The Consumer Rights Act 2015

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Consumer Rights Act 2015

30-day refund becomes law and includes digital purchases

The Consumer Rights Act, which has been labelled the biggest shake-up in consumer rights law in a generation, came into force on 1st October 2015. The Act consolidates key consumer legislation and introduces clearer remedies and timeframes for consumers to claim a refund, repair or replacement on faulty or unsatisfactory goods, digital content and poor services. Its overall aim is to harmonise existing provisions to give a single approach; not an easy task.

“Whether it’s downloading music or buying a fridge freezer, the Consumer Rights Act makes it easier to understand your rights.”

Business minister Nick Boles MP

Most of the changes were important updates to existing laws but two new areas of law were also introduced. For the first time, rights on digital content have been set out in legislation and there are new clear rules for what should happen if a service is not provided with reasonable care and skill or as agreed.

 

Why were the changes needed?

It won’t come as a surprise to say that UK Consumer law is unnecessarily complex, unclear and fragmented. A lot of consumer legislation has developed piecemeal over time and has not been amended to keep up with technological changes; thus creating out-dated laws and overlaps and inconsistencies with other legislation. Moreover, the legalistic language has caused the legislation to lack precision and create uneven enforcement.

Consumer law was crying out to be brought up to date to cope with the requirements and demands of today’s shoppers.”

Which? executive director Richard Lloyd

A call for evidence in the Consumer Law Review in 2008 revealed strong support across the board for consolidating consumer legislation, making it clearer and more accessible[i]. Respondents highlighted a number of benefits that a rewrite would bring – removing discrepancies and inconsistencies, greater use of plain English, greater awareness of rights, remedies and obligations, greater flexibility, future proofing and aiding business growth.

A number of consultations and academic research papers have examined proposals that now form part of the CRA. In developing proposals for the Act the government took into account the Consumer Rights Directive 2013 (CRD), and as far as appropriate, has made the Act consistent with the CRD, with the intention of achieving overall a simple, coherent framework of consumer legislation.

 

Consumer Rights Act 2015

The Act is in three Parts:

  • Consumer contracts for goods, digital content and services;
  • Unfair terms; and
  • Miscellaneous and general

Standards for consumer contracts of goods and digital content – all products must be of satisfactory quality, fit for purpose and as described. The standards also covers digital content, so all products, whether physical or digital must meet the required standards.

reasonable pSatisfactory quality – this is the opinion of the reasonable person and not any unreasonable expectations of a consumer. When considering whether the product is of satisfactory quality there is a need to take account of:-

  1. Any description of the digital content
  2. The price paid for the goods
  3. All other relevant circumstances – particular public statements in advertising and labelling.

However, if something which makes the quality of the goods unsatisfactory has been disclosed to the consumer or ought to have been revealed on inspection – the standard of satisfactory quality would not be applicable.

Fit for purpose – the goods must be fit for the purpose supplied. This standard also covers the situation where the consumer has informed the trader (impliedly or expressly) of any particular purpose for which the consumer is contracting for the goods. There also needs to be reasonable reliance from the consumer on the skill or judgment of the trader.

As described – all contracts will be understood as including the term that the goods will be treated as matching the description. A change to any of that information, made before entering into the contract or later, is not effective unless expressly agreed between the consumer and the trader.

 

Goods

30-day right to reject – for the first time a specific timeframe has been created in which consumers can reject a faulty item and get a full refund. The consumer has to indicate to the trader that they are rejecting the goods and treating the contact as at an end. The indication may be something the consumer says or does, but it must be clear, certain and communicated.

Then the trader has a duty to give the consumer a refund and the consumer has a duty to make the goods available for collection. The trader must pay the reasonable costs of returning them and the refund must be given promptly and within 14 days.

Repair, replace or refund – the CRA creates a ‘tiered’ remedy system by placing a limit on the number of repairs or replacements of substandard goods before traders must offer a partial refund. The consumer has to give the retailer one opportunity to repair or replace the goods or digital content before rejecting the goods or requesting a price reduction. The trader must undertake the repair within a reasonable time, without significant inconvenience to the consumer and bear any necessary costs incurred in doing so. When considering what is a “reasonable time” or “significant inconvenience” – the nature of the goods and the purpose for which the goods were acquired needs to be taken into account.

Six months or more – if the consumer discovers that the goods are faulty within six months of receiving it then it is presumed that the goods have always been faulty. It is then up to the retailer to prove that the fault did not exist when supplied.

After six months, it is for the consumer to prove that the product was faulty at the time it was supplied – which may be a tricky task and require expert opinion. The consumer then has a maximum of six years to bring a claim.

Mixed contracts – for the vast majority of sales, digital content is supplied with goods that can be physically handled (e.g. a car, CD, DVD). The digital content and goods are mixed together as a ‘mixed contact’. The CRA makes it clear that if either the digital content or physical product are faulty, they are treated as a whole item that is defective. As a result, any goods containing faulty digital content are protected by the remedies provided for faulty goods.

This is very important – as the remedies for faulty goods includes the right to reject, which is not a remedy available for defective digital content alone.

Delivery of wrong quantity – if the trader delivers less than the quantity contracted to supply the consumer may reject them, but if the consumer accepts them the consumer must pay for them at the contract rate. If the trader delivers more, then the consumer may accept the goods included in the contract and reject the rest; but if the consumer accepts all of the goods delivered, the consumer must pay for them at the contract rate.

Delivery of goods – unless there is an agreed time or period, the trader must deliver the goods without undue delay and in no more than 30 days.

Who bears the risk during delivery? – the goods remain at the trader’s risk until received by the customer or someone chosen by the customer.

 

Digital Content

For the first time, the Act covers contracts between a trader and consumer in relation to digital content, as distinct from goods and services. Previously traders and consumers had to try to apply the statutory rights for goods and services to emerging digital content products. This created uncertainty regarding which rights applied.

The Act gives consumers a clear right to the repair or replacement of faulty digital content. The law here had been unclear and this change has brought us up to date with how digital products have evolved.

The Act defines “digital content” as “data which are produced and supplied in digital form”. Therefore, a huge range of digital products fall within the definition, such as:-

  • Mobile phone apps
  • Films
  • E-Books
  • Computer software
  • System software
  • Video games

However, digital content does not have to be in a tangible form and should not be confused with the ways by which digital content or goods and services are chosen. For example, the supply of a mobile phone contract is not digital content; it is a service for customers to use.

What’s included?

  • Any digital content that has been paid for, whether it is with money, a gift card or virtual credits.
  • Any free digital content supplied with goods, services or other digital content for which the consumer pays a price.
  • Any free digital content not usually available for free unless you buy another product (e.g. a smart TV).

Repair, Replace or Refund – if the digital content does not conform to the standard required, the consumer has a right to a repair or a replacements. The consumer has to give the retailer one opportunity to repair or replace the digital content before requesting a price reduction. The trader must undertake the repair within a reasonable time, without significant inconvenience to the consumer and bear any necessary costs incurred in doing so.

If the repair or replacement does not fix the situation then the consumer can request a full refund. The refund must be given promptly, within 14 days and using the same means of payment as the consumer used to pay for the digital content, unless the consumer expressly agrees otherwise. There is no right to reject available to a consumer for defective digital content alone.

Six months – if the consumer discovers that the digital content is defective within six months from when it was received, it is to be taken as being defective on the day it was supplied.

Damage to a device – if a trader supplies digital content to a consumer and the digital content causes damage to a device, such as a virus, then the trader will have to compensate the consumer. The consumer must show that the digital content caused the damage and that the trader had not exercised reasonable care and skill.

 

Services

There are also new clear rules for what should happen if a service is not provided with reasonable care and skill or as agreed.

What’s included – whether the service is a small repair job, a new kitchen or entertainment, all of these require a contract. The Act does not include a contract of employment or apprenticeship. The service can be provided alone or alongside goods, for example, double glazing.

Standards for a contract for service – the standard is an update to existing law as it includes:-

  • that the service is performed with reasonable care and skill,
  • that the consumer pays a reasonable price for the service if no price is set out in the contract, and
  • that the service is carried out in a reasonable time.

However, the CRA introduces a new statutory right that if the trader provides information which is said or written it is binding where the consumer relies on it.

Remedies – if the service does not meet the standard above then the consumer has two remedies available: 1) a right to request repeat performance, and

2) a right to a partial or full price reduction.

If the consumer requests repeat performance then the trader must provide it within a reasonable time and without significant inconvenience to the consumer and bear any necessary costs. The consumer cannot request repeat performance if completing performance of the service in conformity with the contract is impossible.

If repeat performance is not adequate then the consumer has a right to a partial or full price reduction. The refund must be given promptly, within 14 days and using the same means of payment as the consumer used to pay for the service, unless the consumer expressly agrees otherwise. There is no right to reject available to a consumer for a substandard service.

 

Unfair Terms

The CRA consolidates the legislation governing unfair contract terms in relation to consumer contracts, which is currently found in the Unfair Contract Terms Act 1977 (UCTA) and The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), into one place. It also removes anomalies and overlapping provisions in relation to consumer contracts. UCTA continues to apply to B2B contracts.

Fairness – the CRA makes it clear that contract terms relating to price and subject matter are only exempt from the fairness test if they are prominent and transparent. This is an improvement for consumers because previously such terms were exempt from a fairness test if they were written in plain language.

Unfair term – an unfair term of a consumer contract is not binding on the consumer. A term is unfair if, they are contrary to the requirements of good faith. A term may also be unfair if it causes a significant imbalance of rights and obligations between the trader and consumer.

The Grey list – the CRA contains a list of contract terms that may be considered unfair. Some examples include:

  • Exclusions or limitations of the trader’s liability for death or personal injury
  • Disproportionately high default charges
  • Allowing only the trader to dissolve the contract on a discretionary basis
  • Allowing only the trader to alter the terms of the contract without a valid reason
  • Excessive early termination charges

 

Miscellaneous and general

Enforcement – the CRA sets out provisions on reforming enforcement powers and consolidates and simplifies the investigatory powers of consumer law enforcers in relation to more than 60 pieces of legislation.

Competition – the act establishes the Competition Appeal Tribunal (CAT) as a major venue for competition actions in the UK and changes the way in which judges are able to sit as chairs in the Tribunal. It introduces a limited opt-out collective action regime, with safeguards, for competition law.

Alternative Dispute Resolution (ARD) – the Act promotes ADR for competition cases. ADR offers a quicker and cheaper way of resolving disputes than going through the Courts.

Letting Agents – the Act imposes a new duty for letting agents to publicise fees. It also imposes a duty on the agent to display or publish, with the list of fees, a statement of whether the agent is a member of a client money protection scheme and which compensation scheme they have joined.

The Higher Education Act 2004 – the act expands the list of higher education providers which are required to join the higher education complaints handling scheme.

Secondary ticketing – this applies where a person re-sells a ticket for a recreational, sporting or cultural event. The act requires that specific information such as, the seat or standing area, any restrictions and the face value of the ticket, be communicated in a clear and comprehensible manner and before the buyer is bound by the contract.

 

The Consumer Rights Act 2015 stands alongside Regulations to create a greatly simplified body of consumer law. Taken together, they set out the basic rules which govern how consumers buy and businesses sell to them in the UK.

Whether they will succeed will depend crucially on how well consumers and traders understand their rights and responsibilities under the new regime.

[i] Consumer Law Review: Summary of Responses, BIS, 2009