The New Consumer Rights Bill: What’s the Impact on Businesses?

This blog does not constitute legal advice. It provides a brief summary of our understanding of some of the current proposed changes under the Consumer Rights Bill; however the Bill’s provisions could be subject to change before it becomes law. If you require legal advice on the Consumer Rights Bill and the affect compliance will have on you or your business you should contact a legal professional.

On the 12th June 2013 the Government produced a draft bill that will implement the biggest reform of consumer law in over a decade. The aim of the bill is to consolidate, modernise, clarify the law and enhance consumer protection. This will obviously have an impact on businesses and they will need to prepare for the changes before the bill comes into force. The government has announced that they will release guidance in April of 2015 in order to help with this process, and it will be available through the Trading Standards Institute Business Companion website.

The current regime

Currently Consumer law is spread across a number of different statues, as well as being outdated and the use of definitions is inconsistent. This means consumers are often confused about their rights, and there is a high administrative and compliance burden on businesses.

Amongst other provisions, at present, any goods provided must be of satisfactory quality and fit for purpose. For any services provided under a contract, the services have to be carried out with reasonable care and skill.

The definition of satisfactory quality has been quite clear in a number of situations, what hasn’t been clear is at what point the consumer can reject goods if they are unsatisfactory. It has also been unclear as to whether repairs or replacements need to occur before the consumer can claim other remedies, such as returning the goods and receiving their money back.  These matters will be clarified when the new bill comes into force, as will the law relating to digital content (musical downloads, film downloads etc.).

The new Consumer Rights Bill – main changes

The consumer rights bill will introduce new “Core Consumer Rights”, these are:

  • Right to clear and honest information before you buy.
  • Right to get what you pay for.
  • Right that goods and digital content are fit for purpose and services are provided with reasonable care and skill.
  • Right that faults in what you buy will be put right free of charge, or a refund or replacement provided.

These core consumer rights have been detailed in the Consumer Rights Bill: Statement on Policy Reform and Responses to Pre-Legislative Scrutiny which can be found here.

These core rights reflect many of the same rights that the previous law provided for, and the Bill retains the satisfactory quality requirements from the previous legislation. The Bill also incorporates the current legislation on services, which requires services to be provided with reasonable care and skill.

Some of the main differences in the new Consumer Rights Bill are:

  • The Bill will only apply to business to consumer transactions. Contracts that are between two businesses or two consumers may still be subject to other rules and regulations however.
  • The rules regarding when a consumer can reject goods that are not of a satisfactory quality/fit for purpose will be clarified.
  • The law relating to digital content will now be clarified by the addition of Chapter 3 to the Bill.

Business to consumer transactions

A consumer is defined in the Bill. The definition makes it clear that the consumer has to be acting wholly or mainly outside of their normal trade, business, craft or profession. The trader or provider of the product must be acting for purposes relating to their trade, business, craft or profession.  This will clarify the position of exactly who a consumer, and when they are purchasing from a business. This also satisfies one of the intentions of the reform – to use definitions with consistency.

Remedies for faulty goods

The Bill will clarify the remedies available to a consumer if goods are not fit for purpose or not of satisfactory quality.

The consumer will have a short term right to reject the goods within 30 days (or a shorter period in the case of perishable goods). They could alternatively (within or after the first 30 days) be able to insist on a repair or a replacement of the goods.

If the consumer makes a request for a repair or replacement within the initial 30 day period then the 30 days is paused for a period of time known as the “waiting period”.  After the request has been fulfilled the consumer then has  seven days , or  the remaining period of the original return period with the “waiting period” added (whichever is longer) to reject the goods.

If a repair/replacement does not fix the fault, or if another fault occurs, the consumer may still be able to insist on a reduction in the price or to exit the contract and get a refund (even where this is outside the initial 30 day period). This is known as the final right to reject. Sometimes the amount of the refund will be reduced depending on the type of goods concerned and how long the consumer has been able to use them for.

The link to the relevant government guidance is: http://discuss.bis.gov.uk/consumerrightsbill/what-are-my-rights-under-the-draft-bill-when-acquiring-goods/#9

Digital content

Previously consumers had to show that buying digital content was a contract for a good or a service. This was difficult in relation to digital downloads. Now that digital content is included in the Bill, it will just have to be demonstrated that it is of an unsatisfactory quality in order to entitle the buyer to a repair or refund. The new bill also allows a consumer to claim for damage to a computer or laptop caused by a download of the unsatisfactory good.

Some examples

The government has provided examples of changes that the Bill will make to consumers, these are as follows:

You purchase a faulty toaster for £20 but after three and a half weeks you find that it no longer works. Currently, under the law, it is not clear whether you have a right to return the goods and get a refund because it is not clear if three and a half weeks is a “reasonable time”. Under the proposed reform you will have a clear right to a full refund as less than 30 days have passed.

 You buy a CD but when played it jumps erratically between tracks or gets stuck. You try to return it but the retailer says that they don’t offer refunds on CDs. What are your rights? Under current legislation your rights are unclear, but the new law will make it clear that for faulty digital content bought on a tangible medium such as a CD, you are entitled to a refund within 30 days of purchase.

More examples can be found here in Annex D.

What this means for businesses

The government has proposed that there will be a saving for businesses, as the Consumer Rights Bill is much clearer than the current legislation and therefore drafting returns policies and training staff should be simpler. This saving however, will be over a number of years rather than initial savings and it may take businesses a number of years to see the benefits. There will, however, be costs for businesses in training staff in the new returns policies and consumer rights and changing terms and conditions to comply with the new laws, which will be an upfront cost.

Additionally, those trading in digital goods will have to consider their returns policies much more carefully, in order to accommodate for the new legislation.

The bill has been set a provisional date of 1st October 2015 to come in to force. This leaves businesses with plenty of time to start considering their terms and conditions. This, however, may be better held off until the government guidance is released for businesses in April 2015. This guidance will be available here.

Ultimately, it is good for businesses to be aware of the incoming changes so they can plan ahead. It may be best to start putting aside a small amount for legal fees, so accurate and concise advice can be provided for the exact impact on a particular business.

Sources:

A draft version of the Bill can be found here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/361909/bis-14-1119-implementing-the-consumer-rights-bill.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/274787/bis-13-916-draft-consumer-rights-bill-governemnt-response-to-consultations-on-consumer-rights.pdf

http://discuss.bis.gov.uk/consumerrightsbill/what-are-my-rights-under-the-draft-bill-when-acquiring-goods/#9

This blog post was written by Vicky Pridmore. Vicky is currently an M Law Student at Northumbria University and working in a business and commercial firm in the Student Law Office. Due to this experience, and previous work experience, she has developed an interest in the commercial world. On graduation she hopes to secure a training contract that will allow her to further her interest in both national and international commercial matters.

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One thought on “The New Consumer Rights Bill: What’s the Impact on Businesses?

  1. Pingback: The new Consumer Rights Act: some key issues | wetakecareofbusiness

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