Is Your Business Aware of Its Obligations Under the Consumer Rights Act?


 In the first of a series of articles on law for businesses in West London, Paul Kite, Partner, in IBB Solicitors Commercial Services Group explains what the Consumer Rights Act 2015 means for businesses and how to address some of the changes.

 IBB’s expert lawyers have produced a series of guidance notes on this and other areas of business law. For more information please click the links below:

Why do I need to be concerned?
For those businesses in West London who provide goods or services to consumers, 2015 will not have passed without some notice being taken of the changes to the statutory rights and remedies available to consumers.  The Consumer Rights Act 2015came into force on 1 October 2015 and applies to the sale and supply of goods, services and digital content.  With the increased availability of information from consumer champions via the internet and the use of social media, consumers are undoubtedly more aware of their rights and take to publicise complaints more frequently.  It is important that businesses have a strategy for responding to consumer complaints in a responsible and cost-effective manner.
 
 
So what do the changes mean for businesses and how should businesses respond?
The changes apply to business-to-consumer supplies and services, not business-to-business.  They are designed to improve consumer protection and provide increased clarity as to the remedies available to consumers. 
Businesses need to make sure that their dealings with consumers are transparent and fair.  They should review their sales and ordering processes, as well as any standard terms of business with this in mind.  Anything which appears to transfer a disproportionate risk to the consumer or seeks to limit or exclude basic rights will fail the test.  Pre-contract notices, advertising material and order forms should be written in plain English and any onerous provisions brought to the consumer’s attention.  It is good practice to seek a written acknowledgment from the consumer that their attention has been brought to the particular term.
The contents of pre-contract advertisements or brochures may also be treated as though it were a term of the contract, so do not disregard this.
What are the consumers’ rights that I need to be aware of?
As was previously the case, the sale of goods and provision of services carry with them implied promises; in the case of goods, that the goods will be of satisfactory quality, fit for purpose and match their description; and in the case of services that the services will be performed with reasonable care and skill, for a reasonable price and within a reasonable period.
It is open to the parties to agree the price and time for performance. This is best to do rather than leave room for argument and the risk that your expectations will not be met.  Get the consumer to sign something to confirm his or her agreement, incorporating or referring back to the quotation.
It is not possible to exclude these implied promises, so don’t bother trying.
If things go wrong, it is important that the selling or supplying business, responds to the customer’s complaints.  It is often the way a complaint is handled which can be the difference between a satisfied consumer and an unhappy one.
What if I don’t honour the implied promises for whatever reason?
The primary remedy available to a purchasing consumer is to reject the goods, provided that they are  within the first 30 days after purchase.  Beyond 30 days, the seller is to be given an opportunity to repair or replace the goods before the customer can exercise the right to return them and request a refund.
After 6 months, the seller is entitled to deduct from the refund an amount to reflect the customer’s use of the goods prior to their return.  There is no definitive guidance on what a reasonable deduction is  (nor is there likely to be).  The best advice is for you to consider what use of the goods the customer has had, for what period and how have they been inconvenienced?  Document the reasons for arriving at whatever deduction is made and try and get the customer’s agreement.  If not, it may be possible to use an alternative dispute resolution providerto help you try and reach a compromise.    
With “services”, the provider is obliged to perform the services (or part of them) again if they are sub-standard.  An entitlement to a price reduction may follow, but in the first instance the provider should offer to put the work right at its cost.  If it is not cost effective then a refund may be appropriate, but bear in mind that the customer may have suffered other losses as a result of the failure to perform the original services with reasonable skill and care and it may be necessary to compensate them for this too.
In the case of digital content, (such as computer programs, streamed music and films, e-books and apps), the content must be of a satisfactory quality, fit for purpose and match the description.  If it is not, the consumer is entitled to request repair or replacement.  Failing either being available, then a suitable reduction in price (or refund).
How should we deal with complaints of faulty goods or sub-standard performance?
By far the biggest area of focus for businesses that deal regularly with consumers in 2016 will be the resolution process.  Whether you are a multi-national with a dedicated customer services team or an SME with limited personnel resources, how you respond to customer complaints could hinder or  enhance your business. 
This should be viewed as a potential differentiator amongst your competitors.  Businesses that take the trouble to listen to consumer complaints and respond positively, seem to enhance their reputation in the market.  Having an effective system for complaint handling, including investment in training, will  minimise the time spent, financial outlay and the reputational risk to the business as well as help  maintain customer loyalty. 
You mentioned alternative dispute resolution.  What is this and how can it benefit me?
Since 1 October 2015 there has been an obligation on businesses supplying goods and services to consumers to direct the customer to a certified alternative dispute resolution (ADR) provider where a complaint remains unresolved.  The ADR provider will be an independent third party providing dispute resolution services/assistance.  One example is the Retail Ombudsman (http://www.theretailombudsman.org.uk/ ).
Online sales and service disputes are governed by a different regime provided by the European Commission for consistency across Europe and relevant businesses are required to provide a website link to the new EU Online Dispute Regulation platform from 9 January 2016.
The main benefits of ADR are speed, cost and confidentiality when compared to litigation.  The parties remain in control of the outcome and it is possible to come to a more flexible solution than a Court, such as offering a discount off a future purchase or service.
What about manufacturers or B2B providers who don’t deal directly with consumers?
The ability of consumers to reject sub-standard goods more confidently (including second hand goods) in the knowledge of their statutory rights will impact upon the whole supply chain.  Retailers and distributors will look to pass upstream any losses they sustain. Identifying and dealing with these issues efficiently, without recourse to legal proceedings, should be a priority for all.
How to make sure that your business is up to date with the latest consumer protection legislation
Paul Kite is a partner in IBB Solicitors and advises and supports businesses on dispute resolution and avoidance.  He is a qualified commercial disputes mediator.  IBB’s expert lawyers have produced a series of guidance notes on this and other areas of business law. For more information please click the links below: