The new Consumer Rights Act 2015 – what does it mean for businesses?
From 1 October 2015, the Consumer Rights Act 2015 (“the Act”) brings in new rules you must comply with when you supply goods, services and even digital content to a consumer.
These rules only apply to you if you are selling in the course of trade or business and they don’t cover business-to-business (B2B) transactions. But you need to be aware that, from 1 October, if someone buys from you for mixed business/personal reasons, they may count as a ‘consumer’ for the purposes of the new rules.
Here’s what you need to know about the consumer’s rights:
The good news is that the warranties implied in your contract by the Sale of Goods Act 1979 are unchanged. Your goods must be of satisfactory quality, fit for purpose and conform to any description you have given about them.
The bad news is that consumers now have a right to reject defective goods for up to 30 days after receiving them and to receive a full refund. If they complain that the goods are defective after 30 days, they still have a right to demand a replacement or a repair. If a repair or replacement is not available, or the repair is unsuccessful or is not provided in a reasonable time, the consumer can request a price reduction or even then reject the goods.
The supply of digital content is regulated for the first time. Any data which is produced and supplied in a digital format is covered by the new rules whether you charge for it or give it away free. This includes computer software, mobile phone applications, software systems for operating goods, television programmes, computer games, books films and music.
From 1st October, you must ensure that the digital content you supply to a consumer is of satisfactory quality, fit for a particular purpose and conforms to any description. In other words, you must treat digital content just like any other goods.
There are however some important differences:
- unlike with physical goods, you are not limited to just one go at repair or replacement when the consumer complains more than 30 days after purchase;
- there is no right of rejection except where the digital content comes with physical goods;
- if the digital content damages the device on which the consumer loads, it, you may have to pay compensation, even if you gave the content away free of charge.
As before under the Sale of Goods and Services Act 1982, services must be carried out with reasonable skill and care and within a reasonable time. However, what’s new is that, if you haven’t expressly and clearly agreed the price for the services, you can only charge a “reasonable price”.
If your services are under-par, the consumer can require you to repeat the service or claim a price reduction. In either care, she may also be able to claim compensation for any losses she has suffered.
You’ll need to update your sales team about this one. If the consumer relies on anything you or your sales team say, or any written material, before entering into the contract, you’ll probably now be bound by it (regardless of what your Terms & Conditions might say). This includes all the information provided to the consumer about the goods or services being provided such as quotations, timescales or details of results to be achieved.
How Can We Help You?
To ensure you comply with the new rules before 1st October 2015, you will need to review your procedures and your customer documentation such as marketing materials, Terms & Conditions, and cancellation and returns policies. You should also consider training your sales people on how they should now be careful about claims and promises they make about your products and services.
We know how disruptive these kinds of rule change can be for small businesses. That’s why we are offering a range of fixed fee services to help you get to grips with it all.
Depending on your requirements, we can provide a review and update of your customer documentation (including Terms & Conditions) from as little as £350+VAT per document. Or, if you want training, we can deliver a workshop for you and your sales staff from as little as £500+VAT.
We are happy to discuss the changes and the challenges they may deliver. Please contact me to chat this through in more detail and to identify the options and best course of action for your business.
To find out more about the changes to unfair contract terms in consumer contracts or customer notices, you can read our article here.