How does the Trade Descriptions Act affect businesses?
The Trade Descriptions Act and Consumer Protection from Unfair Trading Regulations are important pieces of legislation for any business owner to understand. Discover more about these laws, including what they are and what they mean for your company and your customers.
The Trade Descriptions Act was established to ensure businesses are truthful about what they sell. Newer consumer protection laws largely supersede this legislation. Our guide will cover this in more detail.
What is the Trade Descriptions Act?
The Trade Descriptions Act is consumer rights legislation introduced on 30th November 1968. It aims to safeguard consumers against misleading claims about products and services.
This replaced the Merchandise Marks Act of 1887 and ensures businesses and salespeople are honest about what they are selling – to do otherwise is an offence.
Trade description breach examples include:
- Fake designer handbags marketed as a label
- Providing inaccurate information about a microwave’s wattage.
What does the Trade Descriptions Act cover?
The Trade Descriptions Act 1968 covers several issues and makes it clear for businesses what they can and can’t claim about their products and services. The legislation includes the following:
- Outlaws the sale of products or services based on misinformation
- Empowers officials to carry out inspections and confiscate goods and documents
- Allows courts to punish businesses or individuals who breach the rules
- Issuing fines for businesses found to be in breach of the Act.
What is a trade description?
A trade description is the details a business or seller provides about what they sell – whether that’s a service or a product. It helps customers gain a better understanding of what they’re buying before they commit to a purchase.
The official legislation describes the following to be part of a product or service’s trade description:
- Size, gauge, or quantity
- The method by which it was manufactured, produced, processed, or reconditioned
- Its composition
- Its strength, performance, accuracy, or behaviour and fitness for purpose
- Tests that were carried out and their results
- The location or date on which it was manufactured, produced, processed, or reconditioned
- Who it was manufactured, produced, processed, or reconditioned by
- Previous use or ownership, plus any other history
- Other physical characteristics not listed above.
Section two of the full legislation (external link) features the complete details of what a trade description is and includes.
Origins of the Trade Descriptions Act and consumer protection laws
The Trade Descriptions Act replaced the Merchandise Marks Act in 1968 and consequently became law. Over the years, there have been many types of consumer laws introduced to ensure businesses are trustworthy and treat their customers fairly.
This was one of three consumer protection laws – the others were:
The Consumer Credit Act (external link) (1974). This was updated and amended in 2006 and is the regulation of consumer credit such as loans or hire purchases.
It states that:
- A business must have a licence to provide its customers with credit
- The loanee must be 18 or over
- The APR (annual percentage rate) must be made clear
- The consumer must also have the opportunity to take up a cooling-off period.
The Sale and Supply of Goods Act (external link) (1994). This act dictates that any goods your business sells or supplies need to be of a ‘satisfactory quality’.
They need to:
- Be safe
- Be fit for purpose
- Have no faults
- Last for a period deemed ‘reasonable’.
Consumer law isn’t the only type of legislation businesses must comply with – they also need to follow the rules of both employment and intellectual property laws.
Is the Trade Descriptions Act still valid today?
Although the Trade Descriptions Act is still valid today, it has been mostly superseded by the Consumer Protection from Unfair Trading Regulations Act (2008) (external link). This was to ensure the closure of loopholes that were being exploited by rogue traders.
The 2008 legislation banned 31 unfair practices that were being carried out by sellers, including:
Pressure selling and aggressive sales techniques
This includes several unsavoury practices, such as:
- Unwanted communication – either via phone or email
- Visiting a customer at their home address and not leaving when requested
- Telling a consumer they cannot leave your business premises until they have signed an agreement or contract.
A business cannot tell a customer it has membership with a trade organisation when it hasn’t. Additionally, misinforming a consumer that an independent body or organisation has approved your products when it hasn’t is also a banned practice. It is always best to steer clear of anything untrue about your business, services, or products.
Misleading actions are when you convince a consumer to make a decision they otherwise wouldn’t have made if they were provided with truthful information. Such a scenario can occur during the selling or advertising stage. This includes amending or withholding information about where, when, and how a product was made.
Customers make misinformed decisions when retailers hide information at the purchase stage. Unclear information is also considered a misleading omission for the same reason. Without receiving relevant and accurate information before parting with their money, how can a consumer make an informed purchase?
How to prevent your business from breaching regulations
Businesses of all sizes have a lot to consider with consumer protection and trade descriptions legislations. Although it might initially seem overwhelming, simply following a customer-first approach can help prevent your business from breaching regulations. Ensure that you have relevant processes that positively serve consumers, and you’ll be on track for customer satisfaction.
Tips to help prevent your business from breaching these regulations include:
- Thoroughly read relevant legislation to ensure you are complying with the law and maintaining a good reputation
- Design your processes with the law in mind – from conception through to supply and customer service
- Create a multi-step quality check process that ensures your products and services match how you describe them
- Ensure all contracts your business enters into don’t contain unfair terms for the consumer. If they do, it’s not binding for the customer. You can find full details in the Consumer Rights Act (external link)
- Have a customer service process that reassures consumers you are serious about their rights and about the quality of your product and services. Create official policy documentation for returns and refunds. Then, be clear about the 30-day cooling-off period and issue refunds for products that don’t meet standards
- Protect your business with insurance, such as Hiscox product liability insurance. This can help cover businesses involved in the production, manufacture, design, repair, or supply of a product if it causes injury, illness, or damage.
At Hiscox, we want to help your small business thrive. Our blog has many articles you may find relevant and useful as your business grows. But these articles aren’t professional advice. So, to find out more on a subject we cover here, please seek professional assistance.