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In response to this and the recent focus on the importance of protecting individual consumers, the government is set to reform and harmonise current consumer protection law. The Consumer Rights Act, a supposedly single comprehensive legal framework governing the relationships formed between business and consumers, is expected to overhaul and replace existing consumer protection law.
The effect of the Consumer Rights Act will bring significant change to how businesses deal with consumers in practice, not least of all by swinging consumer law in favour of the individual to align the gap between consumers and businesses and their respective bargaining power.
If a business deals with an individual who is purchasing goods or services outside of a business, the business will need to comply with the Consumer Rights Act. With the introduction of the Consumer Rights Act fast approaching on 1 October 2015, now is the time to consider what steps must be taken to proactively address consumer protection.
What are the key considerations of the Consumer Rights Act?
Goods
- Goods must be of satisfactory quality, fit for purpose, match a description and correspond to a sample.
- Consumers have the right to reject unsatisfactory/non-conforming goods within 30 days and receive a full refund.
- If there is a fault after the 30 day rejection window, the consumer can have a repair/replacement. The business has one opportunity to provide a conforming product.
- Where a consumer prefers a repair/replacement, the time limit for a right to refund is paused until the goods are returned. If the item still doesn’t conform to the contract upon return, then the consumer’s right to reject is extended by a minimum of 7 days.
- If a repair/replacement is impossible/defective or not completed within a reasonable time, the consumer has a final right to reject or a reduction in price.
- The ‘cooling off’ period (under the Consumer Contracts Regulations 2013) for consumers to change their mind when purchasing goods at a distance is extended from 7 to 14 days.
- The period in which businesses must provide a refund is 14 days, reduced from 30 days.
- Businesses must deliver goods within 30 days, unless the consumer agrees otherwise.
Services
- Services must be provided with reasonable skill and care, at a reasonable price and within a reasonable time.
- Where the business fails to provide services with reasonable skill and care or where the services do not conform to pre-contractual statements, the consumer can require the business to perform the services again.
- Where repeat performance is impossible or not repeated within a reasonable time, consumers can claim a price reduction of up to 100%.
Digital Content
- Digital content includes paid for content and content that comes free of charge with physical goods.
- The consumer can require a repair or replacement. If this is unavailable, or not provided within a reasonable time, the consumer has the right to a price reduction.
- The consumer has a right to a refund if the business does not have the right to provide the digital content.
- Please see our guide for further information on the Consumer Rights Act and digital content, using gamers and developers to demonstrate its application.
Miscellaneous
- A failure to provide information (e.g. the total price) may leave the business liable to refunds.
- Terms governing price and subject matter must be prominent and transparent.
- The Consumer Rights Act increases the number of terms which are likely to be considered ‘unfair’.
- Enforcement bodies can seek a court order to prevent a business’ failure to comply with the Consumer Rights Act. Failure to comply with such a court order may result in a penalty of an unlimited fine and/or two years imprisonment.
How do you comply with the Consumer Rights Act?
- Review/redraft sales contracts, standard terms, pre-contractual information and refund policies.
- Key terms must be prominent and transparent and not fall into the new unfair categories.
- Customer service teams and staff must be adequately trained to understand the changes.
Conclusion
The purpose of consumer law is to protect and give confidence to consumers and consequently assist the market in which businesses operate. If a business reviews its procedures and documentation to ensure compliance with the Consumer Rights Act, it can avoid liability for breach of the Consumer Rights Act and may also reap the benefits of increased consumer confidence.
Businesses cannot contract out of the Consumer Rights Act or restrict any liability arising out of it. It is, therefore, crucial businesses start considering, and preparing for, the impending changes to ensure they are compliant on a practical level moving forward. A failure to do so can lead not only to significant fines, but also damage to business reputation. Implementing new procedures and reviewing those which already exist to ensure compliance are, compared with the enormous costs that may be incurred for non-compliance, relatively small. Don’t fall foul of the Consumer Rights Act; start making the necessary changes now prior to its introduction on 1 October 2015.
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About the Author
David McGuire from the Outsourcing and Commercial Team at Wright Hassall LLP
