A look at the BIS guidance on goods, digital content and services.

What's the issue?

Regular Radar readers will be familiar with the Consumer Rights Act 2015 (CRA) which completes the overhaul of consumer protection law in the UK.  Various pieces of guidance have followed with some still to come.

What's the development?

Last month, Radar looked at guidance on the CRA on the Business Companion website. This month, we are looking at the BIS guidance on goodsdigital content and services which is somewhat buried in the 'read more' sections on the Business Companion website. Unlike the BIS guidance on Enhanced Consumer Measures and the draft guidance on Unfair Contract Terms (likely to be finalised in the coming months), this guidance has not been given much publicity but it is more comprehensive than the Business Companion guidance it is linked to. BIS guidance on mixed contracts is yet to be published.

What does this mean for you?

For those supplying goods, digital content and/or services to consumers, this is essential reading. It does not answer every question nor cover every situation but it does cover a number of previously grey areas.

Read more

Key points to note include:

Goods

  • Extended warranties – if the consumer pays for an extended warranty, this is a separate product.
  • Recovery of returns costs – while the consumer cannot recover excessive costs associated with returns under the CRA, they may be able to claim damages in relation to the costs e.g. if the consumer needed to hire a van to return a bulky piece of furniture to the shop where it was bought.
  • Remedy for breach of right to supply – is to reject the goods and receive a complete refund.  Damages may be available where another person has rights to the consumer's goods or to interfere with their use.
  • Incorrect installation – no short term right to reject for incorrect installation.  Instead, the right to repair or replacement followed by the right to a price reduction or final rejection.
  • Flow chart – there is a useful flow chart showing core statutory goods remedies (p41) and a chart showing burden of proof (p43).
  • Supplier not manufacturer of goods – if a trader supplies goods to a consumer, it is the trader who must put any issues right with the consumer even if they are not the manufacturer.
  • Time of repayment – the clock only starts ticking on repayment time once the trader has confirmed a refund is due provided the trader does not delay unreasonably.
  • Reverse burden of proof – does not apply in relation to the short term right to reject.
  • Significant inconvenience – a "broad concept".  Factors which could be considered may include impact on health and safety, financial loss, whether the consumer has access to an alternative or temporary replacement.
  • Repair or replacement – the consumer cannot change their mind and ask for the alternative remedy without allowing a reasonable time for the initially chosen remedy to be carried out.
  • Multiple faults to repair – a repair does not have to be completed in a single visit.  Faults reported at the same time and fixed in the same set of repairs will count as a single repair.  The repair is not complete until the trader indicates this to the consumer.
  • Sub-contracting repair – repairs may be sub-contracted.  The trader will remain responsible.
  • Non-identical goods as replacement – the trader cannot force the consumer to accept non-identical goods as a replacement.  Nor can the consumer force the trader to offer them.
  • Repair vs replacement – nothing prevents the trader from offering a refund rather than a repair or replacement provided they do not deny the consumer the option of repair or replacement (unless impossible or unable to carry out without considerable inconvenience).
  • Deduction for use – the trader must be able to show the deduction reflects the use the consumer has had rather than, for example, reducing the refund to the second-hand value of the goods or solely looking at the period of time the consumer has had the goods.  All relevant information can be considered.  The deduction should not take account of any time during which the goods were being repaired as the consumer did not have use of them during that period.
  • Price reduction – the trader must offer an appropriate amount which should reflect the difference in value between the goods as sold (with the defect) and the value if there had been no fault.  Any subsequent issues with the element in relation to which the price has been reduced will not be subject to further claims under the CRA. If a new issue arises after a price reduction has been made in relation to a separate fault, the consumer will still be able to pursue remedies in relation to the new issue.

Digital content

  • Cloud services – where a consumer pays for digital content and accesses it in the cloud, although the processing may take place elsewhere, some digital content will usually be supplied to their device (e.g. an interface or the results of the remote processing).  The digital content rights will apply to the content supplied to the consumer. Other aspects of cloud computing where digital content is not supplied to the consumer may be considered as a service.
  • Games supplied via social network site – the social network site which acts as a platform for games will be responsible for the supply of the game to the consumer under the CRA (N.B. remember most provisions only apply to paid for digital content).
  • ISPs and MNOs – supply a service generally but may also supply digital content e.g. an app. 
  • Supplying personal data for digital content – this does not count as paying for the content.
  • In-app purchases – where in-app purchases are made in a game which was supplied for free, the CRA will apply only to faults affecting the chargeable elements of the game (apart from the issue of damage to other content or devices which will apply to all content).  Where it is not possible to tell which content was paid for with earned virtual currency and which with paid for virtual currency then once a player has made any real money payment, the CRA rights will apply to all their in-app purchases.
  • Someone else's content – the consumer has the right to go to the person whom they paid for the digital content for remedies under the CRA, whether or not that person produced the content.
  • Updates –  a trader may provide updates provided that it is clear in the contract that they may do so. Terms relating to updates may be assessable for fairness so a term which allows the trader to unilaterally alter the characteristics of the digital content is likely to be unfair.
  • Changes to the contract – a trader can only make changes to the contract once it has been agreed with the consumer's express consent unless the pre-contractual information is given in such a way that allows subsequent changes without express consent.
  • Damage to other content / device – liability may be limited provided limitations are fair.
  • Reasonable skill and care to avoid damage – this is an important element of the right to claim for damage to other digital content or to devices. If the trader can show they exercised reasonable skill and care to prevent the damage then there is no claim. For example, if the trader realises there is an issue and publicises the availability of an update or fix and the consumer fails to install it, the trader may be able to argue it used reasonable skill and care to prevent the damage.
  • Limitation periods – run from the date of original supply, not the supply dates of updates.
  • Reverse burden of proof – where the issue arises within six months of the date of supply, the assumption is that the failure occurred at the time of supply unless this is incompatible with the digital content or the way it was in breach and the trader will have to prove the lack of conformity was not present on supply. The reverse burden of proof is not relevant to whether the content met the requirements of the CRA, it is only relevant to the issue of whether this was the case at the time of supply.  It is up to the consumer to prove the digital content did not meet the requirements of the CRA.
  • Repair or replacement – similar points to goods but there is no strict limit on the number of repairs or replacements (unless the content is supplied within goods). They must, however, be carried out within a reasonable time and without significant inconvenience.
  • Refusal of repair – if a consumer refuses an upgrade or repair which would resolve the non-conformity and would be delivered within a reasonable time and without significant inconvenience, the consumer has no right to move to the next tier of remedies.
  • Price reduction – similar to goods.

Services

  • Burden of proof – it is for the consumer to prove that a service did not meet the statutory rights.
  • Re-performance – it will not always be necessary to re-perform the entire services. The trader can do whatever is needed to 'put the service right' i.e. up to the standard it should have been.  While there is no restriction to one attempt at re-performance, if a service repeatedly fails to conform to the contract, this is likely to cause significant inconvenience to the consumer who will then be able to ask for a price reduction or refund.
  • Right to a price reduction – the amount of deduction is to be negotiated. It will normally be the difference between what was paid for the service and the value of the service performed. It may also be related to a failure to comply with information given to the consumer about the trader in which case, negotiation will be needed. An independent third party may assist with working out the amount of a reduction. Ultimately, the courts will decide if no agreement can be reached.
  • Time of repayment – the clock only starts ticking on repayment time once the trader has confirmed a refund is due provided the trader does not delay unreasonably.