The Consumer Rights Bill

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Consumer law governing the sale of goods is complex, which is burdensome for business, and consumers are often poorly informed about their rights. In some cases, consumers do not pursue remedies as they are not aware that a remedy is available to them; in other instances, consumers overestimate their rights. This can lead to costly disputes between consumers and retailers, exacerbated by the fact that in some key areas, the law is unclear as well as complex. As well as this complexity harming consumers and businesses, an ineffective scheme of consumer rights also stifles competition between firms to produce the best quality products, for the best price. 

There is currently significant legal uncertainty around consumer rights in digital content transactions. Two different issues arise from this uncertainty:

  • consumers are less active in attempting to resolve problems they experience with digital content, meaning that the size of consumer detriment in this area is likely to be greater than estimates suggest
  • some consumers may think that they are entitled to a remedy which the business does not think it is obliged to provide under the current law. In such situations there is a risk that both the business and consumer will spend time and money on an unnecessary dispute.
There is a reputational risk to a business if it declines to provide the remedy the consumer wants. In addition, when consumers do experience problems and are unable to claim the remedy they expect, consumer confidence is undermined. This could disadvantage new entrants to the market in particular as consumers are driven towards established brands.

Research commissioned by Business, Innovation and Skills concluded that digital content should be treated in the same way as goods as far as is practicable. This also matches consumer expectations when they purchase digital content. The Bill seeks to address these issues by introducing a new category of digital content in consumer law; new statutory rights for digital content; and new statutory remedies for faulty digital content. These rights and remedies are based on those for goods but with some bespoke changes to reflect the unique nature of digital content.

Consumer services law is difficult to understand and, when things go wrong, there is no statutory redress regime to put things right. It is also unclear when, or to what extent, businesses can exclude or limit liability for the consumer’s statutory rights. Under current law, such exclusions or limitations must be “reasonable”, but in practice it is hard for consumers and businesses to know what “reasonable” means. The rules on reasonableness and limiting liability and the rules on consumer rights are currently set out in different pieces of legislation.

Legislation does not set out any remedies in relation to the provision of services, and the common-law is difficult for consumers and businesses to access, let alone interpret. When a service goes wrong, consumers might want the business to put the service right, but in England and Wales this remedy is only given at the court’s discretion and there are a number of factors which mean this does not often happen in practice. In Scotland the position is different, and the courts are more willing to order a remedy to put the service right. Whilst the current legislation covers England, Wales and Northern Ireland, the provisions in the Bill on services will also extend to Scotland.

The reforms will streamline consumer rights, remedies and enforcement powers so consumers and businesses can access what they need to know more easily and effectively. They will:

  • put in one place key consumer rights covering contracts for goods, services, digital content and the law relating to, unfair terms in consumer contracts, currently spread over 8 different pieces of legislation;
  • align inconsistent remedies available for goods supplied under different contract types, such as: sale, work and materials, conditional sale or hire purchase;
  • combine and clarifies overlaps and confusing laws on unfair terms in contracts;
  • set out in one place generic consumer law investigatory powers, repealing equivalent powers in around 60 pieces of legislation.

The reforms will clarify the law where it is confusing, or written in legal jargon and set out clearly in plain words the quality standards that goods, services and digital content must meet, so that consumers get what they pay for:

  • Goods, services and digital content must meet the descriptions given before they are sold.
  • Goods and digital content must be fit for purpose, and services must be provided with reasonable care and skill.
  • A clear time period of 30 days in which consumers can reject substandard goods and receive a full refund;
  • Limit the number of repairs or replacements of faulty goods before retailers must offer some money back, and clarify the extent to which traders may reduce the level of refund when the consumer chooses to end the contract to take account of the use of the goods the consumer has had up to that point.
  • Clarify which terms in a contract can be challenged in a court to decide whether or not they are fair.

The reforms will modernise the legal as framework to ensure that consumer law keeps pace with technological developments and will:

  • Introduce a new regime relating to digital content (such as ebooks and software), and aligning this as far as appropriate with the law covering goods and services;
  • Make clear that a trader must take care that digital content does not harm other digital content on a consumer’s device.

The reforms will deregulate to reduce business burdens and costs:

  • Simplification means businesses spend less time and money on training staff in complex consumer law, and save time and money dealing with disputes.
  • Businesses will receive notice of routine inspections from relevant enforcers, including local authority Trading Standards officers, giving them time to make necessary arrangements such as relevant staff being available;
  • Faster and lower cost redress for businesses (and consumers) which have been disadvantaged by breaches of competition law.

The reforms will enhance measures to protect consumers, where it is appropriate to do so introducing:

  • a new statutory right that a service must comply with information given by the trader in certain circumstances, even if this is not recorded in the written contract;
  • More flexibility for Trading Standards or other public enforcement authorities to seek redress for consumers who have been victims of breaches of consumer law

The Core Consumer Rights

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
Source: Consumer Rights Bill: Statement on Policy Reform and Responses to Pre-Legislative Scrutiny, Presented to Parliament by the Secretary of State for Business, Innovation and Skills by Command of Her Majesty January 2014
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