Who: HM Government
When: 23 January 2014
Law as stated at: 23 January 2014
The Consumer Rights Bill (the “CRB”) was introduced to Parliament on 23 January 2014, together with Explanatory Notes. The CRB is intended to provide a simpler framework for the law on consumer rights relating to contracts for goods, services and digital content, and on unfair terms in consumer contracts.
It was originally intended that the measure would implement at least some of the EU Consumer Rights Directive 2011/83/EU, but with the 14 June 2014 deadline for transposition looming, delays in placing the CRB before Parliament have led to alignment with the Directive being dealt with by way of other measures signed off during 2013, including principally the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013.
The first draft of the CRB was published in June 2013 and has been subject to recommendations from the Business, Innovation and Skills Committee and impact assessments. The CRB has now been sent to the Public Bills Committee for further scrutiny (to be completed by 13 March 2014) and will then return to the House of Commons for a third reading.
The CRB sets out the rules on the supply of goods, services and digital content in a business to consumer context. As regards B2C contracts, the measure will supersede the Supply of Goods (Implied Terms) Act 1973, the Supply of Goods and Services Act 1982, the Sale and Supply of Goods Act 1994, the Sale and Supply of Goods to Consumers Regulations 2002, the Unfair Contract Terms Act 1977, the Unfair Terms in Consumer Contracts Regulations 1999 and most of the Sale of Goods Act 1979.
Some of the key points for marketers and online sellers which are a change from the existing laws are as follows:
- Proposed application – The CRB sets out rules in relation to business to consumer contracts but does not apply to business to business or consumer to consumer contracts.
- Scope – Contracts relating to the provision of services, goods, and digital content come within the scope of the CRB.
- Digital content quality – Marketers and online sellers should be aware that the consumer quality rights in relation to digital content (in Chapter 3 of the CRB) apply only in respect of digital content which has been paid for by the consumer or which the consumer receives for free alongside other goods, services or digital content that the consumer has paid for. This will be in circumstances where the free element is “not generally available to consumers unless they have paid a price for it or for goods or services or other digital content”. However, it should be noted that the general fairness requirements apply in respect of the provision of all digital content.
- Right to reject goods – Under the current law, consumers can only reject faulty goods within a “reasonable period” but section 22 of the CRB would give consumers the right to reject faulty goods within 30 days, dubbed the “short term right to reject.” If this proposal remains unchanged, online sellers will need to consider the impact of this on their returns policy. BIS recommended that this 30 day period should be extended further in some circumstances (e.g. during holiday periods) but the Government has not extended the CRB timeframes any further.
- Rules on deduction for use – The rules on deductions from refunds (to take account of where the goods have been used by the consumer before rejection) have been clarified. This is set out at Section 24(8 – 12) of the CRB.
- Unfair contract terms – The CRB aims to consolidate the rules governing unfair contract terms in business to consumer contracts into Part 2 of the CRB. The existing rules are in the Unfair Terms in Consumer Contracts Regulations and the Unfair Contract Terms Act.
- Responsible parties in respect of digital content provisions – Under the CRB, online sellers and marketers such as ISPs and mobile phone service suppliers will not be responsible for compliance with the digital content provisions where they are a trader which merely “supplies a service by which digital content reaches the consumer”. The involvement of ISPs and such other service providers that meet that description will not take away responsibility from traders for compliance.
- New powers for public and private enforcers to seek redress – The CRB proposes that trading standards officers and the CMA will have new rights to apply to the civil courts for redress for consumers disadvantaged by breaches of the CRB and for remedies against non-compliant traders to improve their compliance and reduce the likelihood of future breaches. The Secretary of State will also have the power to extend the use of these enhanced consumer measures to private designated enforcers. So far only the Consumers’ Association is in the frame for this as indeed it is already to some extent under existing consumer protection laws. There is talk of Citizens’ Advice being similarly designated, but how this will funded when CABs are already facing severe funding cutbacks across the country is unclear.
Why this matters:
The CRB if enacted in its current form would set out in one measure the rules on the supply of goods, services and digital content in a business to consumer context, including quality requirements, delivery and returns, and unfair terms rules. While the CRB’s main purpose is to consolidate the rules in this space, it also changes the position from the existing law in certain areas (such as those key changes identified above). Therefore, marketers and online sellers should monitor progress of the CRB through Parliament so that they are fully prepared when the finalised measure comes into force.