01 Apr 2015

Consumers will have new rights in respect of faulty or not as described goods, services and digital content later this year. These changes will be introduced by the Consumer Rights Act 2015 which comes into force on 1 October 2015.  For most retailers this will mean reviewing existing complaints handling procedures and ensuring customer service teams fully understand the changes before the legislation comes into force.

Some of the key changes that will be introduced can be summarised as follows:

Goods

  • Implied terms: Terms will still be implied into consumer contracts that goods will be of satisfactory quality; fit for a particular purpose; and as described. The 2015 Act includes terms that may be implied including, for example, that goods will match the model that is seen or examined by the consumer before entering into the contract unless any specific differences are brought to the consumer's attention
  • Pre-contractual information: The Consumer Contracts Regulations 2013 require traders to provide consumers with specified pre-contractual information in certain circumstances. This includes, for example, details regarding payment and delivery arrangements, and details of after-sales service. Under the 2015 Act, this pre-contract information will become an implied term of the contract and consumers will be entitled to claim for any costs they incur (up to the price of the goods) if a trader is in breach of those implied terms
  • Poor installation: If the trader installs the goods, the goods will be deemed to not conform to the contract if the installation is incorrect
  • “Short term right to reject”:  Consumers will have the “short-term" right to reject goods that are faulty or not as described within 30 days (although this will be shorter for perishable goods)
  • Repair or replacement:  Consumers will have the right to request that faulty or not as described goods are repaired or replaced (even after the 30 day right to reject period has expired)
  • “Final right to reject” or price reduction: Consumers will have the right to a reduction in the price or to reject the goods after one unsuccessful repair or replacement
  • Burden of proof:  The onus will be on the consumer to prove that the goods do not conform to the contract if they are seeking to exercise their short term right to reject. By contrast, goods will be presumed to not conform to the contract if a consumer seeks to exercise their right to a repair or replacement, price reduction or “final right to reject” within 6 months of delivery subject to certain exceptions
  • Deductions for consumer use:  Traders may be entitled to make a deduction in respect of any use the consumer has had of the goods before they are rejected in certain circumstances.  As a general rule, no deduction can be made if the consumer exercised their “final right to reject” within the first 6 months although certain goods are exempt from this rule, including motor vehicles

Services

  • Implied terms: Terms will still be implied into consumer contracts for the supply of services that: the service will be performed with reasonable skill and care; the price will be reasonable if not agreed; and the service will be performed within a reasonable period if not agreed. However, under the 2015 Act, anything said or written by the trader to the consumer regarding the trader or the service will be an implied term of the contract if it influences the consumer's decision to enter into the contract or when making decisions about the service after entering into the contract
  • Repeat performance: If the service is not performed with reasonable care and skill, or it does not conform to pre-contractual statements made by the trader, consumers can require the trader to perform the service again to put it right (although there are certain exemptions).  A consumer may also request a price reduction in certain circumstances

Digital content

  • New specific provisions: The 2015 Act introduces specific rights and remedies for digital content such as computer games and downloads. 
  • Implied terms: Digital content must be: of satisfactory quality; fit for a particular purpose; and as described. If not, consumers have the right to a repair or replacement, or a reduction in price.
  • Compensation for corrupted devices: Consumers are entitled to claim compensation if the digital content supplied by the trader damages their electronic device or other digital content so long as the consumer can show that the trader did not exercise reasonable skill and care.  In these circumstances, the trader must either repair the damage or pay compensation to the consumer

Commentary

The 2015 Act introduces a number of important changes that will require businesses to review the way in which consumer complaints are handled and ensure that customer service teams are familiar with the changes before they come into force. The fact that pre-contractual information may be an implied term of the contract also means that point of sale material and literature given to assist sales staff must be up-to-date and accurate to avoid claims for compensation.

One of the key aims of the 2015 Act was to consolidate and simplify consumer law as well as bring it into line with developments in technology. However, whilst a number of the provisions are fairly straightforward, the devil is in the detail and there are number of issues that are likely to concern businesses particularly those selling complex or high value products. The fact that consumers will have the right to a price deduction or to reject the goods/services after only one unsuccessful repair or replacement is one particular area that is causing some anxiety. Businesses are already expressing concerns as to how they should approach customer complaints and what remedies can be used and when.

The Government is shortly due to release guidance to assist businesses with preparing for these changes. A poster will also be available for businesses to place in store(s) to help consumers understand their rights under the 2015 Act although it will not be mandatory requirement to do so.