Consumer rights shake-up begins

Draft legislation announced by Consumer Minister Jo Swinson will give consumers more rights to seek redress for misleading or aggressive practices and provide them with better cancellation rights in contracts. The Government has issued two consultations that will complete the reform of consumer law in the UK: The Consumer Protection from Unfair Trading (Amendment) Regulations 2013 and The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013.

The Consumer Protection from Unfair Trading (Amendment) Regulations 2013
This amendment to the 2008 Regulations allows consumers to seek redress when they have been the victim of misleading or aggressive practices. The draft Regulations provide remedies to consumers where they can show that the trader they purchased a product from has engaged in behaviour that is deemed to be a misleading action under Regulation 5 or is aggressive under Regulation 7 under the original 2008 Regulations.

A trader could be liable under Regulation 5 if they provide false information or information that could deceive the average consumer; or market a product which causes confusion with a competitor’s products or trademarks; or fail to comply with a code of conduct to which they say they are bound.

Regulation 7 deals with aggressive behaviour and takes into account, among other things: the timing and location of the behaviour; whether threatening or abusive language is used; and any exploitation by the trader of any personal circumstances of the consumer.

The Regulations cover three types of contract: sale or supply of a product by a trader to a consumer; the sale or supply of goods to a trader by a consumer; and the payment by a consumer to a trader.

If the consumer is entitled to claim redress, there are a number of remedies available. Depending on the contract, the consumer can unwind the contract and get a refund; they can demand a discount on the price or damages for the breach.

The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013

These Regulations implement some of the provisions of the Consumer Rights Directive which was passed in 2011. In most areas the UK Regulations implement the provisions of the Directive as agreed and there is no scope to vary these.

The draft Regulations deal with three areas: information; cancellation; and hidden costs. They apply to contracts made between a trader and a consumer, and cover contracts made on-premises, ie in a shop, off-premises, ie at a consumer’s home or place of work, and distance contracts, ie those made through a website or over the telephone.

Some contracts are excluded from the Regulations: gambling; health services; and services of insurance or banking.

Depending on the type of contract, the trader must provide certain information before the contract is agreed. Many of the information requirements are already in existing legislation but there are new ones, for example in the area of digital content where, for example, information about what systems or hardware the content will work with must be given.

Part 3 of the Regulations covers the right of consumers to cancel off-premises or distance contracts. Consumers will have 14 days to cancel, which doubles the current seven days. Consumers must return the goods, at their own expense if the trader has not agreed to pay for their return. Online and off-premises traders can withhold refunds until they receive the goods back and they can reduce the refund if the consumer has used the goods beyond handling them to see if they are as expected.

Part 4 covers what the Government calls “hidden costs”. Traders will have to obtain active consent for all payments and the use of pre-ticked boxes for additional charges will not be allowed. Where traders operate a customer service telephone line, consumer must only be charged the basic rate for calls: premium rate lines will be banned.

The consultations
Both consultations are open to the 11 October and the DMA Legal Team will be reviewing the proposals. We would welcome any comments from members on either consultation.

Janine Paterson, Solicitor, DMA