54% of businesses don’t know about unfair contract rules

Research for the CMA also revealed that some businesses think a signed contract is final, not realising that they can’t enforce a term against a consumer if it’s unfair. Others may copy terms from larger businesses or competitors, assuming incorrectly that these will be automatically fair and legally binding. Unfair terms are those that give businesses an unfair advantage over consumers, often by reducing their rights or ability to complain if things go wrong. For example, they can include:

• keeping all of a customer’s deposit if they cancel, regardless of the amount the business is actually losing as a result
• using excessively long notice periods that end up tying customers into a contract for longer than they want
• excluding the business’ liability for things that are its fault (ie delays, or faulty goods or services)

The research showed that less than half (45%) of those surveyed claimed to know the rules on unfair terms well, whereas 36% owned up to not having a strong grasp, and 18% admitted they had never heard of them.

It also found that 67% of UK businesses sell to consumers, with most of these using some form of terms and conditions. The rules on using unfair terms are set down in the Consumer Rights Act (CRA) 2015. However, only 15% said they were familiar with the Act when asked.

Paul Latham, Director of Communications at the CMA, said: “Consumers have a right to be treated fairly – and businesses need to know that they can’t rely on their terms and conditions if they’re not fair. We know that the majority of businesses want to do the right thing by their customers, but it’s worrying that many businesses are not familiar with the law. That’s why we have launched this campaign to help businesses protect themselves against breaking the law, and against using contracts that they can’t enforce.”

Mike Cherry, Federation of Small Businesses (FSB) National Chairman, said: “Clear guidance is important, in what is a complicated area of law. Businesses want to treat consumers fairly and they need the right information. It’s good to see the CMA taking this positive step to help firms comply when setting out contract terms.”