New Consumer Laws: what does this mean for you?

The new Consumer Rights Act (CRA) 2015 came into operation on 1 October 2015. It has mostly consolidated existing consumer laws and has presented consumer rights and remedies in a user-friendly way. While the CRA restates existing rights and remedies available to consumers, it also introduces key changes which provide consumers with enhanced protection against unfair terms and notices in consumer contracts and when buying goods, services or digital content (as distinct from goods and services).

This new piece of legislation may be relevant to your charity if:

  • as part of your charity’s purposes, you sell goods or digital content (e.g. mobile Apps or downloads) or supply services to consumers; and/or
  • you do so through a wholly owned trading company.

In this article we provide an overview of the key concepts and changes introduced by the CRA and what this new piece of legislation means for your commercial activities.

Key changes

New definitions – “consumer”, “trader”

Amongst others, the CRA introduces some new definitions, such as “consumer” and “trader”:

  • a “consumer” is defined as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business craft or profession”. This will include individuals, sole traders and home-working professionals who may purchase goods/digital content for use both for home and work (providing that their purchase is dominantly for use at home). This definition therefore widens the pool of people who may be regarded as a consumer.
  • Any legal entity – whether private or public – will be a “trader” if they provide goods/digital content or supply services to a consumer.

New rights and remedies for digital content

Significantly, the CRA introduces a new category of product – digital content – which is defined as “data which are produced and supplied in digital form”. This definition will now include data such as mobile phone apps, and music/literature/video downloads.

For the first time, consumers who buy digital content will be protected if they:

  • pay for digital content; and/or
  • the digital content is supplied to them free with goods or services they have purchased.

This includes, for example, a paid mobile phone app or a free download (of any type) being given away to a consumer when they purchase a book or item of clothing from your charity’s shop or catalogue.

If you sell or supply digital content to consumers, you will now need to ensure that the digital content meets quality standards similar to those of goods. Amongst other things, these include ensuring that the digital content is:

  • of satisfactory quality
  • fit for purpose
  • as described.

If digital content does not meet the quality standards then the consumer may have the right to:

  • require the trader to repair or replace the digital content
  • a price reduction; or
  • a refund.

In addition, if the digital content supplied by the trader causes damage to a consumer’s device (e.g. a virus through a download), then the consumer may be entitled to compensation.

Other enhanced rights and remedies which apply to goods/services/digital content

Some of the other enhanced rights under the CRA include:

  • certain pre-contractual information about the business or service potentially being included as a term of the contract
  • the requirement that goods match a model seen or examined
  • various remedies for consumers if goods, services or digital content are non-conforming.

Unfair terms

The CRA sets out a non-exhaustive list of terms and notices which may be deemed unfair. Any unfair term or notice will not be binding on the consumer. Furthermore, a trader will not be able to restrict or contract out of the quality standards applying to goods, services and digital content. It is therefore important that you review your contracts to ensure these do not contradict the CRA.

What steps will you need to take in response to the CRA?

Enhanced consumer remedies mean that the scope of your charity’s potential liability could now be broader than before and your charity may incur increased costs when selling to consumers.

Your charity may therefore need to alter its trading practices in order to minimise its risk of incurring liability. Amongst other things, you will need to:

  • review your existing standard sales terms(including those posted on your website) to ensure that they do not include potentially unfair terms and/or notices
  • Review any descriptions (e.g. on your website, leaflets etc.) relating to your business and/or the services you are providing to ensure that these are accurate
  • be aware of, and train your staff, so that you and they are aware of what is required from your charity under the CRA and the liabilities which may result if you do not comply.

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