Legalease Home page
Whats new

 

01/04/2015

Consumer Rights Act 2015
Subject: Law Lawmakers and Lawyers. Selling and marketing/Sales to consumers
Source: www.legislation.gov.uk

Introduction

The Consumer Rights Act 2015 was enacted on 26 March 2015. Its purpose is mainly to clarify and ‘tidy up’ the law relating to the sale and supply of goods and services to consumers. The Consumer Rights Bill was described by the government as ‘the biggest overhaul of consumer law for a generation’.

Existing UK consumer law has become exceedingly complex and fragmented. This has come about due to piecemeal changes in the UK legislation in this area, covering business as well as consumer sales followed more recently by the introduction of additional measures deriving from EU consumer protection law which have been introduced largely by self-standing regulations rather than part of a cohesive code of consumer protection.

The law relating to the supply of goods and services was developed in English common law by judicial decisions in a series of cases. The first statutory intervention was in the Sale of Goods Act 1893. Since then, this area of law has been gradually modified and extended by a number of different legislative measures including the:

* Supply of Goods (Implied Terms) Act 1973;

* Sale of Goods Act 1979;

* Supply of Goods and Services Act 1982;

* Sale and Supply of Goods Act 1994;

* Sale and Supply of Goods to Consumers Regulations 2002;

* Unfair Contract Terms Act 1977;

* Unfair Terms in Consumer Contracts Regulations 1994 replaced in 1999 and amended in 2001;

* Competition Act 1998;

* Enterprise Act 2002

The Consumer Rights Act 2015 (CRA) does not supersede the following regulations which derive from EU consumer protection legislation:

*             the Consumer Protection from Unfair Trading Regulations 2008 (as amended in 2014) which regulate misleading or aggressive practices in marketing and selling to consumers;

*             the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 which replaced the following regulations:

              the Consumer Protection (Distance Selling) Regulations 2000 (amended in 2005)    which revoked the Mail Order Transactions (Information) Order 1976;

              the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008 which themselves replaced the Consumer Protection (Cancellation of Contracts Concluded away from Business Premises) Regulations 1987;

              the Consumer Rights (Payment Surcharges) Regulations 2012

In addition to the objective of consolidation and clarification of existing consumer rights legislation into one comprehensive source, the Consumer Rights Act implements certain aspects of the EU Consumer Rights Directive and makes a number of significant changes as summarised below.

Rights and remedies in sale of goods contracts

The Sale of Goods Act 1979 (as amended) requires goods to comply with certain standards as to satisfactory quality, description, fitness for purpose and other standards. The CRA supersedes the 1979 Act in respect of business to consumer sales and in addition to the foregoing standards, sellers or ‘traders’ in the language of the CRA must ensure that:

* if goods are sold by reference to a model of the goods that is seen or examined by the consumer before entering into the contract, the goods will match the model except to the extent that any differences between the model and the goods are brought to the consumer’s attention before the consumer enters into the contract;

* he provides certain information as set out in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

The CRA provides that the buyer has two express rights to reject goods if they do not conform to the sale contract: a short-term right to reject of 30 days (or reasonable life in the case of perishable goods) and a final right to reject. The short-term right to reject extends by at least seven days if the business has to repair or replace the goods during that time. Once the short-term right to reject is lost, the consumer has the right to a repair or replacement. The business has one opportunity to repair or offer one replacement, but if repair or replacement are impossible, or the business’s one attempt at repair fails, or the first replacement is also defective, the consumer has the right to a price reduction or a final right to reject.

Rights and remedies for digital content

The CRA aims to introduce consistency in consumer protection law for digital content (i.e. data produced and supplied in digital form) whether on a disk or by download. The applicable standards are similar to those for goods except that a consumer has no right to reject digital content. If the digital content does not comply with such standards, the consumer has a right to a repair or replacement, but if that is not possible or the fault goes unresolved, the right to a price reduction up to the full amount of the price.

The trader must have the right to supply the digital content and if he does not have such right, the consumer has a right to a refund. A consumer is also entitled to compensation for damage caused to the device or to other digital content.

Rights and remedies for the supply of services

The Supply of Goods and Services Act 1982 implies (i.e. ‘writes in’) certain terms in a contract for the supply of a service where the supplier is acting in the course of a business. These include terms that the supplier will carry out the service with reasonable care and skill and within a reasonable time, and that the customer will pay a reasonable charge. The CRA implies the same terms into contracts for the supply of services to a consumer but in addition it implies a term that certain information about the trader or service is binding.

The information which is treated as binding is anything that is said or written to the consumer, by or on behalf of the trader, about the trader or the service, if it is taken into account by the consumer when deciding to enter into the contract or when making any decision about the service after entering into the contract. However this is subject to anything that qualified the information on the same occasion, and any change to the information that has been expressly agreed between the consumer and the trader before or after entering into the contract.

In case of non-conformity with the contract, the consumer will have the right to require repeat performance, or, if that is ‘impossible’ or not done in a reasonable time, the right to a reduction in price.

One of the options for reform prior to the Consumer Rights Bill being introduced to Parliament was the introduction of a so-called ‘outcomes-based liability standard’, that is, a requirement that services be of satisfactory quality, in a similar way as the standard required for goods. However, the Government chose not to include such an obligation in the Bill, and despite the criticism of the House of Commons

Business, Innovation and Skills Committee, the right was not included in the CRA.

Unfair terms in consumer contracts

In relation to business to consumer contracts, the CRA consolidates the provisions of the Unfair Contract Terms Act 1977 (UCTA) with the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR), which were considered to be inconsistent, complex and difficult to apply. The parts of UCTA relating to issues other than business to consumer contracts remain in force, but the UTCCR will be fully revoked.

Remedies for anti-competitive behaviour

The Competition Appeal Tribunal (CAT) is a specialist tribunal whose function is to hear cases involving competition issues. However, the CAT’s jurisdiction is currently restricted. It may hear appeals from decisions of the Competition and Markets Authority (CMA) and other sector regulators with competition powers. It may also hear so-called ‘follow-on’ cases. A party which alleges damage caused by behaviour which has already been found to be in breach of competition laws by the CMA, EU Commission and certain other regulators may bring a follow-on action.

Stand-alone claims: unlike a ‘follow-on’ case, in a ‘stand-alone’ claim, there is no decision by a competition authority on which the party which alleges damage may rely brings the action to prove an infringement. In Enron  Coal Services Ltd (in liquidation) v English Welsh & Scottish Railway Ltd, the Court of Appeal ruled that the scope for the CAT to go beyond the findings of the initial infringement decision is extremely limited. This judgment is widely thought to be one of the contributing factors restricting the role of the CAT in competition law actions in the current regime. Businesses or consumers who wish to bring stand-alone cases must bring their case in the High Court of England and Wales, the Court of Session or the Sheriff Court in Scotland or the High Court of Northern Ireland.

Injunctions: whilst the CAT may award damages for follow-on actions, it does not have the power to grant injunctions (an order which prohibits a party from doing a particular act). This restriction prevents a party from obtaining redress from the CAT in the form of an order prohibiting, for example, anti-competitive pricing. At present, a party seeking an injunction would need to apply to the High Court.

Reforms: The CRA provides for follow-on cases to be brought before the CAT and to have the power to grant injunctions. There is also power to allow a fast-track procedure for claims to enable simpler cases brought by small and medium enterprises. In addition, the CRA will introduce enhanced rights for consumers seeking redress for UK or EU competition law infringements. At present, private, representative actions for such infringements can be brought by a specified body in the Competition Appeal Tribunal (CAT), but these can only be brought on an ‘opt-in’ basis ; i.e. a claimant has to choose to be involved in the action. However, only one such collective action has been brought since the relevant provisions were introduced. There are measures to improve the efficacy of the existing ‘opt-in’ provisions, and to introduce a new ‘opt-out’ regime more akin to the US class action system, where a claim is pursued on behalf of a specified class of unnamed claimants, who are deemed included in the action unless they have specifically chosen not to be involved.

Investigatory powers etc.

The CRA makes some reforms to the investigatory powers of consumer law enforcers, in order to consolidate and rationalise piecemeal legislation contained in some 60 pieces of consumer legislation, being unclear, inconsistent and overlapping each other. This was foreshadowed in the BIS consultation published in March 2012 entitled ‘Enhancing Consumer Confidence Through Effective Enforcement – Consultation on consolidating and modernising consumer law enforcement powers.

Letting agents

The CRA imposes a duty on letting agents in England and Wales to publicise their fees, whether or not they are a member of a client money protection scheme and which redress scheme they have joined (fees etc). It explains which letting agents and which fees etc the duty applies to and details the enforcement of the duty.

The provisions come into force on 27 May 2015 for England. In Wales, the provisions will come into effect when the Welsh Government makes the necessary commencement order

Agents are required to display a list of their fees at each of their premises where they deal face to face with customers and also to publish a list of their fees on their website. The fees must be described in such a way that a person who may have to pay the fee can understand what service or cost is covered by the fee or the reason why the fee is being imposed. For example, it will not be sufficient to call something an ‘administration fee’ without further describing what administrative costs or services that fee covers. Where fees are charged to tenants the list should make clear whether the fee relates to each tenant under a tenancy or to the property. The list must also include the amount of each fee inclusive of tax, or, where the amount of the fee cannot be determined in advance a description of how that fee will be calculated. An example might be where a letting agent charges a landlord based on a percentage of rent.

If the letting agent holds money on behalf of their clients as part of their letting agent or property management work, as well as publicising their fees, the agent must publish a statement which states whether or not that agent is a member of a client money protection scheme. Agents who are required to belong to a redress scheme for dealing with complaints must publish which redress scheme they are a member of.

Secondary ticketing

The CRA regulates the online secondary ticketing market; i.e. the market where tickets for sporting, recreational and cultural events are re-sold having been first bought or otherwise acquired on the primary market from an event organiser. These provisions come into force on 27 May 2015.

The new regulations introduce requirements on It concerns:

* information which must be provided in respect of a ticket to its buyer, when that ticket is resold online;

* the original terms and conditions of a ticket;

* reporting of criminal activity on online ticket marketplaces;

* a review of the online secondary ticketing market.

There is no current statutory regulation of the online secondary ticketing market. Other legislation applies generally which covers the market, including:

* The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134) which provide that certain information must be provided when goods, a service or digital content are sold by a trader to a consumer, including sales concluded at a distance (e.g. online);

* The Criminal Justice and Public Order Act 1994 s.166 which regulates the re-selling of tickets for certain football matches;

* The Fraud Act 2006 and the Consumer Protection from Unfair Trading Regulations 2008 (SI 2008/1277) which aim to protect buyers from misleading or fraudulent sales; and

* The Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (which are to be replaced by Part 2 of the Act once Part 2 comes into force) which provide that terms in a consumer contract must be fair.

The new CRA provisions apply to tickets for all recreational, sporting and cultural events taking place in the UK(49).

Duty to provide information about tickets

The duty to provide information about tickets applies when a ticket is re-sold through an online secondary ticketing facility. This might be a website but could equally be a web based application (or other type of online facility). This section applies to tickets first offered for re-sale after the entry into force of the section.

The duty to provide information rests on both the seller of the ticket and the person operating the online facility through which it is being sold. In practice, it will be for the seller to give the information when they go to list their tickets online, and for the operator then to ensure that this information is given to the buyer. Four pieces of information must be given:

(i) information to enable the buyer to identify the particular seat or standing area of the venue to which the ticket applies; this includes, where applicable, the name of the relevant area of the venue, the block in which the seat or relevant area is located, and the row and number of the seat; where the seat and row are identified by something other than a number, this identifier must also be given;

(ii) the buyer must be given information about any restrictions that apply to the ticket and concern who can use it; for example, the ticket might be for a specific area reserved for disabled persons, or it might only be able to be used by those under 12 years old;

(iii) the face value of the ticket must be given; this is the price printed on the ticket itself; this will likely be the price at which the seller originally bought the ticket for;

(iv) where the seller has a connection with the online facility on which they are selling, or the organiser of the event for which the ticket is being sold, they must state that this is the case, and what that connection is; for example, if the seller is an employee of the facility which they are using to sell the tickets, they must give the buyer that information; where the seller is the operator of the facility itself, this information must be given.

The information to be provided in a clear and comprehensible manner, and before the buyer purchases the ticket. For example, the information would be clearly displayed in a legible font before the buyer clicks on a button marked “confirm purchase”.

Prohibition on cancellation or blacklisting

An event organiser may not cancel a ticket or blacklist a seller merely because that ticket is resold or offered for resale unless two conditions are met:

(i) it must be a term of the contract under which the original buyer purchased the ticket from the event organiser that cancellation of the ticket and/or blacklisting of the seller may occur as a consequence of that ticket being resold or offered for resale;

(ii) that term of the contract under which the original buyer purchased the ticket from the event organiser must not be ‘unfair’; the fairness of terms in consumer contracts is assessable under provisions of the CRA and, before the coming into force of those provisions, under the Unfair Terms in Consumer Contracts Regulations 1999. Unfair terms are not enforceable against consumers.

Blacklisting of a seller includes not just the placing of the seller on a list of those sellers who cannot, or cannot without restriction, purchase further tickets. Blacklisting covers any steps taken by an event organiser to prevent or restrict that seller buying tickets, in any form.

The prohibition to actions taken by event organisers after this section comes into force. The ticket in question may have, however, been resold or offered for resale before that time.

 

Duty to report criminal activity

 

Where the operator of a secondary ticketing facility is aware of criminal activity on that facility, a relevant report must be made to the police and to the event organiser; this applies to criminal activity related to the resale of tickets (though there may be other reporting requirements which apply where this is not the case).

UK wide application and date of coming into force

The CRA applies to all four UK jurisdictions, except the provisions relating to letting agents which apply only to England and Wales. The provisions are expected to come into effect on 1 October 2015, with the exception of the provisions regarding letting agents which come into force on 27 May 2015.

 

 

Back to What's new list >