Firms face court over hidden charge
Published 19/03/2013 | 03:06
Low-cost airlines, estate agents and gyms are among businesses that face being taken to court over the fairness of hidden charges under proposals put forward by the bodies which recommend law reform.
British courts should be empowered to scrutinise the fairness of costs tucked away in small print, the Law Commission and the Scottish Law Commission said.
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.
David Hertzell, the Law Commissioner leading on the project for England and Wales, said: "The current law is baffling - so much so that consumers and regulators are reluctant to challenge unfair charges. Both traders and consumers need clearer law. If a price is transparent and prominent, the courts should not interfere - but other charges need to be fair."
He added: "Our approach gives traders control over what charges are exempt from review - provided they put them upfront."
The Commissions said that the rise of price-comparison websites has piled pressure on traders to advertise low headline prices, while earning profits through other charges. They said small print is not "just about font size" - it also includes poor layout, densely phrased paragraphs and legal jargon.
Dublin-based Ryanair is among companies well-known for hitting consumers with charges outside the headline price, such as for excess baggage, while mobile phone contracts and payday loans also face increased scrutiny under the proposals.
The Commissions said the current law was "unacceptably uncertain", which risks damaging businesses as well as consumers. Businesses face reputational damage and substantial legal costs if a charge is later found to be unfair, they said.
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. The so-called end user licence agreements (EULAs) should be expressed in "plain, intelligible language".