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Doorstep selling laws inadequate

OFT identifies six hard-sell tactics

83/04     12 May 2004

Doorstep selling legislation needs to be updated to combat the psychological tactics employed by many salespeople, says the OFT in a report published today.

Download Doorstep selling (pdf file 453 kb).
View the report's annexes on the doorstep selling market studies page.

The study into the practice of selling goods and services on the doorstep and in the home, worth at least £2.4 billion a year, found that a range of sales tactics and influencing techniques can lead consumers to make inappropriate purchases which they later regret. This highlights a gap in consumer protection. The current legislation gives consumers who are cold-called a 7 day period in which to cancel a contract. This protection does not apply to consumers who asked for the visit. Psychological research commissioned for the study indicates that these consumers are no better prepared to resist these sales tactics.

Buying in the home provides a unique setting for a business transaction – salespeople effectively have a captive audience. Nearly 40 per cent of consumers have bought goods or services in the home. While 70 per cent of those were satisfied, a significant minority of 30 per cent experienced problems: at least 15,000 complaints a year are made to trading standards departments regarding doorstep sales. Most respondents to the OFT's consumer survey said they felt buying in the home was more pressurised than other settings. 

Six psychological influencing principles were identified:

• Reciprocity – creating in the consumer a feeling of indebtedness to the salesperson. Free samples, services and discounts can transform a business transaction into a social visit, imitating that of a friend.
• Consistency and commitment – building up the consumer's commitment to the product so that a decision not to purchase looks inconsistent. Using personal information gleaned from the consumer's home to gain agreement that they are interested in a product 'if the price is right' means that the seller can remind the consumer of this commitment when offering a discount.
• Scarcity and anticipated regret – generating a sense of urgency and of loss if a purchase is not made. People dislike feeling regret and are motivated to avoid it.
• Social proof – making the consumer feel they are like everyone else who bought the product. People have a tendency to use the behaviour of others as a guideline for their own.
• Liking and similarity – gaining information about a consumer's likes and dislikes in order to identify with them, build a rapport and gain their trust. People prefer to say yes to someone they like and liking is increased by perceived similarity.
• Authority and expert endorsement – working on the principle that people will defer to expert opinion.

As the law stands consumers have the right to cancel when a sales visit is unsolicited but 94 per cent of consumers are unaware of these cancellation rights. Consumers also find it difficult to distinguish between a solicited and unsolicited visit in accordance with the legal definition (see note 2).

The OFT recommends that Government should extend the legislation to give cancellation rights to solicited visits as well as unsolicited. The OFT will also run a consumer education campaign in conjunction with interested groups to raise awareness of consumers' rights and alert them to the psychological techniques used and how to combat them.

However, even with cancellation rights there are problems. Unscrupulous sellers can deliberately undermine them by unnecessarily installing goods before the cooling-off period expires. The regulations provide protection for legitimate traders from bearing unreasonable costs of removing work already completed, but some traders are using this as a loophole to undermine the benefit of a cancellation right. The OFT recommends that Government consults on the possibility of removing this loophole and of banning work and/or payment within the cooling-off period except in circumstances where it is genuinely needed urgently by the consumer.

In addition the OFT has already set out proposals (see note 3) on strengthening legislation to help tackle bogus trading – where consumers are cold-called and tricked or pressurised into paying large sums of money often for shoddy goods or services. The OFT also wishes to see cooperation continue to grow between trading standards departments and police and other agencies to deal with bogus traders, building on existing best practice, and therefore welcomes the DTI proposal for a cross-departmental ministerial group to provide coordination and impetus at national level (see note 4).

Penny Boys, OFT Executive Director, said:

'Doorstep selling can be a convenient form of shopping, often just as a time saver for busy people, and is of particular value for house bound consumers. However the unique setting the home provides also means that high pressure selling and psychological tactics can persuade them to make purchases they don't really want. It is therefore vital that consumers have adequate protection and are able to cancel contracts they later regret.'

NOTES 

1. The OFT launched its study into doorstep selling on 12 November 2002 following a super-complaint from Citizens Advice. See press release  75/02 for further information.

2. The Consumer Protection (Cancellation of Contracts concluded away from Business Premises) Regulations 1987, commonly called the Doorstep Selling Regulations (SI1987/2117) say that if consumers enter into a contract for the supply by a trader of goods or services for more than £35 during an unsolicited home visit, they are entitled to cancel that contract within seven days. The business must provide a cancellation form, although a letter from consumers to the business will also be a valid cancellation. An unsolicted visit means a visit by a trader which does not take place at the express request of the consumer. This includes a subsequent visit following an earlier unsolicited visit, or a visit which takes place after an unsolicted phone call, if the trader indicated, expressly or by implication, during the preliminary visit or telephone call, that he was willing to visit the consumer. The Doorstep Selling Regulations may also apply to a contract made during a requested visit if the consumer agrees to buy 'new' goods or services which were not part of the request.

3.  The OFT recently published a position paper on the legislative options for tackling bogus trading in advance of a debate on a private member's bill on the subject. For further information see press release 36/04.

4. Gerry Sutcliffe, Parliamentary Under-Secretary of State for Trade and Industry proposed a new cross-departmental ministerial group to coordinate best practice on talking bogus traders during a Westminster Hall Adjournment Debate, 3 March 2004.

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