New consumer rights
The UK's new Consumer Rights Act, which introduces the biggest overhaul of consumer rights in a generation, came into force yesterday (1 October). What are the main changes and what should businesses that sell to consumers be doing?
The CRA is split into three parts:
- Part 1 clarifies the standards that consumers can expect when purchasing goods, services and digital content and the remedies that are available to them when those standards are not met.
- Part 2 consolidates and updates UK laws on when contract terms and notices can be considered unfair to consumers and therefore unenforceable.
- Part 3 contains provisions relating to regulator enforcement powers, private actions in competition law, letting agent fees, secondary ticketing websites and a student complaints scheme.
Goods supplied to consumers (including digital content) must be of satisfactory quality, fit for purpose and match their description. Where they are supplied by reference to a model (e.g. a TV in department store) they must match the model and where the seller agrees to install the goods, the installation must be done correctly. If standards are not met, then there is a variety of potential remedies: (i) a short term right to reject the goods and receive a refund (but not where the only breach relates to incorrect installation); (ii) the right to repair or replacement within a reasonable time; and (iii) right to a price reduction or final right to reject where repair or replacement is unsuccessful, impossible or not provided within a reasonable timeframe or without significant inconvenience to the consumer.
Services must be carried out with reasonable care and skill, which in effect means a trader must work to the same standard as any reasonably competent person in that trade. If a price has not been agreed, the service must be completed for a reasonable price. The service provider is also contractually liable for any statements made (whether about the service or itself) that are taken into account by the consumer when deciding whether to enter into the contract or when making any decision about the service after entering into the contract. The remedies for deficient service provision are repeat performance or, where that is impossible or cannot be done within a reasonable time or without significant inconvenience to the consumer, a price reduction.
The new law is also designed to encourage antitrust class action lawsuits by allowing trade associations and consumer rights groups to represent a class of people on an opt-out basis. This is similar to the US style of class action where consumers or shareholders are automatically in the class unless they choose to opt out.
What should businesses do?
In order to prepare for the implementation of the CRA, most consumer-facing businesses should be:
- reviewing their standard terms and conditions of sale, including those provided on retail websites and mobile apps;
- examining the provisions of any other sales contracts they enter into with consumers;
- evaluating contracts and arrangements with suppliers and distributors to ensure that the consumer rights and remedies provided for in the CRA will be observed and accommodated and that there are no potential liability gaps;
- updating statutory references in all relevant documentation;
- reviewing pre-contractual information that is supplied to consumers, including notices, advertisements and announcements; updating cancellation, returns and complaints handling policies; and
- training relevant staff on the new consumer rights and remedies.
If you would like to discuss these issues please do not hesitate to contact us.