The Consumer Rights Act 2015 came into force on 1 October last year. Consumer-facing businesses that reviewed and updated their terms of business in readiness for the Act might be forgiven for thinking that they would have some respite before needing to revisit their small print again. However, a consultation launched by the Department for Business, Innovation & Skills in March suggests that this might be wishful thinking.
The purpose of the consultation is to consider how terms and conditions can be made more-user friendly and whether to introduce fines for unfair terms. Launching the consultation, the Government noted that a Which? survey from September last year, found that some of the terms and conditions for car and travel insurance were over 38,000 words – “longer than Shakespeare’s ‘Hamlet’ and ‘Romeo and Juliet'”. The Government has particularly said it wants to address the possibility of consumers being caught by “nasty surprises” lurking within lengthy or opaque terms and conditions.
The consultation is seeking responses on the following issues:
- the requirement for key terms to be presented “bold and upfront”. In shops this might be on leaflets that could also be taken away or on prominently placed signage. In the online environment, this might mean having key terms pop up on screen before confirmation of a purchase
- the use of tick boxes. The consultation document says that tick boxes can be confusing – sometimes a tick denotes agreement, sometimes it denotes a lack of agreement and sometimes there is even a mixture within the same set of questions. The Government is considering a standardised format for tick boxes which would see a tick always meaning that a consumer agrees to whatever is being asked
- restrictions on hardware or restrictions caused by linked services. The Government considers that a lack of transparency means consumers may make a purchase (e.g. technology hardware) and not appreciate that the manufacturer will be placing constraints on the software or media that the consumer can use with it
- competing through terms and conditions. The Government believes that terms and conditions could be used as a means of facilitating competition by encouraging businesses to compete to offer more consumer-friendly terms than their competitors and, in this way, to engage consumers and encourage them to read the small print for the best deals
- tracking changes in terms and conditions. The Government is asking whether long-term contracts, for example, savings or energy accounts, should be required to provide a clear track of changes in terms and conditions in the account history with the impact illustrated
- clarity on use of personal data. The Government wants clarity around where consent for the use of personal data should be covered and also that consumers are clear about who their personal data is being shared with
- true monthly contract costs. The Government is consulting on the use of “teaser rates” and the need for greater transparency in pricing for contracts with varying monthly rates.
On the question of enforcement action, the consultation document recognises that current civil enforcement action is limited in scope with businesses only facing prosecution in cases of serious or deceptive aggressive commercial practices. This, the Government believes, means there is a lack of incentive for businesses to use fair terms and conditions and that this could be addressed by conferring on consumer protection authorities the power to impose fines. The Government is consulting on the pros and cons of doing this and how this would work in practice.
The consultation remains open to responses until 25 April. If the Government acts on its proposals, then consumer-facing businesses will be faced with the need to review their terms and conditions, with the possibility of facing fines if they fail to ensure that they are fair.