Consumer protection

Both the UK and the EC are pursuing continued reform of consumer protection law and we saw a couple of interesting decisions on unfair contract terms which we reported on in October.

UK developments

The government is planning legislation aimed primarily at mobile phone providers, online retailers, banks and financial institutions but possibly impacting all consumer-facing companies.

The government intends to give the consumer protection regime real teeth by introducing the ability for enforcers to levy significant fines on businesses using misleading contractual terms and for the CMA to be able to immediately ask a civil court to impose a fine without having to first seek a voluntary undertaking from an offending business to change their practices. The new legislation is also expected to:

  • require businesses not to take card details from consumers signing up to free trials;
  • ban subscriptions which are difficult to cancel;
  • require small print to be shorter and simpler. Tick boxes at the end of lengthy terms may no longer be acceptable and terms and conditions will have to be summarised using bullet points (with naming and shaming of businesses which do not comply); and
  • introduce fines for businesses offering fake or misleading deals or discounts.

The EC has published a revised proposed Directive on online and other distance sales of goods. This is now intended to cover all sales of goods to consumers (rather than online sales only) as the Commission has decided it would be better to have a single set of rules covering the sale of goods to consumers. The substantive proposals have not changed and, as previously noted, differ from the UK Consumer Rights Act (CRA) in a number of areas including:

  • no short term right to reject;
  • no claim for refund or reduction after a single repair attempt;
  • emerging defect presumed to have been present on delivery for up to two years (rather than six months under the CRA);
  • remedy for defects discovered within two years (whereas it is five years in Scotland and six in the rest of the UK);
  • consumers need to expressly accept known defects (under the CRA, they have to be obvious or drawn to the consumer’s attention);
  • a statutory right to withhold payment of outstanding amounts until defects are fixed (not present in the CRA);
  • less scope for deduction from refund sums payable to the consumer on rejection of goods.