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Unconditional offers, pressure selling, and consumer law

Smita Jamdar from Shakespeare Martineau looks at the consumer law implications of warnings from the OfS on unconditional offers.
This article is more than 5 years old

Smita Jamdar leads the education team at Shakespeare Martineau

The latest OfS Insights briefing makes the point that the practice of unconditional offers, when combined with what it calls “pressure selling”, may constitute a breach of consumer law.

The OfS intends to make clear what practices it considers constitute pressure selling and empower students to take action as well as considering regulatory action against any institutions involved.

So how does consumer law apply in this context? The main provisions will be those that ban certain commercial practices all together and establish a scheme of redress for other aggressive and unfair commercial practices, which are set out in the Consumer Protection from Unfair Trading Regulations 2008.

What consumer law forbids

There are 31 banned practices, most of which could not be considered to apply to unconditional offers. However, two are worth considering further. The first is falsely stating that an offer will only be open for acceptance for a particular time, or will only remain available on certain terms for a certain time. The second is providing distorted information about market conditions to get a consumer to purchase the service on terms that are less favourable than market conditions. So cases where students are put under pressure to accept quickly, or to accept because they won’t get a better offer elsewhere, might amount to a banned practice.

Depending on the facts and circumstances, there may be other features of unconditional offers that constitute “aggressive practices”. A practice is aggressive if it significantly impairs a consumer’s freedom of choice through coercion or undue influence and it leads to the consumer entering into a transaction where he or she would not otherwise have done so. Persistence, and exploiting any vulnerability on the part of the consumer, are examples of factors that could lead to a practice being regarded as aggressive.

Finally, the regulations also make unlawful a broader range of “unfair practices”. A practice is unfair if it contravenes the requirements of professional diligence and materially distorts or is likely to distort the economic behaviour of the average consumer (average in the context of the regulations means taking into account any particular vulnerabilities of the consumer group targeted, so in the case of many prospective students, their youth and inexperience).

Professional diligence will be interpreted in a sector specific way, by looking at what honest practice and good faith dealing looks like in the relevant market. This is where it could get very interesting: is there a sector consensus on unconditional offers? If not, will the courts give an institution accused of unfair practice the benefit of the doubt, seeing it as a matter of autonomy and academic judgment, or will they conclude that, as some institutions have rejected the approach as not being in students’ best interests, it cannot represent honest practice and good faith dealing. It will all depend on the specific facts.

The question of fairness

If a practice is banned, aggressive or otherwise unfair, a number of consequences flow. Firstly, the trader, in this case the university, may be guilty of a criminal offence, punishable by a potentially unlimited fine. Where the offence was committed with the consent or connivance of a senior officer of the university or attributable to the neglect of such an officer, then they too may be liable to a fine or in theory imprisonment.

It must be stressed that the threshold of bringing such a case and securing a conviction is very high. In the context of unconditional offers, it is hard to conceive of circumstances where a criminal prosecution would be appropriate, but nevertheless the option is there. It’s worth also noting that there is a defence of due diligence, but to avail themselves of it, institutions would need to show that they took all reasonable steps to prevent the unfair practice or that it was committed as a result of a mistake or some other cause outside their control.

Alternatively, the regulations confer specific rights to redress on consumers. The first is the “right to unwind”, which essentially gives students up to 90 days from enrolment in which to walk away from the contract without incurring any further liability and to receive back any fees paid to the university. This is a significantly longer period than allowed by the statutory right to cancel (14 days from when the student accepts the offer of a place) or most institutions’ own withdrawal policies (often 14 days from enrolment).

By the time the right to unwind is exercised, the institution may not be able to fill that place on that course and in effect loses the full fee for the year and the overall course. And the financial risk does not end there. In addition to getting fees back, the student would also be entitled to any related reasonably financial losses (so, possibly, wasted accommodation costs) and (unusually under our law) damages for distress.

As with all such theoretical legal risks, the devil is in the detail. Responsible, measured use of unconditional offers can, as the OfS briefing recognises, be a good thing for students. However, institutions need to be clear what their policies on such offers and on what the professional judgments and practices surrounding the making of these offers should be. It would be a very bad thing for the reputation of the sector if it because associated with proven cases of the kind of behaviours the public associates with rogue traders.

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