Douglas Roberts: How to avoid falling foul of new Consumer Rights Act

Businesses should be aware of the new limit in which customers can reject a faulty product for a full refund. Picture: TSPL

We are all consumers, but many of us are also business owners and managers. In that role, the new Consumer Rights Act 2015 (CRA) is set to change consumer relations in the UK, before the period of the highest consumer spending around Christmas.

The CRA, which came into force this month, aims to consolidate a number of pieces of legislation, including the Sale of Goods Act, into one accessible piece of consumer law.

The new law is clearer and easier to understand for businesses and consumers, but what exactly has changed? What can companies small and large do to avoid falling foul of the key changes surrounding remedies, digital content and contract terms?

Remedies for unsatisfactory goods: Businesses should be aware of the new 30-day limit, the set period which has been introduced during which customers can reject a faulty product for a full refund. This was previously only a “reasonable time”. Following a failed repair, or replacement, the choice moves to the consumer, who will be entitled to a refund or price reduction, or to request a second repair or replacement. Beyond the 30-day period, vendors are entitled to one opportunity to repair or replace goods or digital content which are in breach of the Act’s standards. However, if the consumer’s choice of repair over replacement is unreasonably more expensive than the alternative, the business has the right to refuse the choice.

Businesses must also ensure they comply with the new remedy requirements to avoid disputes. All businesses now have access to, and must provide to consumers, a certified Alternative Dispute Resolution provider, like an ombudsman, in the event of a dispute which cannot be resolved directly.

Digital Content: For the first time, the CRA introduces consumer rights with regards to digital content. Along with services, digital content is now covered by a tiered remedy system, which provides graduated remedies depending on the customer’s length of ownership of the product.

An important innovation covering the quality of digital content requires that content provided free with other paid-for items, digital or physical, is covered by consumer rights. This will impact on many business promotions such as free song downloads provided with snack foods, bonus content on DVDs and music albums, and digital content provided to access other services, such as vouchers and newspaper subscriptions. Businesses are now also liable for damage caused to devices by the download of digital content, making corporate cyber-security even more important.

Contract Terms: Long-term contracts, such as increasingly lengthy mobile phone contracts and those with broadband providers, are key targets of the new legislation. The new CRA makes it clear that terms in bad faith and those disproportionately favouring the retailer, such as hidden fees and charges, can be deemed unfair. This, coupled with the upcoming OFCOM regulations that will limit the charges on mobile phone contracts, may bring relief to consumers, but a potential drop in revenue for telecoms businesses.

Retail businesses should be sure to train their staff on product representation, as the new Act covers verbal representations of products made in store which affect the decision to buy as part of contract terms. These verbal representations are now explicitly binding.

• Douglas Roberts is a partner, corporate and technology, with Lindsays LLP , www.lindsays.co.uk