ This leaves most consumers without a remedy and thus having to shoulder the cost of their loss.¹²

II.Limitations in the Use of Information as a Mainstream Transparency Approach

Information as a tool can have many advantages. It is the most cost-efficient way to date to bridge information asymmetries in business-to-consumer transactions. Well-designed disclosures can provide useful information and be effective in influencing behaviours in a positive way.¹³ However, the consensus is that mandatory disclosures have by and large failed.¹⁴

Consumer law and policy have been over-reliant on the information paradigm. It is used in much of the legislation designed to protect consumers in all spheres of legislative and policy intervention (national, EU and international level). Information as a regulatory technique grew to influence much of the EU policy and other regional frameworks. It has also been embraced by international institutions.¹⁵

The information paradigm underlines transparency as the main method of consumer protection.¹⁶ It assumes that, armed with information, consumers are able to make informed choices and make adequate comparisons between products. When that is the case, markets are more efficient because consumers can vote with their feet and favour better products and traders. With this goes the recognition that the information provided needs to be reliable,¹⁷ provided in a timely manner and be accessible to consumers. Thus, the law guards against the ‘excess’ of information. For example, the European Directive 93/13/EEC on unfair terms in consumer contracts (UTCCD) ensured that terms, even core terms setting out the price for the product concerned, can be assessed for fairness if they are not clearly and intelligibly communicated. In addition, Directive 2005/29/EC on unfair commercial practices (UCPD) provides a framework for all information to not mislead consumers (either by action or omission). But those rules are by and large insufficiently applied to rid contracts and transactions of poor practices. Besides, even when all the information disclosed to consumers is above board, information still remains an imperfect vehicle for empowering consumer to make rational choices (as we will explore in chapters four and five).

EU consumer law started out preferring ‘information provision over interventionist norms, both in legislation and in case law’.¹⁸ This is partly because it has been easier to find agreement on information obligations amongst EU Member States than on more interventionist rules and enforcement practices. Information is also a less intrusive method, and was favoured by the CJEU even before the creation of a stand-alone basis for consumer policy in European law.

Case law concerning free movement of goods came to recognise labelling as the best way to defend consumers’ interests whilst being the least restrictive on trade.¹⁹ Furthermore, in GB-INNO-BM,²⁰ the CJEU confirmed that consumer information is one of the principal requirements of consumer protection. Information was elevated from a ‘method’ to a ‘right’ in the Treaty of Amsterdam in 1997.²¹ Today, the use of information is a method that is applied in all aspects of consumer protection, from food labelling and the utilisation of dangerous products to financial services.

Research has shown that any human being’s cognitive capacity is limited to handling seven pieces of information at any one time.²² Yet, the amount of information consumers are expected to grapple with under EU consumer law is far higher.²³ While there is some lenience regarding the format and the point at which the information needs to be delivered, depending on the medium used, the volume of information is a compulsory requirement of consumer protection law.

In Walbusch Walter Busch,²⁴ the opinion of the Advocate General clarified that the application of Article 8 does not relieve the advertiser from also having to provide consumers with all the information required under Article 6(1) at a later stage, thus confirming that the information burden under Article 8 is only changed rather than really lessened, a view endorsed by the CJEU. Similarly, in Verband Sozialer,²⁵ the CJEU concluded that the information itself was always necessary, but that the space limitations of the medium may warrant a relaxation of the rules. The CJEU left it to national courts

to examine, on a case-by-case basis, first, whether the limitations of space in the advertisement warrant information on the supplier being provided only upon access to the online sales platform and, secondly, whether, so far as the online sales platform is concerned, the information required by Article 7(4)(b) of [the UCPD] directive is communicated simply and quickly.²⁶

The use of information provisions seems to be ‘too readily favoured as they appear to offer a win–win solution without thorough examination of whether they are likely truly to deliver the desired outcomes’,²⁷ a defect highlighted by Howells over 10 years ago. Part of the problem with such emphasis being placed on information requirements is that a high level of literacy is required for this approach to be successful,²⁸ and it therefore rests on an imperfect standard. Much of European consumer policy is indeed built on the notion of the average consumer, who is ‘reasonably well-informed, reasonably observant and circumspect’.²⁹ But the reality is quite distinct, as we will explore further below. ‘Consumers are a heterogenous bunch’³⁰ and differ widely in their ability to digest and apply information. Behavioural economists have also debunked the myth that, faced with information, consumers will make the best choices for themselves.³¹ In general, according to the theory of bounded rationality, people face limitations in their capacity to assimilate complex information, so it may be rational for consumers not to engage with all of the information provided.

In spite of this evidence, the stronghold of information, borne out of an overzealous embrace of neoclassical economics, is far reaching. For example, the European Parliament Resolution of 22 May 2012 on a strategy for strengthening the rights of vulnerable consumers³² recognises that the notion of an ‘average consumer’ lacks the flexibility needed to adapt to specific cases and sometimes does not correspond to real-life situations. It notes that a focus on information and education ‘may be insufficient to protect vulnerable consumers, since their vulnerability may originate from their difficulty in accessing or assessing the information given to them’. It also highlights that many consumers’ vulnerability results precisely from their lack of assertiveness and comprehension of the information they receive or of the options available, or from their lack of awareness of the existing complaint and redress schemes, and that these barriers grow in the case of cross-border consumption and door-to-door sales, including online cross-border commerce. Yet ironically, the suggested cure for the lack of understanding of the information provided to vulnerable consumers is even more information to be delivered by the Commission, the Member States and national authorities via information and education initiatives.³³

The limitations of information as a paradigm are unfortunately exacerbated the higher the stakes get for the consumer. In this regard, financial services also offer a fertile ground for illustrating how information may fail to help consumers make rational choices but continues to be pushed as the method of choice.

Many financial instruments use standardised information sheets and other transparency tools.³⁴ However, there are many examples of cases where consumers fail to make ‘good’ financial decisions. The evidence points to a number of biases, including heuristics³⁵ and over-optimism. Indeed, information requirements do not deal with the fact that consumers often do not take notice of the information provided due to lack of time, and the way in which the information and choices are being presented can be used to direct consumers towards a desired outcome. Consumers tend to be over-optimistic about their ability to avoid risk and tend to believe information which supports their own viewpoint and ignore information that does not.³⁶ Their assessment of financial products is also reliant on their levels of financial literacy.³⁷

Despite recognition at the EU level that consumer cognitive abilities are imperfect, information (complemented by education) remains the vehicle of choice.³⁸ For example, Directive 2008/48/EC on consumer credit introduced a more stringent transparency regime³⁹ but did not change the status quo, nor signal a shift to responsible lending, where the onus is on the supplier to ensure consumers are protected against the risks of the products they are offering.⁴⁰

Similarly, although the Mortgage Credit Directive 2014/17/EU took on board some of the evidence regarding the limitations of information as a method of protection, it persists in reproducing the main transparency tools, albeit with some improvements based on behavioural experiments.⁴¹

This, however, illustrates the dangers of a policy no longer led by the information paradigm but replaced by behavioural economics as the main driver. Information is simply improved. Nevertheless, there will be many consumers who, despite the reformed transparency tools being available, will still struggle to make the right decision and suffer economic detriment as a result. By following behavioural economics as a new paradigm, the risk is that consumers who are not able to make any sense of the information, even after it has been calibrated to take into account human nature, will be stigmatised and penalised. There is no remedy in law to assist them because they were equipped with the ‘adequate’ information prescribed by law and rubber stamped by behavioural economists, and thus it is their error if they take on mortgage credit they ought to have shied away from. Indeed, it is telling that Article 6 of Directive 2014/17/EC emphasises responsible borrowing, yet does not contain corollary obligations of responsible lending,⁴² beyond an assessment of creditworthiness.⁴³

In conclusion, the use of information as a mainstream transparency approach does not protect consumers adequately. Behavioural economics has gone some way to show the limitations of such an approach and provides some improvements to it. However, as a normative standard, behavioural economics does not change the course of consumer protection per se. Instead, it maintains the basic framework whereby to achieve efficient market outcomes consumers must be empowered to ‘vote with their feet’. Proponents of behavioural economics argue that, for example, traditional transparency remedies such as disclosure rules shall be market tested to make sure consumers will actually be receptive to the new information provided. The overarching idea is to assist biased consumers whilst not thwarting sophisticated ones by restricting their choice set. Behavioural economists do not call for a major shift in the paradigm or the end of information, but simply for its rationalisation. In our view, here lies the major deficiency of a behavioural approach. It is not going far enough. Because it is based on experiments and testing consumer groups to determine how best to nudge them in the right direction, it risks always being one step behind and, as is currently the status quo, leaving gaps in the areas where detriment is felt by consumers and intervention is required. By contrast, understanding consumers’ limitations through the prism of bounded rationality offers a more powerful rationale for moving away from a systematic use of information.

Accordingly, an interventionist approach is called for with the aim of assisting consumers. This would take the form of a more prescriptive standard of conduct, which could include mandatory rules of substance, such as minimum quality standards or fitness tests to prevent mis-selling of risky products, or, as we suggest in this book, the introduction of a positive duty to trade fairly (discussed in chapter seven).

III.Limitations of the Definition of the ‘Average Consumer’ Used as a Reference Point for Protection

Both EU and UK consumer law today use the ‘average consumer’ as a main reference point. It is a benchmark that is not per se defined in any legislation, yet has permeated all areas of consumer protection.

Consumer benchmarks are used … to determine the expected behaviour of consumers. The benchmark applied has important consequences for the level of protection that is offered to consumers and for the degree to which intervention in the market is possible.⁴⁴

The ‘average consumer’ benchmark therefore plays a pivotal role in the way the legislation in place comes to assist consumers who have suffered detriment or to prevent this detriment from occurring.

It is well documented that consumer law seeks to protect the weaker party, albeit one that bears little resemblance to the consumer that national laws were trying to defend at the outset. EU consumer law now only shields a consumer that resembles the ‘homo economicus’ posited under the neoclassical rational choice theory,⁴⁵ thus setting a standard far higher than originally anticipated.⁴⁶ Indeed, the average consumer is a hypothetical consumer who is ‘reasonably well informed, reasonably observant and circumspect’.⁴⁷

This is principally because the roots of the definition of the ‘average consumer’ are not in consumer protection but in trade protection – more specifically, in the free movement of goods. Here lies one of the main reasons why the applicable standard is failing. The concern of the courts when elaborating on who the average consumer may be was about ensuring that no unnecessary barriers to trade could be erected. Free trade was and, in many cases, remains central to the motivation of the courts. Much of the case law is aimed at discouraging Member States from adopting measures that would be too protective of their local producers.

As a result, it was advantageous for the CJEU to paint a portrait of consumers that are not easily misled, so as to be able to suppress national rules that were over-protective of consumers and impeded trade.⁴⁸ In Cassis de Dijon,⁴⁹ for example, the CJEU considered that a ban on the sale of French blackcurrant liqueur in Germany denied consumers choice and the opportunity to sample products made according to other national traditions (ie foreign products). According to the court, consumer protection could be achieved by labelling the origin and alcohol content, trusting consumers to make adequate choices.

In GB-Inno-BM, the court also stressed the role of information as an adequate method of protection for ‘normally aware consumers’.⁵⁰ Thus, local rules that restricted the information that could be disclosed in cross-border advertising were contrary to free movement rules. Of particular interest in this case was the position of the Confédération of Commerce Luxembourgeois, which had requested that the distribution of advertisements in Luxembourg by GB-Inno-MB, a Belgian supermarket chain, be stopped in their existing form. The law in Luxembourg prohibited the disclosure of a previous price in a promotion claiming a price reduction. The reason for the rule stemmed from the fact that consumers would be unable to check the previous price in any event, and that the disclosure of a previous price might exert excessive psychological pressure on the consumer.⁵¹ The CJEU refused to be persuaded by the argument, claiming that a rule which looked at removing access to information for consumers could not be justified, since information was one of the principal requirements of consumer protection under community law.⁵² Ultimately, the court was motivated by the desire to prevent Member States from dictating rules that would oblige businesses to draft separate marketing campaigns – since these would be barriers to trade rather than truly designed to ensure consumers were not misled or put under pressure to purchase.

From this milestone, the conception of the consumer evolved, raising the expectations of how consumers ought to behave. In Mars,⁵³ the court stated that ‘reasonably circumspect consumers may be deemed to know that there is not necessarily a link between the size of publicity markings relating to an increase in a product’s quantity and the size of that increase’.⁵⁴ The court’s focus was on avoiding a costly barrier to trade had Mars been obliged to repackage all Mars bars to be sold in this territory. Instead, and while it was undisputed that the wrapper was misleading, the court disregarded what consumer detriment there could be by using a reasonably circumspect consumer as its benchmark.

The definition of consumer as we know it today was crystallised in the case of Gut Springenheide.⁵⁵ The national court wanted to know how to define the consumer to use it as a standard to assess if the description of packs of eggs was misleading. Gut marketed eggs ready packed under the description ‘six grain – 10 fresh eggs’. Each pack contained a leaflet explaining the merits of this feed for the quality of the eggs, but the leaflet did not explain that in fact the six grains were only 60 per cent of what the hens were being fed. The CJEU sided with a defined normative test based on the legal interpretation and directed national courts to ‘to take into account the presumed expectations which it evokes in an average consumer who is reasonably well informed and reasonably observant and circumspect’.⁵⁶ However, the CJEU did not rule out the possibility of using an objective test anchored in statistical analysis to form an opinion. Indeed, the Court explained that:

where the national court has particular difficulty in assessing the misleading nature of the statement or description in question, it may have recourse, under the conditions laid down by its national law, to a consumer research poll or an expert’s report as guidance for its judgement.⁵⁷

The Court also explained that the national court

may find it necessary to order such a survey, to determine in accordance with its own national law, the percentage of consumers misled by a promotional description or statement that in its view would be sufficiently significant in order to justify where appropriate banning its use.⁵⁸

After Gut Springenheide, many other cases came to endorse this standard, placing extremely high expectations on consumers.⁵⁹ For example, in Adolf Darbo, the CJEU expected that consumers were versed in pollution levels in food ingredients and the composition of foods.⁶⁰ It argued that the presence of pectin in a jam described as ‘naturally pure’ did not mislead consumers because the additive was included in the list of ingredients,⁶¹ and consumers were expected to use common sense and know that garden fruit was inevitably exposed to a certain degree of pollution.⁶² Although the court did admit that the jam contained pollutants, it saw no problem with claiming that the use of ‘naturally pure’ is not misleading,⁶³ adding that ‘even if it is assumed that, in certain cases, consumers might be unaware of that fact and thereby be misled, that risk remains minimal and cannot therefore justify a barrier to the free movement of goods’.⁶⁴

In Douwe Egberts,⁶⁵ assessing a claim that coffee had slimming virtues, the CJEU concluded that the general prohibition in national law was contrary to the free movement of goods and that, instead, national law ought to assess if a statement is possibly fraudulent on a case-by-case basis, taking into account the ‘presumed expectations of the average consumer’.⁶⁶ Advocate General G Geelhoeld explained that:

[The] reference point of the average consumer presupposes that before acquiring any product (for the first time), a consumer will always take note of the information on the label and that he is also able to assess the value of that information. It seems to me that a consumer is sufficiently protected if he is safeguarded from misleading information on products that he does not need to be shielded from information whose usefulness with regards to the acquisition of use of a product he can himself appraise.⁶⁷

He added:

So long as the information concerned is correct, it must be assumed that the average consumer who is reasonably well informed, and reasonably observant and circumspect will be capable of forming an opinion of the products advertised without his economic and health interests being harmed.⁶⁸

The expectations placed on the average consumer from the CJEU and Advocate General Geelhoeld ‘seem to reflect desired consumer behaviour, irrespective of how the average consumer actually behaves’.⁶⁹

Similarly, in the Pippig Augenoptik, the CJEU explained that ‘[the average consumer is] capable of knowing the actual price difference between the products compared and not merely the average difference between the advertiser’s prices and those of its competitors’.⁷⁰

Note, however, the difference in approach in Lidl Belgium.⁷¹ The discount chain Lidl referred to the preliminary ruling in Pippig Augenoptik in contesting the fact that comparative advertising from a local competing discounter was limited to average prices (rather than including separate comparisons for each of the products sold within the corresponding range). The CJEU ruled that to agree to such a requirement would not only affect the very practicability of such advertising methods (for the advertiser), but also be impractical for consumers if they do not possess the skills required to verify the accuracy of the advertised claim.⁷² Under such circumstances, the court considered that it was incumbent on the advertiser ‘to have verified the details and the feature in question as to their accuracy’.⁷³

The difference in the Court’s expectations in Lidl Belgium regarding the capability of the average consumer to verify the accuracy of a price comparison rests in the degree of complexity of the data that needs to be gathered and processed in the respective cases.⁷⁴

Nevertheless, in Teekanne, the CJEU ruled against the misleading use of

labelling of a foodstuff and methods used for the labelling from giving the impression, by means of the appearance, description or pictorial representation of a particular ingredient, that that ingredient is present, even though it is not in fact present and this is apparent solely from the list of ingredients on the foodstuff’s packaging.⁷⁵

In particular, the CJEU found that ‘the list of ingredients may, even though correct and comprehensive, not be capable of correcting sufficiently the consumer’s erroneous or misleading impression that stems from such labelling’.⁷⁶

In summary, there is a predominant mismatch in the case law of the CJEU between the ability of the average consumer and reality. The standard has been artificially inflated to fit free movement of goods doctrine, without much regard to the harm consumers may in fact suffer as a result. This puts too much emphasis on consumer self-reliance to find out whether the information provided is trustworthy.⁷⁷ Nevertheless, more recent case law appears to be calling into question the mainstream characterisation of the ‘average consumer’ (a point we return to in section IV below). This is not only the case when conforming to the neoclassical standard is especially complex and technically demanding (as in Lidl Belgium), but also when it is (unreasonably) time consuming (as in Teekanne, given the prominent use of labelling).

IV.Implementation of the ‘Average Consumer’ Standard under the Unfair Commercial Practices Legislation

The crystallisation of the ‘average consumer’ standard first used to develop free movement of goods doctrine into the benchmark for consumer protection in general took place through its inclusion as a benchmark in the operation of the UCPD. It also found its way into national legislation as the UCPD is a maximum harmonisation directive removing any options for Member States to deviate from the standard agreed at EU level.⁷⁸ Accordingly, the concept of average consumer also became the key element of the general unfairness test in the application of the CPRs in the UK.⁷⁹

This gist of the UCPD is enshrined in the ‘grand’ general clause (Article 5(2) UCPD; Regulation 3(2) CPRs), which prohibits unfair commercial practices that contravene the requirements of professional diligence and materially distort, or are likely to materially distort, the economic behaviour of the average consumer with regard to the product. The general unfairness clause was introduced to provide a safety net in order to make this framework directive future-proof;⁸⁰ therefore, it should only be applied to close regulatory gaps.⁸¹ There is no doubt that the concept of the average consumer is the key element of the general unfairness test. This is because both the standards of professional diligence (with its constituents of honesty and good faith) and material distortion must be ultimately benchmarked against the notion of the average consumer.⁸²

The architecture of the UCPD is completed with two specific sub-general clauses addressing misleading (Articles 6 and 7 UCPD; Regulations 5 and 6 CPRs) and aggressive (Articles 8 and 9 UCPD; Regulation 7 CPRs) practices, plus a detailed list of 31 blacklisted commercial practices (Annex 1 UCPD; schedule 1 CPRs). These provisions are all self-standing offences, meaning that there is no need to argue a violation of professional diligence required under the more demanding general clause,⁸³ nor would it be necessary to rebut the argument put forward by the defendant that it complied with that requirement.⁸⁴ However, as put by Willett, ‘the concept of unfairness under this general clause should accommodate, in a coherent manner, the aggressive and misleading practice concepts’.⁸⁵ Arguably, this shall be particularly the case when the sub-general clauses are applied to contentious cases.⁸⁶

This pivotal role may explain why the definition of the average consumer was hotly contested at the time of its adoption and continues to be so. Yet, the difficulty stems from the fact that the average consumer is not defined in Article 2 of the UCPD and is also not defined in national law. As a result, ‘the inability of one group to secure its definition of average consumer in the directive means that the inevitable political choice in determining the application of these standards is conferred on the courts’.⁸⁷ We have already seen why this is problematic, given that the CJEU’s main view of consumers is anchored in free movement of goods doctrine and the preservation of the internal market.

To some extent, adopting a concept already in place could have had some benefits. Collins pointed out that ‘the concept of the “average consumer” … seems sufficiently precise to achieve a high level of uniformity, because the legislators have sensibly built on and articulated further the notions developed originally by the CJEU, rather than starting afresh’.⁸⁸ But uniformity does not necessarily mean an adequate level of protection for consumers. As the benchmark made the transition from free movement of goods doctrine to consumer protection instrument, it would have been rational to see the standard shaped in ways that would prove more protective of the consumer. Many academics had indeed criticised the standard.⁸⁹

However, at EU level, the use of the average consumer benchmark in the UCPD did not prompt any real changes in the way the test was envisaged and ought to be applied. The European Commission stressed that ‘the test is based on the principle of proportionality’ and that ‘the average consumer under the Directive is not somebody who needs little protection because he/she is always in a position to acquire available information and act wisely on it’.⁹⁰ Instead, ‘[t]he Directive adopted this notion to strike the right balance between the need to protect consumers and the promotion of free trade in an openly competitive market’.⁹¹ In the application of the average consumer standard in the context of the UCPD, the average consumer is still not misled easily because the standard is still expected to perform in enabling free trade and competition rather than focusing on protecting consumers.

As a result, in Mediaprint, Advocate General Trstenjak explained that ‘the consumer is considered, from the viewpoint of Community law, to be capable of recognising the potential risk of certain commercial practices and to take rational action accordingly’.⁹² She added:

the average consumer, nowadays is aware, as a rule, that advertising and sales promotions in a free market economy not only attempt to win over customers by the price and quality of the product, but promise a number of additional benefits. These may be of an emotional nature, such as, in the case of advertising, the feeling of freedom and independence or membership of a certain social group, or additional benefits with a completely economic value, such as bonuses. It is therefore logical to leave it to such a reasonably well-informed and reasonably well observant and circumspect consumer within the regulatory framework defined by Community law to decide whether to purchase a product on the basis of the advertised advantages or because of its quality or even its low price.⁹³

The arguments taken into account by the Advocate General rest heavily on the reliance that the consumer is empowered and that too much protection via a ban on the use of bonuses, as was the case, would be seen as patronising consumers.⁹⁴ The wording is strong.

Yet, in the application of the standard, the case law of the CJEU allows some room for manoeuvre and so does the UCPD. The standard of the average consumer as defined to date is unnecessarily harsh and a softening of the expectations placed on consumers is perfectly possible.⁹⁵

Besides, the wording adopted in Recital 18 UCPD is conducive of the adoption of a different level of expectations. It states:

It is appropriate to protect all consumers from unfair commercial practices … In line with the principle of proportionality, and to permit the effective application of the protections contained in it, this Directive takes as a benchmark the average consumer, who is reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors, … The average consumer test is not a statistical test. National courts and authorities will have to exercise their own faculty of judgment, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case.

The average consumer test is not clearly defined as a normative one (a subjective test based on the opinion taken by the court) or a positive one (an objective test anchored in statistical analysis, for example). In this respect, the European Commission guidance on this thorny issue of interpretation relies extensively on paragraph 29 of the Opinion of the Advocate General Fennelly in Estée Lauder, most notably:⁹⁶

The approach is thus not statistical. Market surveys may, in certain cases, be of assistance, although it must be remembered that they are subject to the frailties inherent in the formulation of survey questionnaires and often subject to diverging interpretation as to their significance. Accordingly, they do not absolve the national court from the need to exercise its own faculty of judgment based on the standard of the average consumer as defined in Community law.⁹⁷

In both Gut Springenheide and Estée Lauder, the CJEU ultimately left it to the national courts to decide whether to rely on statistical evidence if they so wished.⁹⁸ As a result, the use of statistical evidence is neither necessary nor sufficient, but is admissible alongside the normative (hypothetical) test. It is therefore possible to incorporate some behavioural analysis into, or recognise bounded rationality in, the way the average consumer test is applied, if the judges wish to do so and if it can assist in the protection of consumers. Indeed, these rulings should merely be read as aiming to preserve the prerogative of national courts to discharge their burden of proof without facing the risk of rebuttals based on the use of statistical evidence; that is, that either the evidence relied upon by the court is flawed or that the evidence produced by the defendants should be taken into account by the court. Accordingly, it could be argued that the average consumer standard is a normative one, unless the national courts decide to rely also on factual evidence if they see fit.⁹⁹

However, in the context of the UCPD, Mediaprint marked a harshening of the benchmark in line with the neoclassical paradigm.

At the national level, at least in the UK, policy makers and courts have so far mainly followed the EU model. For example, the joint report by the Law Commission and the Scottish Law Commission endorsed a normative definition of the average consumer:

The concept of the average consumer is used widely across European Union law. The European Court of Justice (ECJ) has set a robust standard: one must judge the practice from the viewpoint of a hypothetical consumer who is ‘reasonably well informed, reasonably observant and circumspect. The ECJ has emphasised that national courts should exercise their own judgment: the test does not depend on statistical evidence of how consumers actually behave. The test posits a consumer who is critical and rational. This has been criticised as being unrealistic, given that consumers often make decisions based on emotional factors.¹⁰⁰

In spite of these criticisms, national case law also sided with this interpretation. In OFT v Purely Creative Industries,¹⁰¹ Briggs LJ explained that the notion of average consumer in English law substantially reproduces the European definition. According to him, the judge must presume that the consumer is sufficiently informed, observant and circumspect. This is because the UCPD exists to protect consumers that are taking reasonable care of themselves rather than the ignorant, the negligent or the consumer in a hurry.¹⁰² He also added that, generally speaking, the EU jurisprudence encourages the court to conduct that exercise so far as possible without recourse to statistical or other expert evidence about typical consumer behaviour, or even the evidence of particular consumers.

Moreover, in Recital 18 of the UCPD there are further qualifying references to ‘social, cultural and linguistic factors’ that can assist in varying the levels of expectations placed on consumers. Note that these factors are not included in the national implementation of the directive in the UK (CPRs).¹⁰³ Nevertheless, the judgment in OFT v Purely Creative Industries¹⁰⁴ bypasses this problem as it makes reference to Recital 18 of the UCPD and focuses on the fact that the notion of average consumer adopted by the EU is not a statistical test.¹⁰⁵ Rather, the national judge and national authorities must exercise their own judgement to determine the typical reaction of a consumer on a case-by-case basis.¹⁰⁶ But the judge usefully noted that it is also possible to take into account other factors, such as social, cultural or linguistic factors.

An alternative standard is also available in EU case law. Trademark laws, in particular, rely on the average consumer to assess the likelihood of confusion and the distinctiveness of trademarks, but adopt a more realistic stance. Ironically, the origins of the benchmark are also found in Gut Springenheide. In Lloyd Schuhfabrik, a case concerning the interpretation of Article 5(1)(b) (likelihood of confusion on the part of the public) of Directive 89/104/EEC on trademarks, the court made a direct reference to Gut but immediately qualified the application of the test. It explained:

the average consumer of the category of products concerned is deemed to be reasonably well-informed and reasonably observant and circumspect … However, account should be taken of the fact that the average consumer only rarely has the chance to make a direct comparison between the different marks but must place his trust in the imperfect picture of them that he has kept in his mind. It should also be borne in mind that the average consumer’s level of attention is likely to vary according to the category of goods or services in question.¹⁰⁷

The EC Guidance on the UCPD¹⁰⁸ clearly acknowledges the link between the CJEU case law in trademarks and the UCPD. It explains that the case law can be applied by analogy to the concept of the average consumer in this directive.¹⁰⁹ It also points to national case law that has applied this standard to the use of misleading and aggressive commercial practices in the promotion and supply of electricity in Italy, after the liberalisation of the market. Arguably, the European Commission took a rather narrow view by arguing that:

The Italian administrative court found that in the electricity market, the transition from a monopoly to a liberalized market not only altered the relationship between offer and demand, but had also increased the knowledge gap between consumers and traders. The court considered that, in such a context, the average consumer (i.e. somebody who is, in principle, reasonably well informed on the market conditions) could not be expected to have or gain the necessary knowledge or information to fill such a gap. Essentially, the court took into account the fact that, in the electricity retail market, the average consumer had not yet adapted to the new market situation and that the reasonable level of knowledge one could expect from the average consumer had to be fixed accordingly.¹¹⁰

According to the European Commission, this shows how the average consumer’s level of attention is likely to vary according to the category of goods and services in question, especially to the extent that the length of time for which a liberalised market has been in operation is an objective factor that might affect the expectations of the reasonable average consumer. The Commission also provided supporting arguments to the idea that the degree of novelty of a market mechanism can temporarily justify the departure from the neoclassical standard for the average consumer, citing relevant trademark case law.¹¹¹

Despite the fact that the Commission is willing to acknowledge the limitations of consumers’ ability to compute information, this has not yet taken hold as a main normative value in the application of the UCPD. Yet we have seen that the UCPD itself is fully equipped to enable a variation in the expectations placed on the consumer.

If anything, the importance of improving the construction of the ‘average consumer’ standard is underscored by the observation that this benchmark is applied to other areas of law. Specifically, the average consumer standard has spilled over – first, into the application of the blacklist of the UCPD, where it is not normally required to pay attention to the ‘average consumer’ test. For example, in Wind Tre and Vodafone Italia,¹¹² the CJEU ruled that the practice of selling SIM cards on which internet browsing and voicemail services are preloaded and preactivated could be classified as ‘inertia selling’, banned under Point 29 of Annexe I of the UCPD because it requires ‘demanding immediate or deferred payment for … products supplied by the trader, but not solicited by the consumer’. In doing so, it made reference to Recital 18 and the need to consider the practice from the viewpoint of an average consumer.

Secondly, the benchmark is being applied in relation to other Directives,¹¹³ although it is not a formal requirement of their operation. Willett had predicted that the average consumer test could be used in the assessment of the fairness of contract term, a step undertaken by the CJEU in Pereničová and Perenič.¹¹⁴ In Kásler,¹¹⁵ also regarding unfair terms, the CJEU concluded that, to assess the method used to calculate repayments in a foreign currency in a mortgage:

It was for the referring court to determine whether, having regard to all the relevant information … the average consumer … would not only be aware of the existence of the difference, generally observed on the securities market, between the selling rate of exchange and the buying rate of exchange of a foreign currency, but also be able to assess the potentially significant economic consequences for him resulting from the application of the selling rate of exchange for the calculation of the repayments for which he would ultimately be liable and, therefore, the total cost of the sum borrowed.¹¹⁶

Using the standard of the average consumer raises the bar and expectations placed on the consumer and his ability to navigate the terms. The judgment does not rest solely on transparency, but also requires that the consumer be able to assess the consequences. In light of the complexity of the degree of novelty of the term (and the financial matter in general) concerned, lenders should be under a duty to make crystal clear to consumers the extent to which the mechanism in question would be onerous. In this respect, it is noteworthy how the court referred to ‘the promotional material and information provided by the lender in the negotiation of the loan agreement’ as relevant contextual background.

In light of the case law we have reviewed, it is not at all certain that national courts would conclude that the onus ought to have been on the lender. Yet, had the lender provided adequate warning as to the foreseeable financial implications of the contested term, it would have arguably been extremely difficult for the lender in question to successfully conclude the sale.

V.Protecting ‘Vulnerable’ and ‘Disengaged’ Consumers

In the case law reviewed above, there is no concern for a consumer that would deviate from this standard of the reasonably well-informed, observant and circumspect. Yet, there is growing acknowledgement not only that vulnerable consumers may require a different type of assistance, but also that some consumers who may otherwise conform to the definition of an average consumer have become disengaged, resulting in detriment.

A.The Vulnerable Consumer

The notion of vulnerability is enshrined in law. For example, under section 3(4)of the Communications Act 2003, OFCOM (the UK Office of Communications) must have regard, in performing its duties, to (i) the vulnerability of children and others whose circumstances appear to OFCOM to put them in need of special protection; and (ii) the needs of persons with disabilities, the elderly and those on a low income. The UCPD and its implementation through the Consumer Protection from Unfair Trading Regulations 2008 in the UK also take vulnerabilities into account. However, the text of Article 5(3) of the directive (and its implementing regulations in the UK) is limited to mental or physical infirmity, age and credulity, although its remit was broader in the initial proposal.

That is not to say that the UCPD could not be effective in protecting a larger base of vulnerable consumers. Indeed, according to Recital 19, the types of vulnerabilities highlighted in the legislation are only indicative and new ones may be taken into account. The European Commission Guidelines confirm that the text can cover a wide range of situations, although it is not certain this would be the interpretation that a court would give to the UCPD.¹¹⁷

In any event, not all vulnerabilities could be considered in all circumstances because the UCPD also carries some limits as to who it is prepared to offer protection to. Article 5(3) UCPD states (emphasis added):

Commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group. This is without prejudice to the common and legitimate advertising practice of making exaggerated statements or statements which are not meant to be taken literally.

From the wording, it is notable that a number of obstacles exist. First, the vulnerable consumer that can gain protection needs to be part of a group that is clearly identifiable. This, according to Duivenvoorde, may prove to be a significant barrier to the application of the benchmark.¹¹⁸ Besides, that group needs to be particularly vulnerable, not just vulnerable. In addition, the use of the word ‘only’ is puzzling; it is not clear if it means that only vulnerable consumers need to see their behaviours affected by a practice. The result of such an interpretation would be to withdraw protection if, alongside one of the vulnerable groups, a consumer who is not deemed to belong to that group is also hurt by the practice, even if the consumer may belong to another vulnerable group.¹¹⁹ Finally, the last hurdle to protection is that the trader could reasonably foresee that harm would be caused by the practice.

Consumers are vulnerable for a range of reasons. For example, consumers may be at greater risk of vulnerability because of some aspects of a market, their own physical or non-physical characteristics, or a combination of those. Any consumer can become vulnerable, and vulnerability may not be a permanent state.¹²⁰ For example, consumers may be vulnerable regarding financial services because they are unable or find it difficult to service existing debt, at least temporarily. Consumers may also find themselves at risk of vulnerability due to the time at which they access the market. For example, consumers may be looking for legal advice at times of stress because of bereavement or divorce, which impacts on their ability to choose and interact with a lawyer. In utilities, low income, age or lack of access to the internet may translate into a vulnerability because these consumers may find it more difficult to switch supplier, gain a good deal or make meaningful comparisons (for example, because comparisons are often only accessible online). Personal attributes such as physical disabilities or non-physical (possibly even ‘hidden’) attributes such as autism, dementia or anxiety may impact on a consumer’s ability to, say, access public transport (eg buses and trains), move through an airport or cope with disruption if it occurs.

However, there is clear evidence that such factors do play a major role in consumers experiencing detriment. For example, in the 1960s, Caplovitz showed how people from a disadvantaged background in the USA were consistently charged more for goods and services, in effect paying a poverty penalty.¹²¹ The European Commission report on consumer vulnerabilities across key markets found that this is sadly also the case in the EU, where low-income consumers are regularly put on more expensive tariffs for services because of the limited payment methods available to them, or they do not have access to mainstream financial services, steering them to more expensive credit.¹²²

This report fits into the evolving literature on consumer vulnerability and moves beyond strict personal characteristics (age, gender, locality, education and language)¹²³ by considering an ever-growing range of socio-economic factors, as well as looking at how external elements may create, influence or reinforce vulnerabilities. It considered behavioural drivers (trust, credulity, impulsiveness, attitude to risk, computational abilities); market-related drivers (being unable to read terms and conditions, not comparing deals from providers, not knowing contract conditions, not reading or understanding communications from providers); access (use of the internet); and situational drivers (difficulty in making ends meet or having friends in this situation, long-term sick or disabled, employment status).

•is more susceptible to certain marketing practices.¹²⁴

Cartwright also developed a framework to identify where vulnerabilities are liable to exist in the financial services sector. They are organised around a number of elements, namely: information, pressure, supply, redress and impact vulnerabilities.¹²⁵ For our part, we prefer to refer to ‘vulnerable’ purchasing situations because all consumers are prone to biases that can be exacerbated by the vulnerabilities discussed above.

Regrettably, no matter how consumer vulnerabilities are defined or conceptualized, they continue to play an integral part in consumers experiencing economic detriment that the law is not yet well equipped to address.

B.The Disengaged Consumer

The European Commission report on consumer vulnerability in key markets identified the ‘disengaged’ as a category of consumers. It discusses, albeit briefly, consumers that are disengaged from markets in that they fail to read terms and conditions, fail to be aware of their contract conditions or do not read communications received from their providers. Being disengaged in this sense is conceptualised as a vulnerability that can be mitigated by improving engagement.¹²⁶

In addition, consumers have been called ‘disengaged’ because they fail to shop around and secure a better deal. For example, in the UK, consumers who switch energy suppliers normally pay £300 less a year than those who do not. Customers switching bank accounts can save on average £92.¹²⁷ As the result of a Competition and Markets Authority (CMA) investigation, the UK energy sector regulator Ofgem is trialling a disengaged customer database aimed at helping customers on the more expensive standard energy tariff who have not switched for three years or more.¹²⁸

However, the disengaged consumer is the victim of his or her prior belief that there is no point in shopping around because every trader is similarly bent on treating consumers unfairly.

The disengaged consumer does not necessarily have to conform with the traditional socio-demographic profile (ie relatively uneducated, low income, old, with disabilities etc). For example, what transpired from the CMA’s market inquiries into retail energy¹²⁹ is that the disengaged consumer corresponds to how the mainstream consumer behaves, with the majority not switching because they do not think it worth their while to make the effort to search for a better deal. Disengagement does not, in fact, necessarily come from the consumer themself, but from the dysfunction of the market. Yet, the terminology of being ‘disengaged’ places the blame at the consumer’s door. For example, Alex Chisholm, a previous CMA chief executive, delivered a speech in which he describes consumers as ‘sleepers’, ‘under-active’, ‘healthy but sleepy’, ‘able but inactive’.¹³⁰ All implying that the consumer is at fault. Chisholm goes even further and asks: ‘if apparently the consumer can’t be bothered, should we be?’¹³¹ Thankfully, the answer given in the speech is yes, but it is in relation to competition policy, where low levels of consumer engagements are combined with strong market positions for the incumbents. The view is therefore not necessarily framed to protect consumers. In fact, Chisholm explains: ‘One way of characterising this low consumer engagement problem is as a market failure in which under-active consumers, by not exercising choice, impose negative externalities on other consumers from the consequential weakening of competition.’¹³²

This approach is underwhelming to say the least. This came out quite clearly in the retail energy market inquiry (discussed in detail in chapter six), where the CMA Inquiry Group concluded that consumers are under a collective duty to shop around.¹³³ Not much care is apparently given to the fact that businesses are not behaving fairly towards their customers and that they ought to have a duty to do so (as we advocate in chapter seven). Instead, the expectation is that businesses try to engage their customers, but this is without any guarantees that it will have the desired effect.

The stridency is because the disengaged consumer is not limited to a tiny proportion of struggling consumers who might be in need of extra protection (such as the vulnerable consumer); they sometimes represent the majority. The mainstream approach is to rely on behavioural economics to explain this widespread inertia. However, the category of disengaged consumer does not necessarily require recourse to behavioural insight. Indeed, it is a perfectly plausible outcome for Bayesian updating consumers not to shop around. This is because those consumers are actually perfectly rational. As they are subject to limited resources (time, effort), they form their expectations on the basis of past experiences in order not to waste their resources. In situations where traders tend to behave unfairly, the emergence of disengaged consumers should not be surprising.

VI.Limitations Found in Unfair Terms Legislation

Having considered unfair commercial practices, we now consider unfair contract terms legislation, and its limitations in tackling consumer detriment.

According to section 62(4) CRA 2015, ‘a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer’. As a result, the judge must explore the imbalance in the rights and obligations of the parties. If the harm caused to the consumer by the presence of the term in the contract is not of sufficient magnitude, the term will not be unfair. The way this section is put into operation is by first reviewing which terms can be assessed for fairness.

Until the introduction of the CRA 2015, unfair terms were governed by two statutes: the Unfair Contract Terms Act 1977 (UCTA) and the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs). The UTCCRs found its origin in the UTCCD and was solely focused on business-to-consumer contracts. By contrast, the UCTA applied to all contracts, including business-to-business contracts. The two statutes overlapped somewhat, making their application quite difficult, especially because the test for unfairness used in each was different. In 2005, a joint report by the Law Commission and the Scottish Law Commission recommended that a single harmonised regime replace the two cohabiting statutes.¹³⁴ This report was revisited in 2012,¹³⁵ following further reforms under way at European level. The European Commission proposed to introduce a new instrument to reform the consumer acquis, the Consumer Rights Directive, from which the CRA 2015 derives. The initial project included a reform of the 1993 Directive on unfair terms. Political complications meant that the Consumer Rights Directive abandoned changes to the unfair terms regime. However, the UK took the opportunity of the implementation of the Consumer Rights Directive to finally introduce a reformed regime for unfair terms in the UK.

One of the main deficiencies of the unfair term regime is that it starts from the premise that competition and market pressures will lead to the right outcomes for consumers and that therefore what needs to be controlled is effectively the transparency and prominence of terms. If a term is clear, it will not be assessed for fairness.

The legislation leaves out terms that pertain to the price and main subject matter of the contract, because enabling the judiciary to review those was perceived as encroaching too far on the freedom of contract. Woodroffe also notes that a ‘consumer cannot allege unfairness merely because he has made a bad bargain’,¹³⁶ explaining why the law carries an exemption in the first place. There is reluctance, therefore, to move fairness beyond procedure and into substantive judgements. Core terms were carved out for this very reason, yet the notions of price and subject matter remain quite difficult to define.

The unfair terms regime rests on the idea that consumers should not be surprised by the terms that apply to their relationships with the trader. However, as most terms in a contract are contained in what is called ‘small print’, surprise can never be ruled out. Besides, there is plenty of evidence to show that in fact consumers do not read terms.¹³⁷ The Law Commission noted:

We think that the exemption should distinguish between terms which are subject to competition and those which are buried in ‘small print’. Where consumers know about the terms proffered by traders, they are able to take them into account in their choices: the law should not seek to protect consumers from the consequences of their own decisions. By contrast, consumers rarely read ‘small print’. ‘Small print’ is a concept instantly understood by consumers in their daily lives. It is not just about font size. It is also marked by poor layout, densely phrased paragraphs and legal jargon. Often simply labelling a hyper-link as ‘terms and conditions’ is sufficient to ensure that most consumers do not read the document. We think that all small print terms should be assessable for fairness.¹³⁸

This proposal was adopted in the CRA 2015. Section 64 CRA 2015 states:

(1)A term of a consumer contract may not be assessed for fairness¹³⁹ under section 62 to the extent that –

a.It specifies the main subject matter of the contract, or

b.The assessment is of the appropriateness of the price payable under the contract by comparison with the goods, digital content or services supplied under it.

(2)Subsection (1) excludes a term from an assessment under section 62 only if it is transparent and prominent.

Much therefore rests on the definition of what a transparent and prominent term is. Transparency is achieved, in part, by the use of plain and intelligible language and legibility.¹⁴⁰ Prominence is measured by reference to the ‘average consumer’. Section 64(4) explains that ‘A term is prominent … if it is brought to the consumer’s attention in such a way that the average consumer would be aware of the term’. There may lie a major deficiency of the Act, inasmuch as the ‘average consumer’ is singularly referred to the attribute of prominence but not transparency. This may prevent recourse to the interpretation given by the CJEU in Kásler (discussed above), whereby the requirement of transparency should not be limited to legibility, but should also allow the average consumers to fully comprehend the foreseeable effect of the term in question. It is debatable whether this stronger protection could be achieved under the prominence requirement. In this respect, it is worth noting that the Guidance to the CRA 2015 explains that consumers should be able to see and understand terms that could disadvantage them.¹⁴¹

The Law Commission was also in favour of taking into consideration the place of terms in the assessment of transparency and prominence. As a result, it supported that a reasonable consumer ought to be aware of terms even if they have not read the full contractual document. This is a reasonable stance, since behavioural research clearly shows that consumers do struggle with terms and conditions,¹⁴² and it flows from bounded rationality that they may consider it is not worth the effort. Studies have also found that consumers who have read the terms continue to have incorrect interpretations of the contract terms, due to over-optimism and as a result of various biases.¹⁴³

This possibly hints at the fact that transparency and prominence are two sides of the same coin, and that it is not really possible to consider a term transparent if the consumer does not also know of it. Recital 20 of the UTCCD explains that consumers should have an opportunity to examine all terms, and that some terms are considered unfair because the consumer is not able to review them. For example, schedule 2, part 1, paragraph 10 of the CRA 2015 refers to ‘a term which has the object or effect of irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract’. As a result, the operation of the CRA 2015 rests on the premise that all terms should be transparent.

When it comes to core terms, the Guidance explains that the requirement of transparency is supplemented by an additional condition of prominence.¹⁴⁴ That is not to say that prominence is never required for other terms. Prominence as a standard is reminiscent of the way case law on incorporation of terms operated. Indeed, the CRA 2015 is understood to build upon established case law under which the more unusual the term, the more prominent it will need to be.¹⁴⁵

Before the reform, the seminal judgment by the UK Supreme Court in the bank test case highlighted how limited the reach of the UTCCRs could be, with its emphasis on procedural fairness rather than substantive fairness per se.¹⁴⁶ In OFT v Abbey National plc,¹⁴⁷ the issue of core terms and their exemption from unfairness review was tackled with far too much emphasis on the impact that this would have on banks rather than on consumers.

According to the Law Commission, the Supreme Court failed to protect consumers against unfair surprises in addition to procedural failing, such as referring the case to the CJEU and taking a purposive approach, which would have been beneficial to consumers.¹⁴⁸ Surprisingly, the Supreme Court argued that the terms setting up allegedly excessive fees for unauthorised overdrafts were indeed core (ie relating to the adequacy of the price and thus excluded from the unfairness test under Regulation 6(2)(b)) because these price terms constituted a material source of revenue for banks – that is, notwithstanding the fact that users were charged exorbitant interest rates. It seems questionable whether the outcome would differ much under the new ‘prominence’ test. This is because, as we will explain in our case study on the subject in chapter six, those vulnerable consumers who are mostly reliant on this expensive form of short-term credit did not respond positively to the introduction of message alerts warning about the imminent move into unarranged overdraft.

Prior to the case reaching the Supreme Court, the High Court had found that the clauses in contracts that related to bank charges for unpaid items, paid items where insufficient funds are available and overdraft excess fees were all outside the scope of Regulation 6(2) on core terms and could thus be controlled for fairness. The Court of Appeal rejected the appeal unanimously, confirming the findings at first instance because Regulation 6(2), which carves out an exception, ought to be interpreted restrictively. The banks appealed this decision and the Supreme Court sided with them, considering that the charges were in fact part of the price or remuneration. It is important to note that, in this case, the wording of the clauses in question was deemed by Andrew Smith J to be in plain and intelligible language except for some relatively minor aspects.

The courts took a different view in OFT v Foxtons Ltd.¹⁴⁹ This case concerned the commission that estate agents were charging landlords, not simply on finding an initial tenant, but on renewal of the tenancy agreement or on sales commissions. Mann J decided that renewal and sales commissions were not core terms and that, as they had also been drafted in obscure language, some were too vague or hidden within the document and could therefore be tested for fairness. By contrast, in OFT v Ashbourne Management Services Ltd,¹⁵⁰ Kitchin J considered that a clause in a gym membership under which the consumer is instructed that he ‘must pay the monthly membership subscription’ for a minimum membership period was a core term because ‘it defines a period during which the member is entitled to use the facilities of the gym club and in return must pay a particular monthly subscription’.¹⁵¹ Nevertheless, the judge ruled that this did not preclude assessing the term in question for fairness with respect to other aspects not strictly related to the description of the main subject matter.¹⁵² That is to say, Kitchin J opted for a narrow interpretation of the exclusion under Regulation 6(2)(a) of the UTCCRs, in line with what Lord Walker JSC did with respect to Regulation 6(2)(b) in the bank test case.¹⁵³

In this respect, it is important to point out that the judge referred to ‘the average consumer to whom these agreements are targeted’ as the relevant benchmark for the fairness assessment.¹⁵⁴ The concern in this case was that Ashbourne, a company that provides management services to gym clubs, recommended the use of minimum membership periods in order to take advantage of the over-optimism by new members in terms of their future usage of the gym facilities, thus operating as a ‘trap’.¹⁵⁵ The judge considered that this type of assessment was not precluded as it relates to the consequences to members of early termination in light of the minimum membership period (ie not part of the main subject matter of the contract).¹⁵⁶

Further hurdles await the presumption that a term is not deemed core or is sufficiently obscure to warrant an assessment of fairness. Under section 62(4) CRA 2015, a term is unfair ‘if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer’. This is the test that applies to unfair terms. In this sense, it is from this test that the judge must build a counterfactual. There are two main elements that require attention: significant imbalance and good faith.

Significant imbalance is based on the concept of substantive unfairness. Yet, it is a necessary but not sufficient condition for a finding of unfairness. It will still be required to argue that the trader acted contrary to the requirement of good faith, an element linked to procedural unfairness considerations. Hugh Collins argued that

[the UTCCD] does not require consumer contracts to be substantively fair, but it does require them to be clear. Clarity is essential for effective market competition between terms. What matters primarily for EC contract law is consumer choice, not consumer rights.¹⁵⁷

Stated otherwise, whilst the UTCCD is aimed at correcting an imbalance between the bargaining positions of the trader and consumer, it is not designed to protect consumers from entering into disadvantageous contracts.¹⁵⁸

The key judgments were given by Lord Bingham and Lord Steyn in First National Bank:¹⁵⁹

The requirement of good faith in this context is one of fair and open dealing. Openness requires that the terms should be expressed fully, clearly and legibly, containing no concealed pitfalls or traps. Appropriate prominence should be given to terms which might operate disadvantageously to the customer. Fair dealing requires that a supplier should not, whether deliberately or unconsciously, take advantage of the customer’s necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or [the like]. Good faith in this context is not an artificial or technical concept … It looks to good standards of commercial morality and practice. [Regulation 5(1) of the UTCCRs] lays down a composite test, covering both the making and the substance of the contract, and must be applied bearing clearly in mind the objective which the regulations are designed to promote [ie improving the functioning of the single market and protecting consumers in that market].

Lord Steyn further clarified that ‘Any purely procedural or even predominantly procedural interpretation of the requirement of good faith must be rejected’.¹⁶⁰ In addition, Lord Steyn added that

The directive and the regulations must be made to work sensibly and effectively and this can only be done by taking into account the effects of contemplated or typical relationships between the contracting parties. Inevitably, the primary focus of such a pre-emptive challenge is on issues of substantive unfairness.¹⁶¹

That is to say, substantive unfairness can raise a presumption of procedural unfairness.¹⁶² Therefore, significant imbalance and good faith are separate, yet connected, requirements.

To be unfair, the imbalance must be practically significant, but a finding of unfairness does not require proof that a term has already caused actual harm. The fairness assessment is concerned with rights and duties, and therefore its focus is on potential, rather than actual, outcomes. A term may be open to challenge if it could be used to cause consumer detriment even if it is not presently being used to produce that outcome in practice. It is questionable if terms that have more propensity for actual harm should be sanctioned more harshly. Currently, the legislation provides for the unfair terms to be void and essentially struck out of the contract, which will continue to exist in their absence as far as possible.¹⁶³ It may, however, be possible to imagine that sanctions could be increased and include damages if a term has already caused damage. The issue here would be to be able to quantify the damage.

In Aziz,¹⁶⁴ the CJEU provided guidance on the meaning of ‘good faith’ that takes a broader approach. It directed the national court to consider whether the business ‘dealing fairly and equitably with the consumer’ could reasonably assume that the consumer would have agreed to the term had the contract been negotiated on equal terms. Section 62(5) CRA 2015 requires the fairness of a term to be assessed taking into account: (i) the nature of the subject matter of the contract; (ii) all the circumstances existing when the term was agreed; and (iii) all the other terms of the contract or any other contract on which it depends. Using this spectrum of factors allows the Act to operate in a way that protects those whose circumstances make them vulnerable to exploitation or pressure, at the time they actually sign or otherwise agree to a contract. However, the assessment of fairness only considers circumstances that existed when the term was agreed, not those arising later.

In conclusion, the main change introduced in the test for unfairness under the CRA 2015 is the introduction of a ‘prominence’ test alongside the transparency test calibrated against the ‘average consumer’ benchmark. This indicates that procedural fairness, in line with the neoclassical information paradigm, is still pretty much the predominant analytical framework, whilst acknowledging that consumers are not omniscient.¹⁶⁵ Therefore, the legislation remains limited in the assistance it can offer consumers.

Arguably, if this augmented transparency test is interpreted as requiring traders to ‘educate’ the average consumer about the detrimental effect of potentially disadvantageous terms, the exploitative terms may be removed without the need for any intervention. Notwithstanding, it is hard to see how this new augmented transparency requirement could make a real difference where exploitative terms are predominant across traders. Furthermore, when a sizeable minority of disengaged consumers continue to be exposed to unfair terms, with the risk that they are therefore subject to a worsening treatment by traders who struggle to extract revenue from a shrinking base of exploitable customers, more intrusive intervention will be required to cap the exploitation of vulnerable consumers subject to persistent, worsening and concentrated levels of detriment.

VII.The Enforcement Framework in the UK

Consumer law enforcement takes many forms, but it can, broadly speaking, be divided between private and public enforcement. All forms are useful, even though they have a distinct focus and purpose.

Private enforcement is focused on enforcing consumer rights, and is driven by the consumer that has suffered the detriment. It is therefore necessarily limited, especially where no clear mechanism for collective action is in place. Public enforcement is driven by consumer protection preoccupations, in that it focuses on the collective interests of consumers, but it does not necessarily follow that individual consumers will benefit directly from such intervention.¹⁶⁶ The public and collective nature of the enforcement means that it remains limited, because it has to prioritise those areas where the most consumers may benefit or where there is a greater risk of harm.

Nevertheless, high-profile public enforcement has the potential to set clear precedents and, thus, corresponding expectations that can apply to traders in general. This is particularly so if there are reputational repercussions from being ‘named and shamed’ by the public authority. However, in contrast to the enforcement of competition law, public enforcement of consumer law does not allow for the imposition of fines as a way to boost (financial) deterrence and thus its effectiveness.¹⁶⁷

A.Public Enforcement of Consumer Law

The main enforcers of consumer law in the UK are the CMA and sectoral regulators. Their powers are completed by Trading Standards at the local level. The main pieces of legislation that lead to a form of public enforcement are the CPRs and the CRA 2015 (provisions on unfair terms in particular).¹⁶⁸ The regulatory framework wherefrom enforcement powers are derived was simplified by the CRA 2015. Part III of the Act rationalised enforcement powers shared between local enforcers (such as Trading Standards) and other regulators.¹⁶⁹ The details of the investigatory powers of the various enforcers are contained in schedules 5 and 6 CRA 2015. The powers are accessed via part 8 of the Enterprise Act 2002 (EA 2002).

In recent years, there has been a growing focus on the need for individual recompense for individual wrongs in the consumer area,¹⁷⁰ leading to regulatory changes and the inclusion of rights of private action in areas that used to be the preserve of public enforcers. For example, the Consumer Protection (Amendment) Regulations 2014 introduced a right of private action to the CPRs, in the form of a right to unwind the contract, a right to get a discount and a right to claim damages.¹⁷¹ However, any right of private redress has limitations, and access to justice for consumers remains in any event a difficult issue.

B.Enhanced Consumer Measures under Schedule 7 of the CRA 2015

The most recent changes to consumer law have seen the introduction of enhanced consumer measures (ECMs) under schedule 7 of the CRA 2015, amending part 8 of the EA 2002. The measures are open to all public enforcers under part 8 EA 2002, which includes the CMA, local trading standards authorities and other sectoral regulators. The measures can be used to address both domestic and community infringements.

Under sections 217–19 EA 2002, where a court makes an enforcement order or accepts an undertaking under part 8, it may also attach ECMs to such an enforcement order or undertaking, and where an enforcer obtains an undertaking, such an undertaking can also include ECMs. These measures seek to broaden the types of order that can be obtained in civil courts¹⁷² and fall under three categories according to section 219A EA 2002: redress, compliance and choice. Under section 219B(a) and (b), the ECMs can only be used where they are just and reasonable. This is assessed by taking into account the likely benefit of the measures to consumers, the costs likely to be incurred by the business subject to the enforcement order or undertaking and the likely cost to consumers of obtaining the benefit of the measures.

The redress measures are aimed at giving consumers their money back. Redress measures can only be used where consumers have suffered loss¹⁷³ and not to prevent it proactively, although there is no minimum or maximum amount of loss at which the measures kick in. Compared to the market regime (discussed in chapter three), these measures are attractive because they provide redress to consumers already harmed. There are, however, some key limitations. The cost to the business of putting a redress scheme in place should be proportionate, that is, it is unlikely to be more than the losses suffered by consumers. This does not include the administrative costs of putting the scheme in place,¹⁷⁴ although this cost also needs to be reasonable. As a result, the measures are limited to actual loss and do not offer damages to consumers (although those could still potentially be recovered through a separate action). Nevertheless, this mechanism can be a useful measure, especially to assist with small losses or for more vulnerable consumers who might be unlikely to pursue their case in the courts of their own accord. Where redress to individuals is not viable or proportionate (for example, because consumers cannot be identified or can only be identified at a disproportionate cost) an ECM can require a trader to make a payment ‘in the collective interests of consumers’ (for example, to a consumer charity).¹⁷⁵

Compliance measures are designed to prevent or reduce the risk of further breaches of the law. They are preventative measures and focus on improving operational aspects. For example, measures may include requiring employing a member of staff to supervise particular aspects, employing a compliance officer or improving staff training, with a view to avoid any repeat of the breach.¹⁷⁶

The last type of measure focuses on consumer information about a business’s past behaviours. It is premised on the idea that ‘enabling consumers to see whether a business has broken the law and what action they have taken to put right any detriment caused will enable consumers to make better informed purchasing decisions’.¹⁷⁷ Measures such as ordering the publication of actions taken to remedy breaches on websites or in store can act as an incentive to consumers to switch providers, as well as for businesses to follow the law.

However useful the ECMs may be in principle, it is anticipated that firms will frequently contest their proportionality (probably at the earliest stage), which may act as a brake on the use of those measures. At the same time, in practice, it is likely that enforcers and traders will often negotiate their way to an informal conclusion and agreed course of action.¹⁷⁸

C.Private Enforcement of Consumer Law

Private enforcement demonstrates even further restrictions. According to Riefa,

It is the public perception that court proceedings are expensive, time-consuming and burdensome. They also result in an uncertain outcome due to their adversarial nature. For some consumers those elements are too great an obstacle. Many do not try to seek redress. For others it is the absence of knowledge of their rights that is responsible for redress apathy.¹⁷⁹

By and large, the latest government data also confirms that consumer dispute resolution is confined to a narrow category of users: predominantly middle-aged males on an average income above £20,000.¹⁸⁰ The Woolf reforms and the Jackson reforms effectively cut legal aid for consumer disputes altogether¹⁸¹ and displaced those disputes towards ADR. Users of ADR processes are also taken from this narrow pool. In addition, the research confirmed that users’ educational attainments tend to be high, with two-thirds of respondents holding a degree-level qualification or higher.¹⁸² Thus, apathy seems to be most prominent amongst sub-categories of consumers that may be especially vulnerable and most in need of the assistance of the legal system to obtain redress.

Further obstacles include the fact that small claims decisions are not publicly available. What this means in practice is that consumers, who do not need representation in the small claims court, are unable to find out how disputes in similar areas have been interpreted and resolved by county courts. This is a clear obstacle to access to justice, especially where businesses may be better equipped to deal with, and have more knowledge of, the court system and the way judges perceive particular pieces of legislation. In addition, the push towards ADR compounds the ‘repeat player’ effect, whereby businesses are more likely to have better insights into the workings of the ADR body or the county court for small claims and their application of consumer legislation since decisions reached through ADR processes may not always be published either.

(i)The Role of the Civil Practice Rules and ADR

Consumer claims are subject to the Pre-action Conduct Practice Direction and the Civil Practice Rules, part 3. Since 2015, part 3.1(m) of the Civil Practice Rules has enabled the court to take steps towards or make an order for the purpose of managing the case and furthering the overriding objective, including hearing an early neutral evaluation, with the aim of helping the parties to settle the case. The court is duty bound to consider whether non-court dispute resolution is appropriate. The court can also direct that proceedings be adjourned to give parties time to obtain information, advice and consideration of non-court solutions, as well as go through the process.¹⁸³ Case law has now confirmed that judges can give early neutral evaluations.¹⁸⁴

The change in procedural rules ‘mark[s] the increasing importance which the courts are prepared to place on ADR, recognising that ADR may not offer “justice” but that it does, by a process of cooperation and perhaps of negotiation, offer a “reasonable solution”’.¹⁸⁵ In Grace v Black Horse Ltd,¹⁸⁶ the court noted:

This is already a case in which the parties’ efforts and expense has been seriously disproportionate to the amounts at stake. The parties are therefore firmly encouraged to pursue mediation or some other form of alternative dispute resolution to resolve their remaining differences.¹⁸⁷

There is a clear danger in being led by efficiency when it comes to consumer cases. Many cases will be of a value that may not justify the cost of litigation, and thus consumers may be encouraged to seek alternative settlements rather than pursue matters in court. From an economic standpoint, it looks like the odds are stacked against consumers as, in addition to typically low value claims, the cost implications of declining to use ADR¹⁸⁸ or even failing to respond to an invitation to participate in ADR¹⁸⁹ can be quite severe, as the winning party may fail to recover their costs.¹⁹⁰ In addition, a recent study found that the impact of using ADR or court processes on trader practices differed. Where the courts were used, traders were more likely to change their business practices, whereas where ADR was used, traders tended to improve their customer service provision.¹⁹¹

(ii)Group Litigation and Collective Actions

Consumers do not currently have any meaningful way to aggregate their claims under consumer law. While opt-out collective actions exist for the enforcement of competition law, the same is not available for breaches of consumer law.

In the UK, under current procedural rules, claims that can be conveniently dealt with at the same time can be heard jointly or consolidated, but still require all claimants to bring their own claims. Another alternative is the use of group litigation orders (GLOs), which enable cases that give rise to common or related issues of fact or law to be managed together under specific procedural rules, namely, the Civil Practice Rules, part 19 and practice direction 19B. In GLOs, common issues are identified and lead cases selected.¹⁹² The issues to be tried must not be particular to each defendant. GLOs require individuals to opt in and actively participate in the action. The Civil Practice Rules are vague on how to organise the finer details of an action and rules concerning GLOs’ conduct are ‘drafted in a very light-handed manner’ according to Rachel Mulheron.¹⁹³ This means that GLOs are primarily used for high-value disputes and are not appropriate for aggregating a number of small-value economic losses.

In addition, Civil Practice Rules, part 19.6 enables the use of representative actions where more than one person has the same interest in a claim. The outcome of the case will be binding on all persons represented in the claim. The permission of the court is necessary to enforce the decision in favour of or against parties that are not parties to the claim. However, this way of grouping claims is relatively rare, especially since the finding in Markt & Co Ltd v Knight Steamship Co Ltd, in 1910, that individuals with different contracts and individual damage claims cannot be aggregated within a common representative action. Although the requirement has been relaxed in recent cases, representative actions are still no substitute for a modern ‘class action’.¹⁹⁴ The notion of ‘same interest’ was defined in Emerald Supplies Ltd v British Airways plc.¹⁹⁵ In this case, Emerald Supplies, a flower importer, brought an action as the representative of all direct and indirect claimants who had suffered damage as a result of an alleged air cargo cartel. The court held that the class must share the same interests at all stages of the proceedings and not just at the date of the judgment at the end. This seriously restricted the ability of claimants to use collective actions.

In conclusion, the private enforcement of consumer law faces many practical challenges, not least that its access is more heavily curtailed for vulnerable consumers.¹⁹⁶ As a result, it is important to bolster public enforcement if a higher standard of consumer protection is to be achieved. To this end, the more recent case law from the CJEU offers some hope that the interpretation of the pivotal ‘average consumer’ standard can be more subtle than under the historical approach rooted in the expectation that consumers ought to act as posited under the neoclassical rational consumer paradigm. The next chapter explores whether competition law can be relied upon to achieve a higher standard of consumer protection, especially in problematic markets where a poor standard of professional diligence prevails across rival firms, a state of affairs which tends to induce widespread customer disengagement.

¹See C Willett, ‘Re-theorising Consumer Law’ (2018) 77 Cambridge Law Journal 181.

²Department for Business, Innovation and Skills, Enhancing Consumer Confidence by Clarifying Consumer Law, Consultation on the Supply of Goods, Services and Digital Content (London, 2012) para 5.54 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/31350/12-937-enhancing-consumer-consultation-supply-of-goods-services-digital.pdf.

³Citizens Advice, ‘Consumer Detriment, Counting the Cost of Consumer Problems’ (London, 2016) www.citizensadvice.org.uk/Global/CitizensAdvice/Consumer__publications/Final_ConsumerDetriment_OE.pdf.

⁴ibid 4. The data is based on 1600 face to face interviews and 2600 conducted online.

⁵ibid 27–37.

⁶ibid 9. The report quantified the direct monetary costs borne by consumers experiencing problems: the value of any time required to fix the issue (time costs) and the compensation received. The calculations subtracted costs (direct and time) from the compensation received to give a comprehensive picture of consumer detriment.

⁷ibid 33.

⁸Above n 1.

⁹Bolam v Friern Hospital Management Committee [1957] 1 WLR 582, 2 All ER 118.

¹⁰See C Riefa, Consumer Protection and Online Auction Platforms, Towards a Safer Legal Framework (Farnham, Ashgate, 2015) 148.

¹¹Department for Business, Energy and Industrial Strategy, Resolving Consumer Disputes, Alternative Dispute Resolution and the Court System (London, 2018) 14 www.gov.uk/government/publications/resolving-consumer-disputes-alternative-dispute-resolution-and-the-court-system.

¹²Although, in some cases, it may actually make economic sense not to act, because the cost of going to court is more expensive than what the consumer stands to gain and greater than the initial loss. See, eg a claim for excessive surcharges before they were banned in the UK in C Riefa, ‘EU Payment Surcharges Rules Lacking Teeth: Evidence from Empirical Studies in the Control of Surcharges in the EU and UK Travel Industry’ (2018) 3 European Law Review 341, 350.

¹³See, eg O Bar-Gill, ‘Information and Paternalism’ in A Kemmerer, C Mollers, M Steinbeis and G Wagner (eds), Choice Architecture in Democracies, Exploring the Legitimacy of Nudging (Oxford, Hart Publishing, 2017).

¹⁴See, eg O Ben-Shahar and CE Schneider, More Than You Wanted to Know – The Failure of Mandated Disclosure (Princeton, Princeton University Press, 2016). It is worth noting that Bar-Gill (n 13) argues that mandated disclosure can be effective as long as it is designed keeping in mind that the targeted consumer is typically imperfectly rational and biased.

¹⁵See, eg UNCTAD, United Nations Guidelines for Consumer Protection (Geneva, 2016) https://unctad.org/en/PublicationsLibrary/ditccplpmisc2016d1_en.pdf; with reference to appropriate disclosures, see OECD, Toolkit for Protecting Digital Consumers – A Resource for G20 Policy Makers (Paris, 2018) www.oecd.org/internet/consumer/toolkit-for-protecting-digital-consumers.pdf. The G20 Consumer International Recommendations also focus on disclosure (www.consumersinternational.org/what-we-do/digital/g20-consumer-summit-2017/). Recommendation 4, on disclosure and transparency, puts some emphasis on information being of ‘practical use to consumers’, an aspect that does not always feature in legislations around the world where providers are required to provide information to consumers enabling them to make informed choices. To that end, the information provided should enable an average consumer to quickly acknowledge and understand critical information. Critical information ought to be delivered through notification of anything that may go beyond consumers’ expectations, user-friendly presentation and language, and minimal length of disclosure, as well as give consumers the ability to compare pricing and functionality.

¹⁶G Howells and T Wilhelmsson, ‘EC Consumer Law: Has It Come of Age?’ (2003) 28 European Law Review 370. For a more recent account of EU Consumer policy and the role of information see G Helleringer and A-L Sibony, ‘European Consumer Protection Through the Behavioural Lens’ 23 (2017) 3 Columbia Journal of European Law 607.

¹⁷See Council Resolution 19 May 1981 on a second programme of the European Economic Community for a consumer protection and information policy [1981] OJ C131/1; Council Resolution 23 June 1986 concerning the future orientation of the Policy of the Community for the protection and promotion of consumer interests [1986] OJ C167/1.

¹⁸G Howells, ‘The Potential and Limits of Consumer Empowerment by Information’ (2005) 32 Journal of Law and Society 349, 351.

¹⁹In Case 120/78 Rewe-Zentral AG v Bundesmonopolverwaltung für Branntwein (cassis de Dijon) [1979] ECR I-00649, Case 261/81 Walter Rau Lebensmittelwerke v De Smedt PVBA [1982] ECR I-03961 and Case 178/84 Commission of the European Communities v Federal Republic of Germany (Beer Purity) [1987] ECR I-01227, the CJEU decided that German consumer choice should not be restricted by the exclusion of beers that did not conform to beer purity laws. Instead, consumers in the German market should have a choice. Information on the content of the beer was a regulatory technique that was less restrictive than a ban. The intended result was that the informed consumer could exercise choice according to his or her preferences rather than have their choice confined by governmental intervention.

²⁰Case C-362/88 GB-INNO-BM v Confédération du Commerce Luxembourgeois [1990] ECR I-667.

²¹J Stuyck, ‘European Consumer Law after the Treaty of Amsterdam: Consumer Policy in or beyond the Internal Market’ (2000) 37 Common Market Law Review 367 argued that it was seen as undoubtedly the most fundamental specific consumer right.

²²G Miller, ‘The Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information’ (1956) 63 Psychological Review 81.

²³For example, Art 4 of Directive 97/7/EC on distance selling listed no less than nine pieces of information to be communicated to the consumer. This information needed to be combined with the information requirements contained in the Electronic Commerce Directive, Directive 2000/31/EC. Besides, the ‘almost inflationary use of information duties’ (according to JK Winn and J Haubold, ‘Electronic Promises: Contract Law Reform and e-Commerce in a Comparative Perspective’ (2002) 27 European Law Review 574) continues because the overlap between information obligations in the two directives was not totally resolved by the Consumer Rights Directive. In fact, Directive 2011/83/EC retains a right to information (Arts 5 and 6) as a cornerstone of the system of protection, augmenting the already long list of information to 20 items, depending on circumstances. Directive 2002/65/EC on distance marketing of consumer financial services pushes the over-reliance on information to the extreme, with no fewer than 21 pieces at pre-contractual stage and up to 40 pieces of information in total, depending on certain circumstances. In the area of payment services, a similar inflationary trend is observed in the application of second Payment Services Directive, Directive 2015/2366/EC.

²⁴In Case C-430/17 Walbusch Walter Busch GmbH & Co K v Zentrale zur Bekämpfung unlauteren Wettbewerbs Frankfurt am Main eV ECLI:EU:C:2019:47, the Advocate General was of the opinion that the lighter information requirements under Art 8 only apply when the method of communication is limited by its very nature (as would be the case on a phone screen) and not because of a design choice on the part of the advertiser.

²⁵Case C-146/16 Verband Sozialer Wettenberg eV v DHL Paket GmbH ECLI:EU:C:2017:243.

²⁶ibid para 32.

²⁷Howells (n 18).

²⁸V Mak and J Braspenning, ‘Errare humanum est: Financial Literacy in European Consumer Credit Law’ (2012) 35 Journal of Consumer Policy 307.

²⁹Case C-210/96 Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt [1998] ECR I-4657, [37].

³⁰G Howells and S Weatherill, Consumer Protection Law (2nd edn, Farnham, Ashgate, 2005) 5.

³¹See, eg O Bar-Gill, Seduction by Contract: Law, Economics and Psychology of Consumer Contracts (Oxford, Oxford University Press, 2012); Howells (n 18); R Baisch and RH Weber, ‘Investment Suitability Requirements in the Light of Behavioural Findings’ in K Mathis (ed), European Perspective on Behavioural Law and Economics (Cham, Springer International Publishing, 2015).

³²[2013] OJ C 264 E/11.

³³Note that businesses were also required ‘to promote and develop self-regulatory initiatives to reinforce the protection of vulnerable consumers’ rights, ensure that they have access to better and clear information and develop practices that enhance all consumers’ capacity to understand and assess an agreement’.

³⁴This is the case, for example, with Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit [1987] OJ L42/48, which required provision of the credit agreement and the annual percentage rate (APR) (Art 4). See also Council Directive 90/88/EEC of 22 February 1990 concerning consumer credit [1990] OJ L61/14, which introduced a harmonised method of calculating the APR.

³⁵See CR Sustein, C Jolls and R H. Thaler ‘A Behavioural Approach to Law and Economics’ (1998) 52 Stanford Law Review 1471.

³⁶See Howells (n 18).

³⁷See Mak and Braspenning (n 28) 309. See also the study by A Zokaityte, ‘Financial Literacy and Numeracy of Consumers and Retail Investors’ (2016) 11 Capital Markets Law Journal 405.

³⁸For example, European Commission, Report on the Operation of Directive 87/102/EEC (Brussels, 1995) 27 notes that ‘Community measures should prevent phenomena such as over-indebtedness through consumer information and education’. See also European Commission, Report on Implementation of Directive 2008/48/EC (Brussels, 2014) 17–20, which acknowledges that the use of APR only helps a consumer that is sufficiently financially literate and that levels of financial literacy as well as awareness remain. Yet despite this, the proposed solution is to consider further activities to increase awareness.

³⁹Council Directive 2008/48/EC of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC [2008] OJ L133/66. The directive requires, for example, that the lender explain the pre-contractual information provided, the essential characteristics of the products proposed and the specific effects they may have on the consumer, including the consequences of default in payment by the consumer (Art 5), although it remains for the consumer to make this determination, on the basis of ‘adequate information’. It advocates the use of a Standard European Consumer Credit Information Sheet focused on the quality of the information and its timeliness (Art 4; Recital 19). See also obligations under Art 5(1)(g), (m) and (o).

⁴⁰On this point, see P Rott, ‘Consumer Credit’ in N Reich, HW Micklitz, P Rott and K Tonner (eds), European Consumer Law (2nd edn, Cambridge, Intersentia, 2014) 197–238. Note that there is no obligation to lend responsibly in the directive, although Recital 26 discusses responsible lending. In any event, the measures continue to be aligned to the information paradigm: ‘Those measures may include, for instance, the provision of information to, and the education of, consumers, including warnings, about the risk attaching to the default on payment and to over-indebtedness.’ The only obligation resting on the lender is to proceed with a creditworthiness of the consumer under Art 8, but the directive does not specify what consequences should be attached to lack of creditworthiness. Compare this with the Markets in Financial Instrument Directive, Directive 2004/39 [2004] OJ L145/1. Art 19 imposes upon investment firms the requirement that they ask clients or potential clients to provide information regarding their knowledge and experience in the investment field relevant to the specific type of product or service offered, to enable the investment firm to assess whether the investment service or product envisaged is appropriate for the client. If the investment firm considers, on the basis of the information received, that the product or service is not appropriate to the client, the investment firm should warn the client.

⁴¹Directive 2014/17/EU of 4 February 2014 on credit agreements for consumers relating to residential immovable property [2014] OJ L60/34, Recital 44 on the creation of a European Standardised Information Sheet containing more personalised information.

⁴²Any real discussion on imposing responsible lending obligations is deferred in Art 45 under the title of ‘further initiatives on responsible lending and borrowing’.

⁴³Directive 2014/17/EU, Art 18. That assessment, however, is tighter than it was under Directive 2008/48/EC, and Art 18(5)(a) indicates that credit can only be granted ‘where the result of the creditworthiness assessment indicates that the obligations resulting from the credit agreement are likely to be met in the manner required under that agreement’.

⁴⁴BB Duivenvoorde, The Consumer Benchmarks in the Unfair Commercial Practices Directive (Cham, Springer International Publishing, 2015) 229.

⁴⁵See, eg WH van Boom, A Garde and O Akseli, ‘Introduction’ in WH van Boom, A Garde and O Akseli (eds), The European Unfair Commercial Practices Directive – Impact, Enforcement Strategies and National Legal Systems (London, Routledge, 2016).

⁴⁶See, eg the Molony Report on Consumer Protection, Hansard, HL Vol 244, cols 605–25 (14 November 1962), which highlighted that the fact that there was an imbalance between consumers and suppliers was due to evolving methods of manufacture, distribution and merchandising. It noted that products had involved in such way that consumers were ill equipped to understand the technicalities involved in making informed choices. The report indicates that ‘when confronted with the need to make a choice between different models of such goods the consumer is incapable of intelligent discrimination’. The report saw the consumer as a vulnerable individual. It notes that the consumer ‘finds it beyond its power to make a wise and informed choice and is vulnerable to exploitation and deception’. Contrast this with Bowerman v Association of British Travel Agents Ltd Times 24 November 1995, [1996] CLC 45, which considered that the ‘ordinary member of the public as he steps down from the Clapham Omnibus, enters the travel agency and reads the notice’. The case assumes the notice is read in full but ‘without curiosity or pedantic analysis of every nuance of its wording but ordinary care to be expected of the average customer who is applying money they could not easily afford to lose’.

⁴⁷Gut Springenheide (n 29) para 31.

⁴⁸By contrast, when looking at trademark case law, one finds a more realistic definition of the consumer, because in these cases, the CJEU is looking to protect the interests of trademark owners against third-party use. As a result, being able to demonstrate that the consumer is misled (more easily than would have been the case had the question been about free movement) is useful because it grants trademark holders a higher level of protection.

⁴⁹Rewe-Zentral (n 19).

⁵⁰Above n 20, para 12.

⁵¹ibid para 11.

⁵²ibid para 18.

⁵³Case C-470/93 Verein gegen Unwesen in Handel und Gewerbe Köln eV v Mars GmbH [1995] ECR I-01923.

⁵⁴ibid para 24.

⁵⁵[1998] ECR I-4657.

⁵⁶Gut Springenheide (n 29) para 37.

⁵⁷ibid.

⁵⁸Ibid para 36.

⁵⁹This definition of the average consumer was followed in Case C-220/98 Estée Lauder Cosmetics GmbH & Co OHG v Lancaster Group GmbH [2000] ECR I-117, paras 27 and 30; Case C-44/01 Pippig Augenoptik GmbH & Co GK v Hartlauer Handelsgesellschaft mbH [2003] ECR I-3095, para 55; Case C-99/02 Criminal proceedings against Linhart and Biffl [2002] ECR I-9375, para 32.

⁶⁰Case C-465/98 Verein gegen Unwesen in Handel und Gewerbe Köln eV v Adolf Darbo AG [2000] ECR I-02297.

⁶¹ibid para 22.

⁶²ibid para 27.

⁶³ibid para 33.

⁶⁴ibid para 28.

⁶⁵Case C-239/02 Douwe Egberts NV v Westrom Pharma NV and Christophe Souranis, carrying on business under the commercial name of ‘Etablissements FICS’ and Douwe Egberts NV v FICS-World BVBA [2004] ECR I-07007.

⁶⁶ibid paras 43–46.

⁶⁷[2004] ECR I-07010, para 54.

⁶⁸ibid paras 78–79.

⁶⁹Duivenvoorde (n 44) 50.

⁷⁰Pippig Augenoptik (n 59) para 82. See the discussion in P de Jong, ‘Comparative Advertising in Europe’ in J Phillips (ed), Trade Marks at the Limit (Cheltenham, Edward Elgar Publishing, 2006).

⁷¹Case C-356/04 Lidl Belgium GmbH & Co KG v Etablissementen Franz Colruyt NV [2006] ECR I-08501.

⁷²ibid paras 70–73.

⁷³ibid para 74.

⁷⁴On this point, see Joined Trademark Cases C-236/08 to C-238/08 Google France and Google Inc et al v Louis Vuitton Malletier et al [2010] ECR I-02417, para 121(1), where the court acknowledges: ‘the proprietor of a trade mark is entitled to prohibit an advertiser from advertising, on the basis of a keyword identical with that trade mark which that advertiser has, without the consent of the proprietor, selected in connection with an internet referencing service … in the case where that advertisement does not enable an average internet user, or enables that user only with difficulty, to ascertain whether the goods or services referred to therein originate from the proprietor of the trade mark … or, on the contrary, originate from a third party.’

⁷⁵Case C-195/14 Bundesverband der Verbraucherzentralen und Verbraucherverbände – Verbraucherzentrale – Bundesverband eV v Teekanne GmbH & Co KG ECLI:EU:C:2015:361, para 44.

⁷⁶ibid para 40.

⁷⁷See C Willett, ‘Fairness and Consumer Decision Making under the Unfair Commercial Practices Directive’ (2010) 33 Journal of Consumer Policy 247.

⁷⁸The legal basis for the UCPD had to be the internal market provision of Art 95 TEC (now, Art 114 TFEU) in order to achieve full harmonisation. The Recitals in the preamble to the directive refer to the consumer protection dimension of the internal market in Art.153 TEC, but Art. 153(5) TEC (now Art 169(4) TFEU) limits consumer initiatives to minimum harmonisation: see H Collins, ‘Harmonisation by example: European laws against unfair commercial practices’ (2010) 73 Modern Law Review 89.

⁷⁹Alongside the general category of average consumer, there are two additional sub-categories: (i) the average consumer of a targeted group (Regulation 2(5)(b) CPRs); and (ii) and the ‘vulnerable’ consumer (Regulation 2(5)(a) CPRs).

⁸⁰See G Abbamonte, ‘The Unfair Commercial Practices Directive and its General Prohibition’ in S Weatherill and U Bernitz (eds), The Regulation of Unfair Commercial Practices under EC Directive 2005/29 (Oxford, Hart Publishing, 2007) 21.

⁸¹See HW Micklitz, ‘Unfair Commercial Practices and Misleading Advertising’ in Reich et al (n 40) 95.

⁸²See I Ramsay, Consumer Law and Policy: Text and Materials on Regulating Consumer Markets (Oxford, Hart Publications, 2007) 286; Micklitz (n 81) 87; Willett (n 77). On how the interpretation of the average consumer standards is determinative of the level of consumer protection, see R Incardona and C Poncibò, ‘The Average Consumer, the Unfair Commercial Practice Directive and the Cognitive Revolution’ (2007) 30 Journal of Consumer Policy 21; F Gómez, ‘The Directive on Unfair Commercial Practices: A Law and Economics Perspective’ (2006) 2 European Review of Contract Law 4; WH van Boom, ‘Price Intransparency, Consumer Decision Making and European Consumer Law’ (2011) 34 Journal of Consumer Policy 359; J Trzaskowski, ‘Behavioural Economics, Neuroscience, and the Unfair Commercial Practices Directive’ (2011) 34 Journal of Consumer Policy 377.

⁸³See Micklitz, (n 81) 85.

⁸⁴Case C-435/11 CHS Tour Services GmbH v Team4 Travel GmbH ECLI:EU:C:2013:574.

⁸⁵See Willett (n 77).

⁸⁶ibid.

⁸⁷Ramsay (n 82) 286.

⁸⁸Above (n 78) 100.

⁸⁹For Howells (n 18), the adopted standard is above that of a real consumer. Trzaskowski (n 82) believes that the concept is a normative abstraction derived from economic fiction, and Incardonna and Poncibo (n 82) argue that the prevailing neoclassical standard requires consumers to achieve an overly demanding standard of rationality and information without dedicating much attention to the real functioning of consumer behaviour.

⁹⁰European Commission, Commission Working Document – Guidance on the Implementation of the Directive 2005/29/EC on Unfair Commercial Practices (Brussels, 2009) 23.

⁹¹ibid 24.

⁹²Case C-540/08 Mediaprint Zeitungs – und Zeitschriftenverlag GmbH & Co KG v ‘Österreich’-Zeitungsverlag GmbH [2010] ECR I-10909, Opinion of Advocate General Trstenjak, para 103.

⁹³ibid para 104.

⁹⁴ibid para 105.

⁹⁵We have already seen this was the case, for example, in Lidl Belgium (n 71) and Teekaane (n 75), although those cases did not concern the application of the UCPD.

⁹⁶European Commission (n 90) 28.

⁹⁷[2000] ECR I-0117.

⁹⁸Gut Springenheide (n 29) para 35; Estée Lauder (n 59) para 30.

⁹⁹In the context of the application of the test to misleading actions, according to Micklitz (n 81) 94, ‘if a minority of consumers have been misled, then the effect of the prohibition needs to be balanced against the principle of free movement of goods and services and often it needs to be restricted’.

¹⁰⁰See Law Commission and Scottish Law Commission, Consumer Redress for Misleading and Aggressive Practices (London and Edinburgh, 2012) paras 2-31–2-32 www.scotlawcom.gov.uk/files/7813/3276/1409/rep226.pdf.

¹⁰¹[2011] EWHC 106 (Ch), [2011] ECC 20.

¹⁰²ibid para 62.

¹⁰³Regulation 2(2) states: ‘In determining the effect of a commercial practice on the average consumer where the practice reaches or is addressed to a consumer or consumers account shall be taken of the material characteristics of such an average consumer including his being reasonably well informed, reasonably observant and circumspect.’

¹⁰⁴OFT v Purely Creative (n 101).

¹⁰⁵The use of statistical tests and their merits has already been considered in UK law in OFT v Officers Club [2005] ECHC 1080, which decides a case under the previous legislation on misleading advertising. Officers Club was selling clothes at a 70% discount. The advertisement for the discount was erroneous because the prices had not been maintained for a sufficient period of time before the discount was applied. The court explained that a report on the perception of consumers could not be used as proof that consumers were not misled. The decision also explained that it is for the judge – and not a third party, even an expert – to define the notion of consumer that is protected by the law (para 146). This is a mechanism borrowed from ‘passing off’ in intellectual property case law in the UK. In this decision, the consumer had been defined as ‘reasonable and ordinary’, a standard much less stringent that the current EU average consumer test. In OFT v Purely Creative (n 101), the court said that national judges must exercise their own judgement to determine the typical reaction an average consumer may have on a case-by-case basis (para 63). In this exercise, it is possible to take a number of factors into account.

¹⁰⁶OFT v Purely Creative (n 101) para 63.

¹⁰⁷Case C-342/97 Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV [1999] ECR I-03819, para 26. See also Google France (n 74).

¹⁰⁸European Commission (n 90) 25.

¹⁰⁹ibid.

¹¹⁰ibid 27.

¹¹¹See, eg Joined Cases T-183/02 and T-184/02 El Corte Inglés v Office for Harmonisation in the Internal Market (Trade Marks and Designs) [2004] ECR II-00965, para 68; Case T-20/02 Interquell GmbH v Office for Harmonisation in the Internal Market (Trade Marks and Designs) [2004] ECR II-1001, para 37; Case C-446/07 Alberto Severi v Regione Emilia-Romagna [2009] ECR I-08041, para 62.

¹¹²Cases C-54/17 and C-55/17 Autorità Garante della Concorrenza e del Mercato v Wind Tre SpA and Vodafone Italia SpA ECLI:EU:C:2018:710.

¹¹³In the UK, the ‘average consumer’ standard is now incorporated into s 66(5) of the CRA 2015, which applies to the control of unfair terms.

¹¹⁴C-453/10 Jana Pereničová and Vladislav Perenič v SOS financ spol s r o ECLI:EU:C:2012:144. See also B Keirsblick, ‘The Interaction between Consumer Protection Rules on Unfair Contract Terms and Unfair Commercial Practices: Pereničová and Perenič’ (2013) 50 Common Market Law Review 247. See further C Willet, Fairness in Consumer Contracts (Farnham, Ashgate, 2007) 114, who, at an earlier stage, indicated the potential use of the average consumer test in relation to the fairness of terms.

¹¹⁵Case C-26/13 Árpád Kásler, Hajnalka Káslerné Rábai v OTP Jelzálogbank Zrt ECLI:EU:C:2014:282.

¹¹⁶ibid para 74.

¹¹⁷European Commission (n 90) 29. Note, however, that it transpires from documents and scholarly reading that many seem to adopt a literal interpretation of Art 5(3) and would regard the list of vulnerabilities as exhaustive. Recitals in a directive do not have legal standing, although they are an aid to interpretation, and it is therefore possible to adopt a literal interpretation limiting the types of vulnerabilities caught by the UCPD. The question has not yet been tested in front of the CJEU.

¹¹⁸See Duivenvoorde (n 44) 25.

¹¹⁹ibid 26, which poses the question eloquently: ‘if a commercial practice affects people with a mental infirmity, but also the elderly, does that mean that neither is protected?’.

¹²⁰On vulnerability being a dynamic concept, see, eg F Ippolito and S Iglesias Sánchez, Protecting Vulnerable Groups: The European Human Rights Frameworks (Oxford, Hart Publishing, 2015) 1.

¹²¹D Caplovitz, The Poor Pay More (New York, Free Press, 1967). For a more recent account of the situation in the USA showing that little has changed, see E Mierzwinski, ‘Colston E Warne Lecture: Consumer Protection 2.0 – Protecting Consumers in the 21st Century’ (2010) 44 Journal of Consumer Affairs 581.

¹²²European Commission, Consumer Vulnerability across Key Markets in the European Union (Brussels, 2016) 319 https://ec.europa.eu/info/sites/info/files/consumers-approved-report_en.pdf.

¹²³ibid 169.

¹²⁴ibid 169.

¹²⁵See P Cartwright, ‘The Vulnerable Consumer of Financial Services: Law, Policy and Regulation’, www.nottingham.ac.uk/business/businesscentres/crbfs/documents/researchreports/paper78.pdf.

¹²⁶European Commission (n 122).

¹²⁷See CMA, Energy Market Investigation, Final Report (London, 2016) https://assets.publishing.service.gov.uk/media/5773de34e5274a0da3000113/final-report-energy-market-investigation.pdf.

¹²⁸See Ofgem, Ofgem Disengaged Customer Database (London) www.ofgem.gov.uk/consumers/household-gas-and-electricity-guide/how-switch-energy-supplier-and-shop-better-deal/ofgem-disengaged-customer-database.

¹²⁹CMA (n 127).

¹³⁰Alex Chisholm, Why ‘Sleepers’ Can’t Always Be Left to ‘Sleep’ (London, UK Government, 2016) www.gov.uk/government/speeches/alex-chisholm-on-consumer-engagement-in-a-digital-world.

¹³¹ibid.

¹³²ibid.

¹³³CMA (n 127).

¹³⁴Law Commission and Scottish Law Commission, Unfair Terms in Contracts (London and Edinburgh, 2005) www.lawcom.gov.uk/project/unfair-terms-in-contracts/.

¹³⁵Law Commission and Scottish Law Commission, Unfair Terms in Consumer Contracts: A New Approach? (London and Edinburgh, 2012) www.lawcom.gov.uk/app/uploads/2015/06/unfair_terms_in_consumer_contracts_issues.pdf.

¹³⁶G Woodroffe, C Twigg-Flesner and Chris Willett, Woodroffe & Lowe Consumer Law and Practice (10th edn, London, Sweet & Maxwell, 2016) 197.

¹³⁷See, eg Bar-Gill (n 31).

¹³⁸Law Commission and the Scottish Law Commission, Unfair Terms in Consumer Contracts: Advice to the Department for Business, Innovation and Skills (London and Edinburgh, 2013) 10, www.lawcom.gov.uk/project/unfair-terms-in-consumer-contracts/.

¹³⁹Unless the term is in fact contained in pt 1 of sch 2, ie the grey list. In this case, a term relating to a core term would be subject to an assessment of fairness. This is the case, for example, with terms enabling the trader to determine the price or subject matter of the contract after the consumer is bound by it (CRA 2015, s 64, para 14).

¹⁴⁰CRA 2015, s 64(3).

¹⁴¹See CMA, ‘Unfair Contract Terms Explained’, CMA37(a) (London, 2015) para 28 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/450410/Unfair_Terms_Explained.pdf.

¹⁴²See Consumers International, The Internet of Things and Challenges for Consumer Protection (London, 2016) 43 www.consumersinternational.org/media/1292/connection-and-protection-the-internet-of-things-and-challenges-for-consumer-protection.pdf; MG Faure and HA Luth, ‘Behavioural Economics in Unfair Contract Terms: Cautions and Considerations’ (2011) 34 Journal of Consumer Policy 337; Bar-Gill (n 31).

¹⁴³See, eg MD Grubb, ‘Overconfident Consumers in the Marketplace’ (2015) 29 Journal of Economic Perspective 9.

¹⁴⁴See CMA (n 141) paras 18–20.

¹⁴⁵See Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433; D Barry, E Jenkins QC, C Sumnall, B Douglas-Jones and D Lloyd, Blackstone’s Guide to The Consumer Rights Act 2015 (Oxford, Oxford University Press, 2016) 109.

¹⁴⁶The OFT had to drop a protracted investigation into the fairness for unauthorised fees for personal current accounts after the UK Supreme Court ruled that such an inquiry was outside its jurisdiction within the meaning of Regulation 6(2) of the UCCTRs: see the case study on personal current accounts in ch 6, s II for more detail.

¹⁴⁷[2009] UKSC 6.

¹⁴⁸See Barry et al (n 145) 109.

¹⁴⁹[2009] EWHC 1681 (Ch).

¹⁵⁰[2011] EWHC 1237 (Ch).

¹⁵¹ibid para 152.

¹⁵²ibid para 153.

¹⁵³ibid.

¹⁵⁴ibid para 162.

¹⁵⁵ibid para 173.

¹⁵⁶ibid para 175.

¹⁵⁷H Collins, ‘Good Faith in European Contract Law’ (1994) 14 Oxford Journal of Legal Studies 229, 238.

¹⁵⁸See Law Commission and Scottish Law Commission (n 100) paras 7.12–7.14. As put by Advocate General Trstenjak in her Opinion in Case C-484/08 Caja de Ahorros [2010] ECR I-04785, para 40, ‘Directive 93/13 does not go so far as to put an end altogether to the parties’ freedom to arrange their own affairs … The consumer is not to be protected generally against entering into a disadvantageous transaction. Rather, he is deemed to be adequately protected, with regard to the main subject-matter, through competition.’

¹⁵⁹Director General of Fair Trading v First National Bank plc [2001] UKHL 52, para 17.

¹⁶⁰ibid para 36.

¹⁶¹Above n 159, para 33.

¹⁶²R Bradgate, R Brownsword and C Twigg-Flesner, The Impact of Adopting a General Duty to Trade Fairly (London, Department of Trade and Industry, 2003) 43.

¹⁶³CRA 2015, s 67.

¹⁶⁴Case C-415/11 Mohamed Aziz v Caixa d´Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa) ECLI:EU:C:2013:164.

¹⁶⁵In this respect, the Law Commission and Scottish Law Commission (n 134) para 3.24 typified the consumer as rational, but busy: ‘ the legislation assumes that consumers are rational economic actors, who when presented with the right information make good decisions over what to buy. The problem is that consumers are busy – or “time poor”. They do not have time to read and understand all the small print, especially when that small print is made difficult to read and complex to understand.’ As the report pointed out, this normative standard is far from recent: see quote at para 3.9 from Lord Reid in Suisse Atlantique, dated 1967 (‘In the ordinary way the customer has no time to read them, and if he did read them he would probably not understand them. And if he did understand and object to any of them, he would generally be told he could take it or leave it. And if he then went to another supplier the result would be the same’).

¹⁶⁶See C Andrews, Enforcement of Consumer Rights and Protections (London, LexisNexis, 2015) 1, explaining that consumers may benefit directly in some situations, eg in criminal proceedings where a compensation order is made or other enhanced redress is available.

¹⁶⁷In this respect, it is worth noting that CMA is calling for new powers to be able to impose fines for breaches of consumer law: see CMA, Tackling the Loyalty Penalty – Response to a Super-complaint Made by Citizens Advice on 28 September 2018 (London, 2018) para 9.7.A.2 https://assets.publishing.service.gov.uk/media/5c194665e5274a4685bfbafa/response_to_super_complaint_pdf.pdf.

¹⁶⁸Other legislation, especially that focusing on product safety and food safety, is also heavily reliant on public enforcement mechanisms.

¹⁶⁹Department for Business, Innovation and Skills, Enhancing Consumer Confidence through Effective Enforcement, Consultation on Consolidating and Modernising Enforcement Powers (London, 2012) 18 www.gov.uk/government/uploads/system/uploads/attachment_data/file/31534/12-543-enhancing-consumer-confidence-effective-enforcement-consultation.pdf.

¹⁷⁰Andrews (n 166) 4.

¹⁷¹Regulation 27(e)–(g).

¹⁷²Department for Business, Innovation and Skills (n 169) 3.

¹⁷³ibid 9.

¹⁷⁴ibid 14.

¹⁷⁵C Riefa and C Willett, ‘Enforcement and Effectiveness of Consumer Law in the UK’ in H-W Micklitz and G Saumier (eds), Enforcement and Effectiveness of Consumer Law (Cham, Springer International Publishing, 2018) 691.

¹⁷⁶Department for Business, Innovation and Skills (n 169) 23.

¹⁷⁷ibid 24.

¹⁷⁸Riefa and Willett (n 175) 692.

¹⁷⁹Riefa (n 10) 148.

¹⁸⁰Department for Business, Energy and Industrial Strategy (n 11) 14.

¹⁸¹Funding for consumer cases is very limited. See the Legal Aid, Sentencing and Punishment of Offenders Act 2012, s 9, sch 1, supplemented by the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendement of Sch 1) Order 2013 and Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendement of Sch 1) (advocacy exceptions) Order 2014.

¹⁸²Department for Business, Energy and Industrial Strategy (n 11) 15.

¹⁸³CPRs 3.3 and 3.4.

¹⁸⁴Seals and Seals v Williams [2015] EWHC 1829 (Ch). The case highlights that judges can express provisional views in the course of a hearing and that is not dependent on the consent of the parties (at para 7).

¹⁸⁵Andrews (n 166) 215.

¹⁸⁶[2014] EWCA Civ 1413.

¹⁸⁷Ibid para 54. Source: Andrews (n 166) 215.

¹⁸⁸Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.

¹⁸⁹PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288.

¹⁹⁰Dunnett v Railtrack plc [2002] EWCA Civ 303.

¹⁹¹See Department for Business, Energy and Industrial Strategy (n 11).

¹⁹²Andrews (n 166) 225.

¹⁹³R Mulheron, ‘Some Difficulties with Group Litigation Orders – and Why a Class Action is Superior’ (2005) 24 Civil Justice Quarterly 40.

¹⁹⁴ibid.

¹⁹⁵[2010] EWCA Civ 1284.

¹⁹⁶For example, in addition to the problems highlighted above, legal aid is not available for consumer disputes.