Consumer Rights Update

June 8, 2017

Businesses that deal with members of the public are reminded that the Consumer Rights Act 2015, which received the Royal Assent on 26 March, becomes law on 1 October 2015. The Act replaces a number of laws with regard to business-to-consumer transactions, including the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982, and is designed to offer consumers comprehensive protection and enhanced rights of redress.

The Act is divided into three parts. Part One deals with consumer contracts for goods, digital content and services, Part Two deals with unfair contract terms and Part Three covers miscellaneous and general provisions, including enforcement powers.

Businesses affected by the new legislation can access guidance designed to enable them to comply with its requirements by the time it comes into force via the Trading Standards Institute ‘Business Companion’.

In addition, the Competition and Markets Authority (CMA) has published new guidance (144 pages) on the unfair contract terms provisions, to give businesses a comprehensive guide to complying with their obligations under Part Two of the Act. This covers what makes terms and notices unfair, the likely consequences of using unfair wording in contracts, and gives tips on how to ensure terms and notices are fair and easy to understand. In addition, the CMA has produced further guidance including a flow chart providing an overview of the unfair contract terms provisions, aimed at helping traders decide whether or not a particular contract term is fair, a two-page summary of what businesses need to know about unfair contract terms, and a 28-page guide entitled ‘Unfair contract terms explained’.

The various guidance documents can all be accessed here.

Since 1 October 2015, under changes introduced by the Consumer Rights Act  2015, it has been compulsory for most businesses to offer Alternative Dispute Resolution (ADR) to their customers if a complaint arises between them which cannot be settled by negotiation.

ADR is a process designed to resolve complaints without the need to resort to legal proceedings. It is less formal, and normally faster and less costly, than legal proceedings.

The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 require a business which finds itself in this situation to inform its customer by a ‘durable’ medium (i.e. in writing or by fax or email) that it cannot settle the complaint, and to inform the customer of the web address of a provider of ADR services competent to deal with the complaint and whether or not the business is obliged to, or will, participate in an ADR process operated by that organisation.

In  2016 it will become compulsory for all businesses that sell goods or services online must put on their website a link to the EU Commission’s Online Dispute Resolution platform.