Consumer Rights Act 2013 proposals unveiled

The Government has unveiled the long-awaited draft Consumer Rights Bill, which aims to simplify consumer law for consumers and businesses. The Bill will consolidate complex consumer laws by incorporating them into a single piece of legislation and introduce new rights for consumers and businesses.

This follows two consultation late last year by the Department for Business, Innovation and Skills on goods, services and digital content and the Law Commission and Scottish Law Commission on unfair contract terms.

Consumer Minister, Jo Swinson said: “We want to make sure consumers are confident about their rights in everyday situations be it their washing machine breaking down or an online game they purchased always crashing. This will also benefit businesses as they are going to spend less time working out their legal obligations when they get complaints from customers.”

The draft Bill gives consumers the right to:

• Receive some money back after one failed repair to faulty goods (or one faulty replacement)
• Have substandard services redone or get a price reduction
• Receive a repair or replacement of faulty digital content such as film/music downloads, e-books and online games
• Return faulty goods within 30 days and receive a refund
• Collective redress allowing consumers and companies to challenge anti-competitive behaviour.

The draft Bill also consolidates the law around unfair terms in contracts with consumers.

What businesses should be doing now

• Look at their policies and processes for dealing with faulty goods (including refund policies)
• Review customer contracts and notices
• Check that digital content (eg e-books and apps) comply with the rules

Reactions to the draft Consumer Rights Bill
The collective redress proposals (see above) got a mixed reception from business leaders. Both the British Chamber of Commerce (BCC) and the CBI voiced concern. Welcoming many aspects of the draft Bill, BCC director of policy and external affairs, Dr Adam Marshall said: “We are disappointed that the Government has chosen to publish proposals for an 'opt-out' collective action regime. Even though the Government’s proposal is limited to cases in competition law, it could establish a dangerous and unwelcome precedent.

"The introduction of “opt-out” collective action in the UK could eventually result in expensive and damaging US-style class action lawsuits. Such an outcome would be bad for businesses and consumers, who would ultimately bear the costs of increased litigation.”

CBI director for competitive markets, Matthew Fell said: “We will resist any effort to introduce US-style class actions into consumer redress, which risks fuelling a litigation culture and making the UK a worse place to do business.”

However, the National Franchised Dealers Association (NFDA) director, Sue Robinson, welcomed the proposals: “The NFDA have long called for a more effective means of collective action and therefore we welcome any initiative which offers improved access to justice for both businesses and consumers who have incurred losses as a result of competition law.”

The Trading Standards Institute (TSI) and the National Trading Standards Board voicedconcerns over some enforcement procedures.

Leon Livermore, TSI’s chief executive said: “Our main concern lies with the new requirement for trading standards officers to give reasonable notice to businesses prior to inspections; if trading standards officers cannot exercise their powers of entry without prior notification, it is clear that rogues can always stay one step ahead.”

Gillian Guy, chief executive at Citizens Advice called for regulators to be able to "name and shame businesses which refuse to put right bad practice so that customers know who they can trust to treat them fairly. As well as protecting customers, naming and shaming by enforcers would prevent dodgy businesses gaining a competitive advantage over companies that abide by the law.”

The Government is inviting comments on the proposals before the Bill is formally introduced to Parliament as the Consumer Rights Act 2013.

Janine Paterson, Solicitor, DMA