Law commissions urge tougher action on hidden charges
- 19 March 2013
- From the section Business
Consumers need more protection against hidden charges often tucked away in the small print, according to two bodies responsible for promoting law reform.
The Law Commission and Scottish Law Commission say in a report published on Tuesday that courts should be empowered to scrutinise the fairness of prices.
Regulators can already investigate cases of alleged market abuse by firms such as airlines, gyms or banks.
But the commissions said the law which underpins investigations needs reform.
David Hertzell, the commissioner lead on the project for the Law Commission of England and Wales, said: "The current law is baffling - so much so that consumers and regulators are reluctant to challenge unfair charges."
Under current laws, courts have the power to assess the fairness of a contract but are unable to look at the price.
The commissions recommend that courts should not interfere with prices which are "transparent and prominent" - but when charges are hidden in small print, they should be given the power to assess them for fairness.
Mr Hertzell said: "We have consulted widely on our recommendations, and both business and consumer groups agreed on the need for reform."
The commissions say that the rise of price-comparison websites have put pressure on traders to advertise low headline prices, while playing down other hidden charges.
They say small print is not "just about font size", but also includes poor layout, densely phrased paragraphs and legal jargon.
The commissions conclude that the current law is "unacceptably uncertain", which risks damaging businesses as well as consumers.
Other recommendations from the commissions include more powers to remove legal jargon from the contracts entered by consumers when they purchase computer software, designed to limit the product's use.
These so-called end user licence agreements (EULAs) should be expressed in "plain, intelligible language", they say.
Professor Hector MacQueen, Scottish Law Commissioner, said: "The software industry has argued that consumer legislation does not apply to some EULAs as they are 'licences' rather than 'contracts'. Our recommendations close this supposed loophole."