These regulations amend the Consumer Protection from Unfair Trading Regulations 2008. They give consumers new private rights of redress when they have been the victim of a misleading or aggressive commercial practice.
New Regulation 27A sets out when a consumer has a right of redress. First, the consumer must enter into a contract for the sale or supply of a product by a trader (a "business to consumer contract") or for the sale of goods to a trader (a "consumer to business contract"), or they must make a payment to a trader for the supply of a product (a "consumer payment"). Second, the trader must engage in a prohibited practice (a commercial practice which is a misleading action under Regulation 5 or is aggressive under Regulation 7) in relation to the product. Third, that prohibited practice must be a significant factor in the consumer's decision to enter into the contract or make the payment. The consumer must also satisfy any specific conditions which apply to the right of redress they are exercising.
The rights of redress are:
- the right to unwind;
- the right to a discount; and
- the right to damages.
The consumer's right to unwind applies to both business to consumer contracts and consumer to business contracts. For business to consumer contracts, the right must be exercised within a period of 90 days and while the product remains capable of being rejected. The effect of unwinding such a contract is that the contract comes to an end and the consumer has a right to a refund (and, where applicable, the goods are restored to the trader). For consumer to business contracts, the consumer has a right to the return of the goods, or, if they cannot be returned in the same condition, to be refunded any difference between the amount the trader paid and the amount the goods are worth.
The right to a discount applies to business to consumer contracts, in respect of past or future payments under the contract, if the consumer has not exercised the right to unwind. The level of the discount is either 25%, 50%, 75% or 100% depending on the seriousness of the prohibited practice. If the consumer paid more than £5,000 for the product the discount they receive will be the difference in value between the market price of the product and the amount they paid.
The right to damages is available for additional financial losses and alarm, distress, physical discomfort and inconvenience caused by the prohibited practice. The loss must have been reasonably foreseeable at the time of the prohibited practice and there is a due diligence defence available to traders.
These provisions came into force on 1 October 2014 and apply in relation to contracts entered into, or payments made, on or after 1 October 2014.