Are you aware of your obligations under the new Consumer Rights Act?
Taking effect from 1st October 2015, the Consumer Rights Act seeks to simplify, strengthen and modernise UK consumer law. Consolidating three pieces of existing consumer legislation, the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations and the Supply of Goods and Services Act, the law is now clearer and easier to understand, meaning that consumers can buy, and businesses can sell with increased confidence. On occasions where something does go wrong, disputes can now be resolved more quickly and cheaply.
The changes are relevant to all consumers and every business which sells directly to them. Read on for a step-by-step guide to the Act and what it means for you.
Goods and Services
The Consumer Rights Act introduces:
· A tiered remedy system - in place for faulty goods, digital content and services, the tiered remedy system means that a consumer’s rights to a refund are now more clearly set out. The level of the refund depends upon how long they’ve owned the product for.
o 30 day refund period – consumers now have a defined timeframe in which they have a right to return a faulty item and obtain a full refund
o Right to repair or replacement – after 30 days and within 6 months, the consumer has the right to demand a repair or replacement item (at the trader’s expense). The trader has one opportunity to repair or replace the item
o Final right to reject – if points one and two of the tiered remedy system have failed to resolve the issue, the consumer is now entitled to ask for a refund or price reduction. It is worth noting that any refund must also include the cost of delivered items to be repaid to the consumer – no deductions are allowed. This can be 100% of the price where appropriate.
· If a trader is in breach of any of the implied terms in relation to the supply of services (done with reasonable skill and care), a consumer can:
o Request a repeat performance – this must be completed in reasonable time without inconvenience to the consumer, and at the full expense of the trader
o Request a price reduction – this can again be 100% of the price where appropriate.
The Consumer Rights Act also gives consumers rights in relation to digital content that is paid for, digital content supplied free with other paid for items and digital content supplied on a physical medium, such as a DVD. Digital content must be fit for purpose and be of a satisfactory quality.
The Consumer Rights Act introduces:
· Repair and replacement – if a trader is in breach of the implied terms (i.e fit for purpose and of satisfactory quality) for the sale of digital content, the consumer has a right for repair or replacement. The repair / replacement must be completed in reasonable time without inconvenience to the consumer, at the trader’s expense
· Price reduction - this can be 100% of the price where appropriate
· Compensation - for damage to device or other digital content.
The standard of which digital content is sold must now match those of goods being sold and services supplied. This introduction reflects the changing commercial nature of how goods are purchased and how services are supplied.
Unfair Terms in Consumer Contracts and Notices
Under the Act it will now be easier for consumers to challenge unfair terms, such as hidden fees and charges, and key terms of contracts, including pricing, may be assessed for fairness. Consumer contracts should be transparent (i.e. expressed in plain and intelligible English) and key terms prominently referenced. Terms which are deemed to overly detriment the consumer run the risk of being unfair and non-enforceable.
The Act now incorporates pre-contract information as forming part of a consumer contract - if a trader provides information in relation to a service and the consumer takes this information into account, the service must comply with that information. If any of the information is either incorrect, or subsequently changes without the agreement of the consumer, and as explained above, the consumer can obtain a price reduction - this can be 100% of the price where appropriate.
Many of the changes are likely to be welcomed by both businesses and consumers. If a dispute arises, it should become easier to resolve. However, all businesses selling to consumers should consider the following:
· Complaints procedure – does it reflect the changes?
· Terms and conditions – are they consistent with the new provisions on digital content, remedies and unfair contract terms? Do you need separate terms and conditions when trading with businesses and consumers? Do the terms favor the trader too heavily? Are the terms easy to understand?
· Training – should your staff and agents be trained to ensure your business does not become unintentionally bound by statements made prior to contract?
This article was written by James Parratt, Trainee Solicitor (Commercial).
If you have any concerns about the Act and how it impacts upon your business, please contact Tom Scoville, Solicitor (Commercial).
Published: 23 Oct 2015