The Consumer Rights Act (the Act) comes into force on 1 October this year and will have immediate implications for any business involved in retail sales in the UK. Every business which engages with consumers will be affected and there is no opt out. Although much of the Act is a consolidation and clarification of existing consumer laws, there are a number of significant changes and it is important that every business understands the implications of these and takes time, and the appropriate steps, to ensure compliance with the requirements of the new legislation.
What is this likely to mean in practice? A large part of the process will be education; managers and sales staff will need to be advised about new consumer rights and be informed of their responsibilities at point of sale. In addition, not only terms and conditions of business, but all existing promotional and sales literature will need to be reviewed to check it complies with the new legislation and revised where necessary.
The clock is ticking and 1 October, the date by which any business dealing with consumers must be compliant with the Act, is fast approaching. In this LawBite we examine the key changes introduced by the Act and the practical implications for any business selling goods, services or digital content to consumers.
The Act is a culmination of consumer law reforms adopted by the UK over recent years with the objective of simplifying the administrative burden on businesses and clarifying the position for their customers. Relevant existing legislation is a patchwork of different regulations in which key terms are not always consistent, making it difficult to navigate for business and consumers alike. The new Act is intended to provide a framework for coherent and consistent consumer law, to introduce specific remedies in relation to digital content (not addressed in previous legislation) and, in certain circumstances, to enhance consumer rights.
The Act is divided into three parts:
- Consumer contracts for goods, digital content and services;
- Unfair contract terms; and
- Miscellaneous provisions dealing with enforcement powers and competition issues.
What are the key reforms?
Sale of goods
As under existing Sale of Goods Act legislation, goods offered for sale to consumers must be of satisfactory quality, fit for purpose and conform to any description given. However, the new Act makes changes to the remedies available in respect of goods which do not conform to these statutory standards. As from 1 October, there will be a clear timetable regarding a consumer’s right to reject faulty goods. If a defect is discovered within 30 days, the consumer has the right to reject the goods and receive a full refund (short term right to reject). After 30 days, the consumer has the right to request a repair or replacement and the business has just one attempt at this; a failure to make a repair or to provide a replacement means the consumer can reject the goods or seek a price reduction.
Provision of services
Businesses supplying services to consumers are also affected by the Act. New provisions include strengthening the implied term that the business must provide the relevant service with reasonable care and skill. The price and time scales for the provision of the service, if not agreed at the outset, must be reasonable. In addition, significantly, the legislation introduces a new term that any information provided to the consumer about the service or the business, whether orally or in writing, which is relied upon by the consumer, is binding. Sales staff will need to be aware of this, as what they say to customers, pre contract, will be important.
The new Act introduces specific rights and remedies relating to digital content, (defined as data produced and supplied in digital form) including software, music, computer games, films, e books and apps. The Act provides standards for digital content similar to those relating to goods. Where digital content is not tangible there is no automatic right of rejection, but the consumer has the right to repair or replacement if it is not possible or would take an unreasonable amount of time or significantly inconvenience the consumer. In certain circumstances, the consumer is given the right to claim compensation if the digital content supplied causes damage to their device or other digital content.
Unfair contract terms
Although the Act consolidates much of the existing law on unfair contract terms, there are new provisions which mean that most businesses will need to review existing terms and conditions. The Act expands the existing so called “grey list” of potentially unfair terms to include any terms which mean disproportionately high charges if the consumer decides to terminate the contract, any terms allowing the business to alter the subject matter and any terms which provide the business may determine price.
Issues for business
Chidem Aliss, Senior Associate, in the Commercial Team commented “Getting things wrong in connection with this consumer rights legislation will prove costly for business, both financially and in terms of damage to reputation”.
To make sure your business is compliant on 1 October 2015 it is important to take steps now:-
- to review all business/customer communications including existing terms and conditions of business, sales policies, in store notices, sales brochures and websites; and
- to provide relevant training for sales staff.