Do companies have any legal obligation to tell the truth?

Question

I purchased an item from a major DIY retailer in the UK, the item was defective and I rang up their support desk asking for a refund. The initial response I got was basically "we're just the retailer, we just sell it, if there's anything wrong with it you'll need to contact the manufacturer yourself". I knew this was incorrect and I quoted the 'Consumer rights act 2015'. At this point story changed immediately and my details were taken and I was given a reference number and told I could go back to the store for a replacement.

The speed that the help desk switched from "it's not our problem" to "bring it back for a replacement" made me think that the support staff have been told to try to fob-off customers with 'it's not our problem' unless the customers demonstrate they actually know their legal rights.

I asked to speak to a supervisor, they apologised, confirmed that the faulty item was their problem and blamed 'inadequate training' for their initial mistake - however, I find it hard to believe that that someone whose full-time job is dealing with customer complaints can't be aware of the basic provisions of the relevant law.

Here's my question, Does a company actually have any legal obligation for honesty in these circumstances? Is fobbing a customer off down a legal blind alley (i.e. "you need to contact the manufacturer") a legitimate business strategy? Or is a company obliged to know consumer law and act on it without prevarication?

(By the way, I rang a couple of days later with a made-up issue, spoke to a different operator and got exactly the same response!)

Answer 1

england-and-wales

Yes.

Fraud

If done intentionally, it's fraud under Section 2 of the Fraud Act 2006:

(1) A person is in breach of this section if he — (a) dishonestly makes a false representation, and (b)intends, by making the representation — (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss.

(2) A representation is false if — (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading.

(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of - (a) the person making the representation, or (b) any other person.

Consumer regulations

It's also illegal under the Consumer Protection from Unfair Trading Regulations 2008. Regulation 3 provides:

(1) Unfair commercial practices are prohibited.

(3) A commercial practice is unfair if — (a) it contravenes the requirements of professional diligence; and (b) it materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product.

(4) A commercial practice is unfair if — (a) it is a misleading action under the provisions of regulation 5; [...]

Regulation 5 contains further provisions relating to misleading actions:

(1) A commercial practice is a misleading action if it satisfies the conditions in either paragraph (2) or paragraph (3).

(2) A commercial practice satisfies the conditions of this paragraph — (a) if it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and (b) it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.

(4) The matters referred to in paragraph (2)(a) are — [...] (k) the consumer's rights or the risks he may face. [...]

"Transactional decision" is defined in Regulation 2 and includes a decision of whether to exercise a contractual right in relation to the product:

2 (1) In these Regulations [...] “transactional decision” means any decision taken by a consumer, whether it is to act or to refrain from acting, concerning — [...] (b) whether, how and on what terms to exercise a contractual right in relation to a product.

The contractual right in question here is the right, implied into the contract by statute, for the quality of the goods to be satisfactory under Section 9 of the Consumer Rights Act 2015:

(1) Every contract to supply goods is to be treated as including a term that the quality of the goods is satisfactory.

Section 19 sets out your statutory rights if the trader is in breach of the above term.

The applicable offences are found in Regulations 8 and 9:

8 (1) A trader is guilty of an offence if — (a) he knowingly or recklessly engages in a commercial practice which contravenes the requirements of professional diligence under regulation 3(3)(a); and (b) the practice materially distorts or is likely to materially distort the economic behaviour of the average consumer with regard to the product under regulation 3(3)(b).

8 (2) For the purposes of paragraph (1)(a) a trader who engages in a commercial practice without regard to whether the practice contravenes the requirements of professional diligence shall be deemed recklessly to engage in the practice, whether or not the trader has reason for believing that the practice might contravene those requirements.

9. A trader is guilty of an offence if he engages in a commercial practice which is a misleading action under regulation 5 otherwise than by reason of the commercial practice satisfying the condition in regulation 5(3)(b).

Answer 2

Yes

australia

It is unlawful to engage in deceptive and misleading conduct in trade or commerce under the Australian Consumer Law and the equivalent state and territory Fair trading laws.

The most prominent precedent is the ACCC v Valve (the owners of the Steam gaming platform) whose terms stated a no refund policy when Australian consumers are entitled to refunds in certain circumstances. The fine was approximately 15 million AUD.

Oh, and blaming “inadequate training” doesn’t make it not misleading or deceptive.