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UK Government: Small businesses losing money to unfair tactics(M2 PressWIRE Via Thomson Dialog NewsEdge) RDATE:18042008 New regulations will crackdown on rogue traders New research* released today reveals that most small businesses believe their profits are affected by rivals using unfair sales practices. A Department for Business, Enterprise and Regulatory Reform study found that: * 53% of small business leaders think their profits are hit by rivals using unfair sales practices * Of those who feel their profits are affected, one in 10 estimate rogues are costing them more than a fifth of their revenue and 38% believe they are costing them between 10-20% * A fifth of small business leaders have worked in an organisation that they felt used such practices, with 12% actively encouraged or trained by a previous employer to deploy questionable tactics to make a sale The Government is cracking down on this problem. If they are approved by Parliament, the Consumer Protection Regulations (CPRs) will come into force on 26 May. The CPRs could represent one of the biggest changes to consumer law in decades. The CPRs will apply to all businesses that trade directly with consumers - from hoteliers and builders to retailers and second hand motor traders. They will ban 31 types of unfair sales practices outright including bogus 'closing down' sales, prize draw scams and aggressive doorstep selling. They will also, for the first time, establish a catch-all duty not to trade unfairly, closing loopholes that rogue traders have previously been able to exploit. Consumer Affairs Minister Gareth Thomas, said: "Honest traders understand the value of treating customers fairly and they've had enough of losing profit to rivals using underhand tactics to get ahead. "The Consumer Protection Regulations will deliver better protection for consumers, cut red tape and put in place a simpler and clearer consumer law that will be easier to interpret and enforce." The CPRs will benefit honest businesses by simplifying consumer protection legislation and driving out the rogues. They will replace and improve on provisions in 23 pieces of existing legislation - establishing a modern framework fit for the 21st Century that is simpler and easier for businesses, consumers and enforcers to understand. John Wright, Chairman of the Federation of Small Businesses, said: "I welcome this new law. Legitimate businesses should no longer have to face unfair competition from firms who use underhand tactics to get ahead. These regulations will create a level playing field for all, allowing businesses to thrive based on merit and not on who is best at duping or pressuring consumers." Trading Standards and the OFT will enforce the new law. A wide range of sanctions will be available to them, depending on the seriousness of the offence, from guidance and codes of conduct to unlimited fines and lengthy prison sentences. Ron Gainsford, Chief Executive of the Trading Standards Institute, said: "TSI welcomes the CPRs. Front-line Trading Standards professionals will be even better placed to disrupt, expose and appropriately penalise those rogue and unfair traders who persist in cheating and defrauding consumers. Working with the OFT we are determined to bring the cowboys and criminals to task and support the swathe of honest business, large and small, who are as fed up as consumers with those who use unfair practices and perpetrate crime." For more information on how the new Consumer Protection from Unfair Trading Regulations will affect business, visit http://www.businesslink.gov.uk/unfairtrading. Case studies False prize draw Letters headed 'Official Payout Notification' told people they were guaranteed to win a prize. They had to ring a hotline to claim. People had to listen to the whole message to find out if they had won a prize. The call cost GBP6. People were instructed to write in with their claim. Thousands of people did all this, but it appeared none received a price. A prosecution was brought in this case, but enforcement authorities said it would have been simpler, cheaper and quicker under the CPRs. Aggressive doorstep selling A doorstep salesman scares elderly people into buying a burglar alarm system. There is a variety of legislation in this area, but it is inadequate because, unlike the CPRs, it does not cover the inherent unfairness and aggressive nature of the sales technique. The CPRs will combat the pressure sales element of certain doorstep sales, which do not currently constitute a breach of the law. Misleading actions A trader cold calls consumers. To make them feel secure he falsely tells them that the products he is selling have been thoroughly tested and approved by a professional institution. This practice is frequently used by rogue doorstep sellers. It will be a lot easier to take action against this and other misleading practices under the CPRs. Notes to editors 1. Survey of 270 leaders of UK small businesses conducted February 2008 by tickbox.net. A full copy of the survey is available. 2. The Consumer Protection from Unfair Trading Regulations implement the Unfair Commercial Practices Directive which establishes consistency of trading across the EU, making it easer to market goods and services to an internal market of 460 million consumers. 3. The Government is investing approximately GBP7.5 million in new specialist Trading Standards 'scambuster' teams. These teams will tackle the real crooks that deliberately set out to defraud consumers. They will be at the forefront of using the new Consumer Protection Regulations. 4. The legislation will primarily affect businesses across the UK who trade directly with consumers or whose products are used by consumers and cover goods, services, obligations and contractual rights wherever trading takes place including on the high street, online, by phone or via TV. BERR believes there are around 750,000 affected businesses in total in the following sectors: * Second-hand motor trade * Timeshare and holiday clubs * Home maintenance, repairs and improvements * Betting, competition and prize draws * Sale and repairs of motor vehicles * Retail * Hotels, restaurants and take away food services * Rental of automobiles * Rental of sports and recreational equipment, incl. TV and video rentals * Dry cleaning, hairdressers, beauty treatments and physical well-being 5. The Department for Business Enterprise and Regulatory Reform helps UK business succeed in an increasingly competitive world. It promotes business growth and a strong enterprise economy, leads the better regulation agenda and champions free and fair markets. It is the shareholder in a number of Government-owned assets and it works to secure, clean and competitively priced energy supplies ((M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to [email protected])). Copyright ? 2008 M2 Communications Ltd. |