Guidance includes FAQs and suggested drafting.

What's the issue?

As regular Radar readers will know, the Consumer Rights Act 2015 (CRA) is a major consolidation of consumer protection law.  The majority of the CRA is expected to come into effect on 1 October 2015 and BIS has promised guidance in the run-up to implementation.

What's the development?

  • Guidance on the rules on goods, digital content and services has been published on the Business Companion website which explains trading standards law. 
  • BIS has published guidance for local authority trading standards services on the enhanced consumer measures (ECMs).
  • Guidance on secondary ticketing has been issued both by BIS and by Business Companion. Please see our separate e-alert to find out more.
  • Guidance on unfair contract terms is still in draft form and we will look at it in more detail when the final version is available.

What does this mean for you?

The guidance on the Business Companion website is intended for businesses but it is fairly high level and does not deal with all the grey areas thrown up by the legislation.

The ECM guidance is aimed mainly at local authority trading standards officers. It sets out how the ECMs are intended to work and provides case studies. It is, however, useful reading to help businesses understand how the new enforcement regime is going to work. 

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Guidance on Goods, Digital Content and Services

As mentioned above, this guidance is high level. There are some useful points of clarification and reminders, however which include the following:

Goods

  • Returns – the trader is responsible for the reasonable cost of returns except where the consumer is returning them from the place where he took possession (e.g. shop). The consumer is not required to return the goods there unless specified in the contract. Even where the consumer does return the goods to the shop, he may, in some circumstances, be able to reclaim some of the cost e.g. where a car breaks down and the consumer has to pay a recovery service to return it.
  • Burden of proof – if the consumer chooses repair, replacement, price reduction or final right to reject and if the defect was discovered within six months of delivery, the fault is presumed to have been there at the time of delivery unless the trader can prove otherwise or the assumption is inconsistent with the circumstances (e.g. there are clear signs of misuse).  If more than six months have passed, the consumer has to prove the defect was there on delivery.  The consumer must also prove this if exercising the short term right to reject.  In cases where the defect did not become apparent until some time after delivery, it is enough to prove there was an underlying or hidden defect at the time.  No claim can be made after six years from the breach (usually the date of delivery).
  • Guarantees – where the manufacturer offers a guarantee, that is in addition to the statutory rights with the trader.  The consumer can choose whether to pursue the trader or the manufacturer and neither may refuse the consumer his rights and direct him to the other party.  The trader may have rights against the manufacturer.
  • Misuse or fault? - if the trader can't ascertain whether an item is faulty or whether it has failed due to misuse, the consumer must show the fault is not due to misuse if exercising the short term right to reject or the claim is being made six months after delivery.  If there is no agreement, the trader may wish to obtain a second opinion e.g. from the manufacturer or an independent expert (who should be chosen with the written agreement of the consumer).
  • Credit notes – the trader cannot require the consumer to accept a credit note where goods are being returned due to failure to conform to the contract.
  • Point of sale wording – the guidance contains suggested point of sale wording for buying goods on premises and at a distance.

Services

  • Use of another trader – under normal circumstances, the consumer cannot require another trader to re-perform services and then charge the original trader.  In some circumstances though, the consumer may be entitled to do so e.g. where the service is a repair to a vehicle which breaks down miles away from where it was originally repaired and due to the first repair not being done correctly.  The consumer and trader should discuss this and try and come to an agreement before the second set of repairs is paid for.
  • Guarantees – a term which prevents a guarantee from being transferrable is likely to be unfair e.g. building work which is guaranteed for ten years; the guarantee should be transferrable to all owners of the building within the guarantee period.
  • Right to re-perform – a trader cannot expect to be given a second chance if the first attempt at provision of services was so poor that any reasonable consumer would have lost faith in the trader's ability to perform the services.
  • Information – information said or written to the consumer is binding where the consumer relies on it.
  • Suggested point of sale wording - for buying services and services at a distance

Digital content

  • A digital content contract? - use of an online shopping platform is not digital content, it is just a virtual shopping place.  The supply of a mobile phone contract is a service even though digital content may subsequently be supplied under the contract.
  • Minor defects – most software, apps and games have minor defects which are corrected over time so a reasonable person might expect such defects to be present in the digital content which can still be of satisfactory quality with minor defects.
  • Fitness for purpose – the trader is not responsible for the content not being fit for the consumer's purpose if the consumer did not rely on or it was unreasonable for the consumer to rely on the skill or judgment of the trader e.g. if the consumer communicates the purpose to the trader but downloads the content before the trader has time to respond.
  • Matching description – the content must match any description the trader gives to the consumer even if the consumer has examined a trial version or a better version before the contract is made and the supplied product matches the trialled or better version. The content must continue to match the description through any upgrade process although it can then contain additional or enhanced features.
  • Time of claim – any claim that an upgrade was not of satisfactory quality would be treated as having occurred at the date of the original contract for supply and not the modification date.
  • Date of defect – if the consumer shows the digital content is defective within six months of supply, it is taken to have been defective on the date of supply.
  • Mixed contracts – in a mixed goods and digital content contract, the standards for the digital content conforming to the contract are those for digital content but if the trader is in breach, the remedies will be those for goods.
  • Remedies for damage to devices or other digital content – repair of damage or payment of compensation.
  • Point of sale wording – suggested wording is provided.

Guidance on ECMs

These are new civil powers for enforcement authorities which are intended to help consumers.  ECMs must aim to achieve one or more of:

  • redress to consumers;
  • enabling consumer choice; or 
  • a reduction in reoffending.  

The main change brought in by the ECMs is a wider discretion and range of remedies which will allow the enforcer to consider issues on a case by case basis. They are in addition to the existing powers to bring criminal prosecutions against businesses in breach of consumer protection rules and to seek civil injunctions to prevent further breaches

It is up to the enforcer to decide whether or not use of ECMs is an appropriate way to deal with a breach based on what is in the public interest and whether their use would be just, reasonable and proportionate.  The first step should be to try and work with the relevant trader. The trader may propose alternative measures but if the trader refuses to comply with any measures imposed by the enforcer, it will be up to the courts to decide whether those measures are reasonable and proportionate and enforce them if necessary. The use of ECMs is available to all public enforcers under Part 8 of the Enterprise Act 2002.

There is no prescribed list of ECMS and Trading Standards Officers can tailor them very specifically to the relevant issue. They can also impose measures which are "in the collective interest of consumers", for example, requiring an offender to pay losses to a consumer charity where individual consumers who have suffered damage as a result of the breach cannot be identified.

The guidance suggests possible measures might include a business doing one or more of:

  • setting up a redress scheme and advertising/notifying it to customers;
  • detailing their breach and what they are doing to put it right, for example on their website, in the press or in store;
  • signing up to a Primary Authority scheme; 
  • appointing a compliance officer;
  • providing better staff training/guidance to staff; 
  • undertaking internal spot checks (and maintaining records of these); 
  • improving record-keeping; 
  • collecting (and acting on) customer feedback; 
  • introducing a robust customer complaints-handling scheme;
  • signing up to a certified ADR scheme and committing to be bound by its decisions.