The Consumer Rights Act 2015 (the "Act") comes into force on 1st October 2015. The Act consolidates and reforms previous consumer rights legislation and remedies in respect of three main categories being goods, services and digital content.
We have set out a brief overview of the key changes and how these could affect retailers below. However, the salient message is that retailers who sell to consumers should carry out a full review of their sale-related processes, policies and terms and conditions (whether these relate to physical or online sales) ("Ts&Cs"), to ensure that they are prepared for and able to comply with the new requirements when they come into effect.
New short-term right to reject goods: Retailers will need to ensure that their Ts&Cs are updated to include a new "short-term right to reject", which grants consumers a deadline of 30 days to reject any received goods.
Treatment of created goods: Retailers that create goods on order for their customers (for example a bespoke suit) will need to be aware that the finished product will be treated as goods, rather than as a product of services. Their Ts&Cs will need to reflect this.
Goods must match a model seen or examined: Where a contract is entered into by reference to a model seen or examined by a consumer before entering a contract, the goods provided must match the model. Retailers must communicate any differences to the model to the consumer before the contract is entered into.
Treatment of goods including digital content: If goods being sold include digital content, and the digital content does not conform to what is set out in the contract (in particular the requirements as to satisfactory quality, fitness for purpose and matching description) the consumer will have the right to apply for statutory remedies for goods – retailers won't be able to rely on the digital content provisions described below.
Recovery of costs for non-compliance with pre-contract commitments: If a retailer breaches any of its pre-contract commitments made under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 ("Consumer Contracts Regulations") (which include informing the consumer of the total price of goods, delivery charges, technical protection, digital compatibility) then consumers may recover costs incurred which do not relate to the material characteristics of the goods.
Digital content now offered protection: Digital content (data which are produced and supplied in digital form) is a new category of product and is expressly offered consumer protection for the first time. This clarifies a previously uncertain area of law regarding the consumer rights in relation to such content. Retailers that trade in digital content should ensure that their Ts&Cs reflect the protection afforded to consumers by the Act.
Digital content treated similarly to goods: When selling digital content (subject to some additional exclusions):
- the contract will be treated as including terms that the digital content is of satisfactory quality and fit for purpose, the retailer has the right to supply it, and that it complies with the description given and pre-contract information provided under the Consumer Contracts Regulations; and
- a consumer will be able to request a repair or replacement where there is an issue with the content supplied and, if repair or replacement is impossible or is not properly carried out, will be entitled to a price reduction based on the difference in value between the price paid and the enjoyment that the consumer is able to receive from the product/service (which may be 100%). For example, if a consumer purchases a film and it fails to play they are likely to be entitled to a 100% refund, however if a consumer pays monthly for a film streaming subscription service and one particular film fails to stream, the refund percentage is what is attributable to the playing of that film in the context of the availability of the rest of the streaming service.
Retailer's should consider their Ts&Cs to ensure that these remedies are covered.
No right to reject (or obligation to return or delete) digital content: There are no rights to reject digital content and receive a refund and no corresponding obligations on the consumer to return or delete digital content. Consumers must use the remedies set out above.
Retailers can be liable for damage caused by defective digital content, even where it's free: Retailers will be liable for any damage which digital content (even if it's provided for free) causes to any device or other digital content. Retailers will therefore need to be careful to ensure that their digital content has been tested before it is released.
In "mixed contracts" where digital content and services are supplied (e.g. music streaming) the new digital provisions will apply to the digital content and the service provisions shall apply to the service. If using "mixed contracts", Retailers will need to ensure that their Ts&Cs reflect both the services and digital content positions set out in the Act.
Incorporation of rules from the Consumer Rights Directive: The Act contains new rules on the contractual status of pre-contract information provided to the consumer deriving from European legislation and set out in the Consumer Contracts Regulations.
- Retailers won't be entitled to exclude liability for failure to perform services with reasonable care and skill or for failure to perform services in accordance with information provided by the retailer about themselves or the services they are to provide.
- Retailers won't be entitled to limit their liability to less than the price paid for the services (or the value of any other consideration) for the retailer's failure to comply with any terms treated as included in the contract. Even where the retailer caps its liability at the price paid (rather than a lower amount), there are certain provisions within the Act which may render limitations of liability unenforceable where these are deemed to be "unfair" to the consumer. Retailers should bear this in mind when deciding what limitations to include within their Ts&Cs, taking into account the potential variations in the value of the services supplied.
New statutory remedies:
- If a retailer is in breach of its obligation to perform services with reasonable skill and care or has not complied with information it has provided about the services, a consumer will have a right to repeat performance, or, if this is impossible or is not done properly, a price reduction.
- If a service is not performed within a reasonable time the consumer will have a right to a price reduction.
Retailers will need to ensure that there are appropriate provisions in their Ts&Cs to clearly set out the process and procedure for consumers when seeking to apply these remedies.
No consumer protection for businesses: Businesses will no longer be able to claim consumer protection (as they currently can in certain situations). Only an individual can be a consumer, although an individual making some business use of a consumer purchase may benefit from consumer protection.
If you are a retailer, you need to be aware of the changes being made and should start preparing for how the Act could affect your business and consider making appropriate changes to your Ts&Cs.