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CHAPTER 2

THE WEAPONS OF LAW

2.4.1False or Misleading Statements
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The Trade Descriptions Act (U.K. 1968) laid down specific provisions with regard to false or misleading statements. Several years elapsed before these provisions were enacted by the legislature in Ireland, under the Consumer Information Act 1978.

NOTE!


There is nothing within the wording of the Irish Consumer Information Act 1978 that restricts its substantive provisions just to dealings with consumers.


While a provision of the Act established the office of the Director of Consumer Affairs in Ireland (and it was this, presumably, that gave rise to its title), both its purposive intent, and its substantive provisions giving rise to offences by persons engaged in the course of  trade, mirrored those of the U.K. Trade Descriptions Act 1968, the forerunner legislation in both jurisdictions being the Merchandise Marks Acts.


The specific use of the term, 'consumer', in the title of the Irish Act, which gives the impression that the Act relates solely to dealings with consumers, is therefore very much misleading.

 

Section 6(1) of the Irish Act contains the following provisions (Section 14(1) of the U.K. Act contains provisions to similar effect):

If a person, in the course or for the purposes of a trade, business or profession

(a)

makes a statement which he knows to be false, or

(b)

recklessly makes a statement which is false as to……

(i)

the provision in the course of the trade, business or profession of any services …….

(ii)

the nature, effect or fitness for purpose of any services ……

—— he shall be guilty of an offence.


Section 7(1) of the Irish Act contains the following provisions:

If a person offering to supply goods of any description or provide any services…… gives by any means a false or misleading indication of —

(a)

the price or charge for the goods, (or) services ……

(b)

any charge for installation of or servicing of the goods ……

—— he shall be guilty of an offence.


It was not until 1987, under Section 20 of the Consumer Protection Act, that statutory legislation, making it an offence to give an indication (by any means whatever) which is misleading as to the price at which any goods or services are available, was given express statutory effect in the United Kingdom.19


Note!
The above extracts are quoted from the Irish Act. The wording ‘or profession’ was absent from the original U.K. Trade Descriptions Act. Subsequent U.K. Acts included a definition of ‘business’ that incorporated professions, and there is no doubt but that professions were always intended to be covered by the U.K. Act.20 These subsequent incorporations must be seen to just provide interpretative clarification of the original Act, as the U.K. legislature had, from the very outset, used the general expansive phrase, 'in the course of trade', as distinct from the restrictive occupational term, 'in the course of a trade', within the wording of the Trade Descriptions Act.



Section 5 of the U.K. Trade Descriptions Act gives effect, through the mechanisms of the Act, to an offence where an advertisement contains a trade description which is false or misleading to a material degree. Section 8 of the Irish Act creates a similar statutory offence. Within the ambit of both Acts the term ‘advertisement’ includes a catalogue, a circular and a price list.


It is the function of the Director General of Fair Trading, in the U.K., and the Minister or relevant Local Authority, in Ireland, to bring or prosecute proceedings in relation to offences under these Acts. 

But these offences must first be brought to their knowledge!



BUT ! ——  AND A VERY BIG BUT !



BUT, in Ireland, when enacting the Consumer Information Act 1978,
even though there were no equivalent provisions in any banking and financial services legislation that protected the customer / client / consumer by setting down offences for knowingly, or recklessly, making false or misleading statements, or for giving a misleading indication as to the price or charge for services, the Irish legislature, guided by the Competent Authority, The Central Bank, saw fit to ensure that the Act's provisions would not apply to any act or omission, for the purposes of 'banking business' (authorised under the Central Bank Act 1971), by a bank or its servants or agents.


While the business of a Building Society or Life Assurance Company did not, in 1971, include 'banking business', and while it may be reasonably argued that, back in 1971, the provision of Mortgages did not constitute normal banking business (a bank's activities relating to the Mortgage market being, at this time, generally confined to the provision of bridging loans) ————  the 'sacred cow' protection status afforded by the Irish Legislature and the Central Bank to all involved in the 'banking business' in Ireland is clearly evident.



This deliberate exclusion of 'banking business' from the provisions of the Consumer Information Act 1978 would have serious implications for the customers of Irish Financial Services Institutions.


For it meant that those engaged in 'banking business' could continue with their practices, of deliberately using false or misleading statements and of giving a misleading indication as to the cost of credit, to induce customers to enter into contracts with them, most particularly, contracts that favoured their own personal financial interests ——— ALL safe in the knowledge that the Central Bank woud not interfere.


Even when, in 1987, the Irish legislature enacted statutory provisions to combat the use of misleading indications of the 'cost of credit', it was ensured that these statutory provisions were issued under an Order, the Consumer Information (Consumer Credit) Order 1987, that was governed by the restrictive provisions within the Consumer Information Act 1978, provisions that had already been contrived to exclude 'banking business'.

Note! This specific issue of Financial Services Institutions giving a misleading indication as to the 'cost of credit', and the many negative consequences of same for the customer / consumer, will be seen in Chapter 6, The Cost of Credit.

 

 


 


The committing of an offence under the above Acts is a crime, subject to criminal prosecution. Their provisions, however, do not directly provide any remedy, by way of damages or compensation for the wrong done, to the injured party.


However, in the United Kingdom, the Courts are empowered to order that a person convicted of a criminal offence pay compensation for any loss or damage resulting from that offence.


Unfortunately, no such all embracing power to order compensation is available to the Irish Courts.
However, the Irish Consumer Information Act, 1978 does contain a provision (which, considering the ‘prior application’ proviso and in view of the derisory amount of the fine imposable, appears tokenistic) whereby a Court imposing a fine on a party guilty of an offence under the Act may, at its discretion, direct that part or all of that fine be paid to a person who has suffered loss as a result of the offence (provided an application for same has been made prior to the imposition of the fine).


Notwithstanding any part remedy that may result from a court action under Statute, it is clear that a conviction of an offence under these Acts, or being guilty of an offence (in the case where the time limit within which proceedings can be instituted precludes criminal prosecution), can provide the injured party / consumer with an additional weapon in a related Civil Action.




Note!
The issue of a person making a statement which he knows to be false or recklessly making a statement which is false (which effectively amounts to the making of a fraudulent statement), specifically for the purpose of inducing another person to make an investment decision, is addressed in Section 2.5, The United Kingdom Position, and in Section 2.6, The Irish Position. (See also Section 2.3.6: Fraud and the Conman —— U.K. Law and Irish Law.)


19 Lowe and Woodroffe, Consumer Law and Practice, (4th ed.), p. 241 and 256.

20 Lowe and Woodroffe, Consumer Law and Practice, (4th ed.), p. 220.

 

 

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