In July 2012, the Department for Business, Innovation and Skills ("BIS") published a consultation proposing the reform of consumer law in relation to the supply of goods, services and, for the purposes of this briefing, digital content (including games, music files, software, apps, films and e-books).  The consultation proposes significant changes to many businesses within the TMT sector, bringing the sale of digital products, services and content within the concept of the sale of goods.

As the law currently stands, digital content, purchased by download, does not constitute "goods", and as such, is not protected by the Sale of Goods Act 1979 ("SGA") nor the Supply of Goods and Services Act ("SGSA") 1982.  This means that such content is to be provided with "reasonable care and skill".  Inconsistency occurs, for example, where a consumer purchasing a music CD has more protection than a consumer downloading the same music online.  BIS' proposal is to provide clarity, and will increase the level of protection afforded to consumers when purchasing digital content via intangible media, by providing statutory remedies and standards of quality similar to those of goods.

The key proposed reforms in relation to the supply of digital content are:

  • the provision of implied terms, based on those provided within the SGA, regarding the quality of digital content, i.e. compliance with description, fitness for purpose and satisfactory quality;
  • the provision of new statutory remedies for the breach of the above mentioned quality standards, including the right to reject with a full refund where the digital content has not been accepted; and
  • on an EU level, the adoption of provisions within the Consumer Rights Directive (approved by the EU October 2011), including the requirement to provide certain pre-contractual information in relation to the digital content and supplier to the consumer, and the requirement to provide consumers with a 14-day cooling off period within which a transaction made online may be cancelled.

The reforms proposed within the consultation, in relation to digital content in particular, are radical, and intend to resolve a significant uncertainty and inconsistency perceived to be present within the consumer protection framework in the UK.  The consultation ends on 5 October 2012, and the eventual reforms are proposed to be contained within an updated Consumer Rights Bill.

To read the consultation in full, please click here.