Who: UK Government
When: 8 May 2013
Law stated as at: 31 May 2013
The promise of a Consumer Bill of Rights fit for the 21st century has been included in the Government’s proposals for legislation in the 2013-2014 sessions of Parliament. The Bill is part of ambitious plans to change the landscape of consumer law in the UK. Whilst the full details of the Bill are yet to be published, briefing notes to the Queen’s Speech indicate that the Bill will seek to consolidate consumer law from eight separate pieces of existing legislation covering goods, services, digital content and unfair contract terms, and reform and consolidate the powers of enforcement bodies like Trading Standards to seek compensation for consumers where consumer law has been breached.
The Bill will also seek to provide clarity where the law has not kept up with technological advances, to establish clearer consumer protection when purchasing digital content like music, software and games. Jo Swinson, Minister for Consumer Affairs in the Department for Business, Innovation and Skills has announced that she hopes to update consumer law to make it “fit for the 21st century”, by ensuring consumers can secure refunds or replacements if web-based products fail.
Last summer’s consultation by the Department for BIS on the supply of goods, services and digital content indicates that the Bill will seek to implement this enhanced consumer protection through a separate digital content regime with its own set of rights and associated remedies, which would see digital content treated as a separate category from goods and services in order to clarify recourses available to consumers if digital content is faulty or substandard. The consultation also indicates that further specific rights and remedies might be made available in relation to services surrounding access to and use of the digital content such as downloading or streaming.
Potential impact for advertisers:
The Bill also promises to include measures to enhance protection for consumers who have been misled into a contract or been subject to aggressive selling practices such as high pressure sales techniques.
The Law Commission has previously recommended that new legislation be introduced to give consumers direct right of action against a trader if that trader’s misleading or aggressive practice was a significant factor in causing the consumer to enter into a contract, or make a payment that they would otherwise have not have made. The Law Commission has indicated that it is likely this recommendation will be included as part of the Bill.
At present, protection against misleading and aggressive sales practices is broadly provided by two areas of law. First, the Consumer Protection from Unfair Trading Regulations 2008 (the “Regulations”) prohibits traders making misleading actions or omissions, and using aggressive or unfair commercial practices like displaying a quality mark without authorisation or falsely stating that a product is only for a limited period in order to close the sale.
Secondly, consumers can seek private forms of redress through the laws of “misrepresentation” and “duress”. However a report published by the Law Commission in March 2012 concluded that this area of law is fragmented, complex and unclear, leaving consumers lost in a bewildering array of remedies, and businesses incurring unnecessary costs in getting to grips with the Regulations and the different private forms of redress.
The Law Commission recommended that new legislation replace the Misrepresentation Act 1967 in so far as it covers business-to-consumer transactions to consolidate and clarify rights of redress for consumers against a trader for misleading or aggressive sales practices. Remedies available to consumers under this new legislation might include the right to unwind the transaction and get a refund, or to receive a discount on the price, and additional damages may be available for any proven indirect losses.
Until full details of the Bill are published it is not yet clear whether new legislation will merely amalgamate existing law into one place or introduce legislation to further extend consumer protection. However advertisers should take comfort from the Law Commission’s recommendation that any new legislation should be limited to only provide redress to consumers who have entered into a contract or made a payment. It would not, for example, provide redress to those induced by a misleading advertisement to visit a shop if they failed to make a purchase.
Consumer Bill of Rights vs. Consumer Rights Directive:
The Consumer Bill of Rights is distinct from and should not be confused with the Consumer Rights Directive. The Department for BIS initially indicated that the Consumer Rights Bill would implement the Consumer Rights Directive in the UK. However the lack of explicit reference to the Directive in the Queen’s Speech indicates that implementation of the Directive through the Bill has been ruled out, and the Directive will probably be implemented via secondary legislation. This is no doubt due to the Directive’s deadline for implementation: it must be adopted into national law by 13 December 2013 and is set to come into force on 13 June 2014. As the draft Bill needs to be published before it is formally introduced to Parliament it is unlikely that it could implement the Directive by this December deadline.
It is not yet clear how much additional protection will be afforded to consumers under the draft Bill as many of the changes proposed in the 2012 consultation are already required by the Consumer Rights Directive. However it does seem likely that a large part of consumer law will remain unconsolidated. All businesses selling to consumers will need to keep track of both the draft Bill and the Directive to ensure compliance with potentially a dual set of obligations.
Why this matters:
If the draft Bill is carried through both Houses, consumers should be in a better position to seek compensation for breaches of consumer law and challenge where they have been misled into a contract. Consolidating such a range of legislation and providing clarity in areas where the law is fragmented and complex could help all businesses subject to consumer law to reduce costs: the Department for BIS has previously reported that the complexity of the current legal framework has a direct impact on the cost of staff training and time spent dealing with consumer complaints, both legitimate and groundless ones that, if knowledge of the law was greater, could more easily be resolved.
As noted above, it is not yet clear how the Consumer Bill of Rights and Consumer Rights Directive will interact, or how the briefing notes and recommendations relating to the Bill will be translated into legislation. However it does seem likely that all business subject to consumer law ranging from internet-based retailers to doorstop sellers, will need to keep track of the draft Bill and the Directive.
We will report further on the draft Bill once it has been published. For information on how the Directive might impact on your business see our recent coverage.