The Consumer Rights Act 2015

The Consumer Rights Act 2015 came into force on 1 October 2015, completing the overhaul of consumer protection law. It constitutes a major reform of consumer protection law covering:

  • statutory implied terms and remedies in consumer contracts for goods, digital content and services;
  • unfair contract terms in consumer contracts;
  • enforcement of consumer protection law;
  • secondary ticketing provisions; and
  • measures to facilitate private actions for breaches of competition law.

If you are a consumer facing business, and if you have not already done so, you need to review your:

  • sales lifecycle;
  • sales contracts including standard website and app terms;
  • limitation of liability clauses to check compliance and references to legislation;
  • pre-contractual information (including in notices and announcements); and
  • cancellation and returns policies.

Why?

  • The CRA sets out implied contract terms which cannot be excluded in relation to consumer contracts for goods, digital content and services;
  • tiered remedies are set out in relation to breach of statutory implied terms;
  • contracts for the supply of digital content are treated as a separate category of contract with their own statutory rights and remedies for the first time;
  • the unfair contract terms in consumer contracts regime has changed with the amendment of the Unfair Contract Terms Act 1977 and the revocation of the Unfair Terms in Consumer Contracts Regulations 1999.

Around the time of implementation, guidance was published by BIS, the CMA and on the Business Companion website. Some of this guidance was surprisingly under-publicised. While useful, ambiguities remain and are likely to be dealt with on a case by case basis by enforcers. To date, there have been no high profile examples of the use of the new Enhanced Consumer Measures, which give enforcers greater discretion and a wider range of remedies, but we expect this to change in the near future.

Our dedicated Consumer Law Reform web page hosts a wealth of material on the changes to consumer protection law over the last few years including the Consumer Rights Act 2015 and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. It includes articles, briefing notes and links to relevant legislation and guidance.

Directives on harmonisation of aspects of digital content supply and online and distance sale of goods to consumers

As part of the DSM, the Commission has just published two draft Directives, the first on certain aspects concerning consumer contracts for the supply of digital content (Digital Content Directive) and the second on certain aspects concerning consumer contracts of the online and other distance sales of goods (Online Goods Directive). The Commission is concerned that a lack of harmonisation (and in many cases, a lack of applicable legislation) creates lack of consumer trust and hampers cross-border sales.

The key proposals are:

Digital content

  • supplier liability for defects – the consumer can request a remedy in relation to defective digital content. This will not be subject to a time limit as digital content is not subject to wear and tear;
  • reversal of burden of proof – the consumer will not have to prove that a defect existed at the time of supply. It will be up to the supplier to prove that was not the case;
  • termination rights – consumers will have the right to terminate long-term contracts and contracts to which the supplier makes major changes;
  • data as consideration – personal data given in exchange for digital content, beyond what is necessary for performance of and to ensure conformity with the contract, is considered to be “counter-performance other than money” and treated in the same (or similar) way to financial consideration. In addition, where the consumer gives the supplier certain personal data in order to obtain digital content, the supplier must stop using the data when the contract is terminated.

Goods

  • reversal of burden of proof – under current EU rules, for a certain period of time after supply, the consumer is not required to prove a defect was present on delivery; it is, instead, up to the supplier to prove it was not. This period of time will be harmonised to a standard two years;
  • no duty to notify – the consumer will not lose the right to a remedy if they fail to report a defect within a certain period of time as is currently the case in a number of Member States;
  • minor defects – if the seller is unable to repair or replace a defective product, consumers will have the right to terminate the contract and be reimbursed. This will apply in case of minor as well as major defects;
  • second-hand goods – consumers will have rights in relation to second-hand goods purchased online for a period of two years rather than the current one-year period which applies in some Member States.

While the introduction of harmonised rules in these situations makes sense, these Directives are unlikely to be welcomed by the UK which recently introduced the Consumer Rights Act 2015 (CRA) to deal with rights and remedies in relation to the supply of goods, digital content and services. Some of the rules proposed by the Commission are broadly in line with the CRA, others are not.

In terms of the digital content Directive, even the definition of “digital content”, which was taken from the Consumer Rights Directive, is different to the one used in the CRA. The supply of non-essential personal data is treated in more or less the same way as financial consideration for digital content in the new draft Directive but not in the CRA which is particularly relevant as much of the CRA applies only to paid-for digital content. This, therefore, looks likely to extend the scope of the regime significantly in the UK and will affect a broad range of businesses (although there is a certain lack of clarity to the provisions).

There is a presumption that digital content is to be supplied immediately after conclusion of the contract, whereas under UK law (derived from the Consumer Rights Directive), the consumer must explicitly request immediate supply and acknowledge that they will lose their cooling off period as a result. While the two provisions are not mutually incompatible, they do appear to be pulling in different directions.

Crucially, the rules on burden of proof are different. Under the CRA, the digital content is only presumed not to have conformed to the contract on point of delivery, for a period of six months after supply. Under the draft Directive, this presumption applies permanently. There is also a statutory termination right which does not exist under the CRA. In addition, under UK law, remedies may only be claimed up to six years from supply. Under the draft Directive, there is no time limit.

The draft Online Goods Directive on the online and distance sale of goods is going to cause similar issues in the UK if adopted in its current form. While the remedies available are similar, there is no short term right to reject as under the CRA. Instead, the consumer moves straight to repair or replacement and can only terminate if repair or replacement is unsuccessful. And again, the burden of proof rules are different.

Both these Directives require Member States to implement equivalent provisions of a standard which must be no higher and no lower than those in the Directives.

Of course, it is a long way from initial publication to enactment and these drafts may well change significantly. If they do not, UK consumer law, which has recently undergone major change, will have to change again.