The Consumer Rights Act 2015
This year has seen the advent of a key new piece of legislation, which has boosted the statutory rights of consumers in the UK. The Consumer Rights Act 2015 (Act), the main provisions of which entered into force on 1 October 2015, clarifies and consolidates the existing law on consumer rights into a single piece of legislation.
So what has changed?
As under previous consumer legislation, goods and services must be of satisfactory quality, fit for purpose and conform with the description provided by the trader.
There are several main areas of change and consolidation:
- The law on rights and remedies for consumer goods and services has been strengthened
- There are new rights and remedies for consumers in relation to digital content, and
- The law on unfair terms in consumer contracts and consumer notices has been reformed.
The Act also contains additional miscellaneous provisions relating to matters such as secondary ticketing sales and letting agents, which entered into force in May 2015.
How does this affect consumer rights and remedies?
The Act provides a new definition for consumer, which means "an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession" (Section 2(3), Act.). This is wider than the previous definitions found in UK and EU law, as individuals may still be classed as consumers if they are acting "mainly", rather than "wholly" for non-business purposes.
There is also a new definition of trader, which means "a person acting for purposes relating to that person's trade, business, craft of profession, whether acting personally or through another person acting in the trader's name or on the trader's behalf" (Section 2(2), Act).
The rights and remedies available to consumers have been strengthened in the following key ways:
- Consumers who buy faulty goods now have up to 30 days to obtain a full refund - the law previously provided only a 'reasonable time' for such refunds
- The Act now covers second-hand goods, when purchased through a retailer
- Consumers purchasing digital content (or being supplied with such content free with another purchase), such as online films and music, are now entitled to a refund if the goods do not work and may be entitled to compensation if a virus infects the consumer's computer, and
- Consumers are now contractually entitled to services that are performed with reasonable skill and care. Where this is not the case, the service provider must remedy the situation, or the consumer may be entitled to a partial refund. In addition, where services are not performed in a reasonable time, consumers may be entitled to a price reduction.
As under the law previously, consumers remain entitled to other remedies such as damages and specific performance.
How does the new Act help consumers who think a contractual term is unfair?
In respect of unfair terms in consumer contracts, the test remains similar to the current test provided by the Unfair Contract Terms Act 1977. However it now also contains a 'prominence' requirement, whereby terms that specify the main subject matter of the contract or set the price will be fair only where they are:
- Transparent - ie legible, and in simple, easy-to-understand language, and
- Prominent - ie they must be brought to the consumer's attention in a way that means the average consumer would be aware of the term.
The list of terms that will automatically be regarded as 'unfair' has also been added to:
- Where the trader can decide the characteristics of the subject matter after the consumer has entered into the contract
- Where the trader can make disproportionate charges or require the consumer to pay for services which have not been supplied when the consumer ends the contract, or
- Where the trader is allowed discretion over the price after the consumer has entered into the contract.
Consumer notices that try to restrict the trader's liability, including oral or written announcements and communications, must also comply with the fairness test.
As an additional level of protection, the courts are now bound by law to consider whether the terms of a consumer contract were fair even where arguments about fairness have not been raised by the parties to the proceedings.
What if consumers are affected by a product that is not as described?
It has now become easier to bring a claim where traders have provided misleading information about goods or services. Where traders provide misleading information about the main characteristics, whether spoken or written, and consumers take this information into account either (i) when deciding to enter into the contract; or (ii) making any decision about the product or service after entering into the contract, consumers are now entitled to bring a contractual claim under statute for breach of contract, where previously it may have been possible taking a claim in negligence or other tort. A claim in contract is much easier to bring than a claim in negligence, or tort.
Consumer options in terms of what action to take have also increased. There is now a statutory right for consumers to enter into alternative dispute resolution proceedings such as referral to the Consumer Ombudsman, rather than court proceedings. This has advantages in that it can be less costly and it increases the chances of settlement out of court. In addition, consumers may now bring joint private collective actions in relation to anti-competitive behaviours by businesses. In other words, groups of consumers with the same or similar claims will be able to join their claims together and bring them as a single claim, thereby increasing their collective strength against often large corporations.
Businesses need be aware of these changes and ensure that they budget and plan for the risks associated with clearer, more consumer-friendly legislation designed to make it even easier for consumers to bring claims against traders.
