The centrepiece of the UK’s consumer law reform programme, the Consumer Rights Act 2015 (“CRA”) has become law today (1 October 2015). The Act consolidates and updates an existing framework of consumer law that is currently set out in over 100 separate pieces of legislation.

This blog forms the first of a four part series aimed at reporting the key changes under the CRA that you need to be aware of. This bulletin focuses on the specific rules that for the first time, will apply to the provision of digital content to consumers.

Why was a change needed?

The law needed bringing up to date as the Sale of Goods Act 1979 (“SOGA”) was enacted long before the digital age we live in today. Our increased dependency on digital products for entertainment and productivity, from smartphone apps to streamed songs and movies, has meant that the law needed to adapt to deal with the continuing technological revolutions we are experiencing.

Currently under SOGA there is inconsistency between a consumer’s enhanced protection for digital content sold in a tangible format such as on a CD or disk (“goods” for the purposes of SOGA) and digital content which is downloaded straight onto a device (arguably not “goods” for the purposes of the SOGA). The right under SOGA to reject goods and receive a refund poses particular problems for digital works, given the risk (and ease) of copying. The courts to date have not been able to resolve the problem with any degree of certainty and consumers have often found themselves having to rely on the trader’s goodwill when seeking a remedy for defective digital content, rather than strict legal rights.

New category for digital content

For the first time, the CRA will cover contracts between a trader and a consumer in relation to digital content, as distinct from goods and services.

Under the CRA, digital content means data which are produced and supplied in digital form (e.g. computer games, mobile apps, digital format books or films and virtual items purchased within computer games) and must comply with certain standards which broadly reflect the standard for traditional goods. This means that they have to:

  • be of satisfactory quality;
  • be fit for purpose; and
  • comply with the description given.

There is also an implied term that the trader has the right to provide the digital content to the consumer.

Free digital content

If digital content is given away (e.g. a free mobile app) the statutory rights do not apply. However the trader could still have liability if the digital content causes damage to the consumer’s device (see more on this below).

Digital content which comes free with goods, services or digital content for which the consumer paid money and which is not generally available to consumers for free, is not considered “free” for the purposes of the CRA and forms part of the contract. The example which is given in the government’s guidance is a £500 computer which is supplied with free anti-virus software.

For the purposes of the CRA, the software is supplied as part of a contract costing £500.

Remedies

Unlike with goods, there is no right for the consumer to reject the digital content. The rationale being that there is often no practical way of returning the digital content. There is also no requirement that the consumer must delete the digital content from his device.

If the digital content is faulty:

  • a consumer can choose to have either a repair or replacement, providing that the chosen remedy is not impossible or disproportionately difficult. E.g. where a game is stored on a consumer’s smartphone is corrupt, a repair might be disproportionately difficult compared to a replacement download; and
  • where repair and replacement are both impossible (or the trader fails to carry them out), the consumer can request an appropriate price reduction (up to the full amount of the price) which should be refunded within 14 days of the trader agreeing that the consumer is entitled to a refund.

A consumer is also entitled to compensation for damage caused to their device or to other digital content. For example, if the digital content introduces a virus.

Traders outside the UK

If a trader pursues its activities or directs its activities in the UK, then the contract for the supply of digital content with a consumer habitually living in the UK will be governed by UK law and the CRA will apply. Depending on the circumstances, “pursuing or directing activities” might include for example, having a website translated into English or with a “.uk” web address from which consumers in the UK can purchase digital content in sterling.

Our advice

Businesses supplying digital content should be aware of the new statutory rules and remedies and will need to ensure that their terms of supply (including website and app terms) and sales processes are compliant. The remedies introduced by the CRA do not simply reflect those applicable to physical goods and will require careful consideration.

Although there is no specific right for consumers to reject digital content and receive a refund, where digital content is faulty and the trader does not fix it, the trader may be liable to return the whole sum paid. The scale of the price reduction in the case of less fundamental flaws with digital content could also lead to disagreements between trader and consumer.

SUMMARY – DIGITAL CONTENT

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