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Unfair payment collection
33. The Regulations expressly cover all commercial demands for payment. Debt collectors acting aggressively and receive the consumer payment on their own behalf would be covered as “traders”. If the debt collectors are acting as agents of a trader, the claim would instead be against the trader. Businesses undertaking so-called “civil recovery” which receive payment from consumers accused of shoplifting could count as “traders” under the Regulations. In such cases the “product” purchased by the consumer is the settlement of actual or purported liabilities.
Consumer payments and “civil recovery”
16. The Regulations amend the definition of a “transactional decision” to expressly cover demands for payment from a consumer in full or partial settlement of the consumer’s liabilities or purported liabilities to the trader (see reg 2(1A) of the 2008 Regulations). This means that misleading and aggressive practices in respect of such demands would now clearly lead to both criminal sanctions (under the 2008 Regulations), as well as private redress (under the Regulations).
17. For example, so-called “civil recovery” where a consumer is accused of shoplifting, and is asked to pay a standard fixed fee to avoid prosecution, can fall in this category, is now clearly covered. The amended definition would also cover consumer payments associated with wheel-clamping, or demands for payment in respect of purported illegal downloads of digital content.
Civil recovery
A young mother with two small children was shopping, when one of the children took a drink from a shelf and opened it. The mother paid for the drink.
She later received a letter from a “civil recovery” company, claiming (falsely) that under a scheme endorsed by the Home Office, they were entitled to Ł90 for staff and management time, administration costs, and security costs. The letter threatened court action if she did not pay.
The mother received harassing calls every day for two weeks. The mother paid the full amount after one month.
Did the trader commit a misleading action?
• The civil recovery company lied about being endorsed by the Home Office, and has committed a misleading action (reg 5 of the 2008 Regulations). The fact of endorsement would be a “significant factor” in the “average consumer’s” decision to pay (reg 27A(6) of the Regulations).
• The civil recovery company received a “consumer payment” from the young mother (reg 27A(2)(c) of the Regulations). The mother’s decision to pay was a “transactional decision” as it was in full settlement of her purported liabilities to the civil recovery company (reg 2(1A) and (1B) of the 2008 Regulations).
What remedies does the consumer have?
• As the mother had paid for the drink, the civil recovery’ company’s claim was bogus, and no payment was owed. She therefore has a right to unwind the payment (reg 27H(1) of the Regulations), as she acted within three months.
• The mother may also be able to claim damages remedy for distress and inconvenience due to the harassing and threatening calls. The amount could be at the mid to high end of the scale of restrained and modest payments.
A young mother with two small children was shopping, when one of the children took a drink from a shelf and opened it. The mother paid for the drink.
She later received a letter from a “civil recovery” company, claiming (falsely) that under a scheme endorsed by the Home Office, they were entitled to Ł90 for staff and management time, administration costs, and security costs. The letter threatened court action if she did not pay.
The mother received harassing calls every day for two weeks. The mother paid the full amount after one month.
Did the trader commit a misleading action?
• The civil recovery company lied about being endorsed by the Home Office, and has committed a misleading action (reg 5 of the 2008 Regulations). The fact of endorsement would be a “significant factor” in the “average consumer’s” decision to pay (reg 27A(6) of the Regulations).
• The civil recovery company received a “consumer payment” from the young mother (reg 27A(2)(c) of the Regulations). The mother’s decision to pay was a “transactional decision” as it was in full settlement of her purported liabilities to the civil recovery company (reg 2(1A) and (1B) of the 2008 Regulations).
What remedies does the consumer have?
• As the mother had paid for the drink, the civil recovery’ company’s claim was bogus, and no payment was owed. She therefore has a right to unwind the payment (reg 27H(1) of the Regulations), as she acted within three months.
• The mother may also be able to claim damages remedy for distress and inconvenience due to the harassing and threatening calls. The amount could be at the mid to high end of the scale of restrained and modest payments.
Unfair payment collection
33. The Regulations expressly cover all commercial demands for payment. Debt collectors acting aggressively and receive the consumer payment on their own behalf would be covered as “traders”. If the debt collectors are acting as agents of a trader, the claim would instead be against the trader. Businesses undertaking so-called “civil recovery” which receive payment from consumers accused of shoplifting could count as “traders” under the Regulations. In such cases the “product” purchased by the consumer is the settlement of actual or purported liabilities.
Consumer payments and “civil recovery”
16. The Regulations amend the definition of a “transactional decision” to expressly cover demands for payment from a consumer in full or partial settlement of the consumer’s liabilities or purported liabilities to the trader (see reg 2(1A) of the 2008 Regulations). This means that misleading and aggressive practices in respect of such demands would now clearly lead to both criminal sanctions (under the 2008 Regulations), as well as private redress (under the Regulations).
17. For example, so-called “civil recovery” where a consumer is accused of shoplifting, and is asked to pay a standard fixed fee to avoid prosecution, can fall in this category, is now clearly covered. The amended definition would also cover consumer payments associated with wheel-clamping, or demands for payment in respect of purported illegal downloads of digital content.
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