Regulator to probe clarity of consumer contracts

The Office of Fair Trading (OFT) has launched an investigation into contracts for goods and services saying many consumers are being ripped off.

The consumer protection regulator’s investigation will focus on uncovering practices that intentionally deceive consumers and will concentrate on online transactions.

The OFT said many of the contract terms given to consumers are complex and people often don’t understand the terms and conditions.

Consumers are already protected from unscrupulous businesses by the Consumer Protection from Unfair Trading and the Unfair Terms in Consumer Contracts regulations.

But the OFT wants to understand how well typical contracts are understood by consumers.

Heather Clayton, director of the OFT's Consumer Market Group, said: “Consumers are offered a range of complex contractual arrangements, particularly for goods and services offered online.

“We often see situations in many different markets where people lose out as a result of not understanding contracts.

“We want to understand the cause of these problems and look for remedies that will not only protect consumers, but also help businesses that are trying to provide clarity to their customers."

The OFT will study how well consumers understand typical contracts and how the presentation of contracts changes their comprehension.

It will also examine whether the consumer's level of understanding is affected by the presentation of contracts online, face-to-face, in writing or over the phone.

It wants government departments and consumer bodies to submit information to the investigation by 31 March.

The OFT said the investigation could lead to ordering retailers to create and abide by a code of practice.

They might also make recommendations to the Government, take action against particular companies and ask the Competition Commission to conduct a full investigation.

The study is expected to be completed by winter 2010.