Criminal Sanctions: Tradition, Rationales, Policies and Operation
Criminal sanctions have been a core part of public enforcement of consumer law in the United Kingdom for centuries. There is plenty of scope for debate as to the rationales for using the criminal law in the consumer protection sphere. Certainly, criminal sanctions can be viewed as having important deterrent effects that might be missing in the case of the preventive sanctions discussed above. More generally, the OFT have said that criminal enforcement should be used where:
civil enforcement is unlikely to be effective in achieving a change in behaviour and/or the breach is sufficiently serious that the conviction and punishment of offenders ought to be pursued, for example to protect the public and to provide wider deterrence.
The OFT elaborate on this by saying that they are likely to consider beginning a criminal investigation:
• where traders deliberately or recklessly use deceptive, misleading or fraudulent practices;
• where traders deliberately or recklessly use aggressive, intimidating or coercive practices;
• where flagrant and/or persistent offending by a trader or group of associated traders has occurred or is occurring;
• where a particular unlawful practice is widespread, or there is a risk determined that criminal enforcement is likely to be the most effective means by which to set a precedent for future action; or
• where false statements are made or false documents provided in the course of dealings with the OFT or another enforcement body or where the investigation is otherwise obstructed.
Criminal sanctions have been, and continue to be used, for instance, in relation to food labeling, quality and safety; and general product safety. They were used against 'false trade descriptions' (Trade Descriptions Act [TDA] 1968) (covering basically misleading statements about goods and services) and 'misleading pricing' (Consumer Protection Act 1987 Part III) until the implementation of the UCPD. These provisions were repealed by the CPUTR and replaced by offences based on the UCPD concepts. So, a trader now commits an offence if he carries out a misleading act or omission or an aggressive practice (the definitions reflecting those in the UCPD). These are all strict liability offences, there being no mens rea requirement (i.e., no need to prove that the trader acted intentionally, recklessly or negligently). A trader also commits an offence if he contravenes the requirement of professional diligence. However, for the trader to be criminally liable for violation of the professional diligence standard, there is a mens rea requirement. The trader is only guilty of an offence if he 'knowingly or recklessly [engages] in conduct that is contrary to professional diligence and materially distorts or is likely to materially distort consumer behaviour'. It is important to stress here that the trader need only be 'knowing or reckless' as to his own behaviour. There is no need for him to know of (or be reckless as to) its actual or likely effects on consumers.
Finally, a trader also commits an offence if he engages in any practice set out in paras 1-10, 12-27 and 29-31 of the Schedule of practices that are always regarded as unfair.
In the case of the misleading action and omission offences, the aggressive practice offence and the practices in Sch. 1, there are defences available. The defences are those that have long been used for 'consumer protection' offences in the United Kingdom, so that earlier case law under the TDA and other legislation may still prove helpful.
One set of defences are those available under s. 17. Here the defendant must first prove that the commission of the offence is due to:
• a mistake; which must be a mistake by the person charged, rather than one of their employees; or
• reliance on information supplied to him by another person (who the defendant must identify to the prosecution), for example, information as to mileage from previous owners of a vehicle or information on a product label placed there by the producer (and relied on by the retailer); or
• the act or default of another person (who the defendant must identify to the prosecution) who can be a party such as a sub-contractor or other party that is responsible for the activity in question, but can even be an employee, for example, as in Tesco v Nattrass where a supermarket manager who wrongly labeled washing powder counted as 'another person' for the purposes of the supermarket's defence; or
• an accident or another cause beyond his control, which may cover computer errors.
Having established one of the above criteria, the defendant must then establish that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence by himself or any person under his control. Whether there have been 'reasonable precautions' is a question of fact which will be affected by the circumstances of each particular case. Different precautions may be necessary according to whether the defendant is a manufacturer, a retailer or a supplier of services; and what is required may well also vary according to whether the defendant is a large enterprise or a small corner shop. In general, the key is that an appropriate system must be in place to prevent the practice taking place, for example, devising an adequate training programme for employees; testing products (for example, to see if they comply with information on labels); or (in the case of false mileage readings on cars), checking the history, for example, through the registration document and obtaining statements from previous owners.
Whether there has been 'due diligence' turns on whether the system of reasonable precautions has actually been used in practice. If it has not, then there will be no due diligence and the defence will fail.
A further defence is provided by reg. 18. There is a defence if the defendant can establish that it is his business to publish (or arrange for publication) of advertisements; he received the advertisement for publication in the ordinary course of business; and he did not know, and had no reason to suspect, that its publication would amount to an offence. This covers those (such as newspapers and magazines) who publish advertisements, as well as those (such as advertising agencies) who arrange for publication.
These defences are available partly because the offences are strict liability and it is thought that some form of escape route from strict criminal liability should be available where blame is minimal. The 'reasonable precautions and due diligence' requirement can also be viewed as a way of incentivizing traders to manage their affairs so as to avoid the behaviour in question. We would suggest that this is why, as we saw above, it is key to successful use of this defence to establish that an effective system was in place to prevent the practice taking place; and that this system was operating properly in the circumstances in question.
Europeanization of Criminal Enforcement Through the 'General Clause'
So, we can see that the United Kingdom has chosen to back up preventive control of (UCPD-defined) unfair practices with traditional UK criminal sanctions. However, again, although the United Kingdom may be using traditional, 'homegrown' enforcement tools to enforce the European standards of fairness; we would suggest that these standards of fairness are, themselves, Europeanizing the homegrown enforcement tools. The point, again, is the general clause, and the very broad application of fairness that it has introduced to UK criminal law.
To take one example, the pre-existing criminal rules tended not to cover statements made during the performance or enforcement of a contract. The TDA, for instance, was focused on statements about the goods or services themselves; tending to mean that the focus was on statements made at or around when the contract is first made. However, statements made in the context of performance or enforcement are covered by the new (Europeanized) regime. We noted above that the UCPD concept applies to practices 'before, during or after' any 'commercial transaction. So the reach of criminal consumer protection law was required as a 'reasonable precaution' against customers being misled (Simmons v Potter above, n 40 . has been significantly extended by this European general clause. It will cover, for example, statements as to the rights of consumers, which might influence their decisions as to whether 'to exercise a contractual right' (possibly covering statements that deceive consumers as to their rights and which are therefore being likely to cause them to make the decision not to enforce these rights).
-  For an excellent and exhaustive review of rationales, see P Cartwright, Consumer Protection and the Criminal Law (Cambridge University Press, 2001).
-  OFT, Criminal Enforcement of the Consumer Protection from Unfair Trading Regulations, OFT, London, 2010, para 2.1, available at oft.gov.uk/shared_oft/ policy/OFT1273.pdf.
-  Ibid, at 2.2
-  B Atwood, K Thompson and C Willett, Food Law (Tottel, 2009).
-  G Howells, 'The End of an Era - Implementing the Unfair Commercial Practices Directive in the United Kingdom', above, n 7.
-  CPUTR, Schedule 4.
-  Regulations 9-11; and see regs 13 and 14 on penalties and time limits respectively.
-  Regulation 8.
-  Regulation 8(1)(a).
-  Regulation 12.
-  The defences are not available in the case of the 'violation of professional diligence' offence: if the trader has been 'knowing or reckless' (the required mens rea) then it is hard to see how he can have exercised 'reasonable precautions/due diligence' (s. 17 defence) or 'innocently' published an advertisement (s. 18 defence).
-  Birkenhead Co-operative Society v Roberts  1 WLR 1497.
-  Regulation 17(2).
-  See Simmons v Potter  RTR 347 and Ealing LBC v Taylor  CLR 156.
-  Hurley v Martinez  CCLR 1.
-  Regulation 17(2).
-  So long as they are not so senior as to be an 'alter ego' of the company (e.g., members of the Board of Directors, managing director and other senior officers) (see Tesco v Nattrass  2 All ER 127).
-  Ibid.
-  See Berkshire CC v Olympic Holidays Ltd (1994) 13 Trading LR 251.
-  See Garrett v Boots the Chemist (1980).
-  See Tesco v Nattrass, above n 43.
-  Amos vMelcom (Frozen Foods) (1985) 149 JP 712, DC (insufficient evidence of sampling to check if meat labelled 'rump steak' was actually thus).
-  See Richmond upon Thames LBC v Motor Sales (Hounslow) Ltd  RTR 116; Wandsworth LBC v Bentley  RTR 429 DC; and Ealing LBC v Taylor  above, n 40. Even with some such checks, it has also been held that not enough had been done, and that a statement disclaiming knowledge as to whether the mileage was correct
-  See Turtington v United Co-operative Ltd  Crim LR 376; and see the judgment of Lord Diplock in the Tesco v Nattrass case (above n 43) for guidance on due diligence.
-  See TDA, ss 1-5 and 14; and C Willett and M Morgan-Taylor, 'Consumer Protection', above, n 7, at 184.108.40.206.
-  UCPD, art 3(1)/CPUTR, reg 2(1).
-  For a misleading practice under the CPUTR/UCPD, the information must be false or be likely to deceive the average consumer and it must cause or be likely to cause the average consumer to take a transactional decision he would not have taken otherwise (UCPD, art 6/CPUTR, Reg. 5 [a]-[b]); and 'transactional decision' includes a decision as to whether to exercise a contractual right (UCPD, art 2[k]/CPUTR, Reg. 2 ).