Comment: consumer rights get ready for the new era
Hot on the heels of the Consumer Rights Bill come two further pieces of draft legislation which as a combined package will have a serious impact on how retailers handle consumer rights, complaints and redress. By Gavin Matthews, head of retail at Bond Dickinson.
On 6 August, the Department for Business, Innovation & Skills issued its much-heralded amendments to the Consumer Protection from Unfair Trading Regulations (the CPRs) and the draft regulations implementing the Consumer Rights Directive.
The changes under the Consumer Rights Directive are designed to create a level playing field across the EU as at the moment the regulations vary across member states.
Consumers don't currently have any means of direct redress but the amendments to the CPRs entitle consumers to this, provide standard remedies and an entitlement to damages on top of those standard remedies. Whilst these amendments are headlined as providing direct redress for those who have been the victim of misleading or aggressive practices, an aim which we applaud, we foresee an increase in consumer claims, as consumers flex their new muscles in seeking direct redress.
The standard remedies being introduced are:
The right to "unwind" a contract – if the goods or services have not been fully "consumed" and the consumer rejects the goods within 90 days, they can then unwind the contract and receive a full refund.
If the consumer keeps the remainder of the goods, then they have a right to claim a discount from the trader. This discount is available even when the right to unwind has been lost. The level of discount is fixed in accordance with the bands set out in the Regulations.
Additionally consumers then have an entitlement to seek damages if they can prove that the practice has caused economic loss, distress or inconvenience. On a more positive note the Regulations specifically state that a claim for damages for alarm, distress, physical discomfort or inconvenience is only the right to "restrained and modest damages".
The second set of draft regulations cover three main areas:
The first is the information which traders should provide to consumers before a sale takes place – the name, geographical address and contact number, the total price of the goods and services (including taxes), payment arrangements, delivery and, significantly, a complaints procedure.
The second is cancellation rights and responsibilities for distance and off premises sales; this includes providing clear information and cancellation rights in distance and off premises sales and also clarifies that the cancellation period is 14 days, instead of the current seven-day period. The good news is that at long last it is now clear that retailers do not have to provide a refund until the goods are returned by the consumer and more importantly, if the goods have been handled beyond that reasonably allowed in a shop, then the retailer can recover the diminished value of the goods – although how this can be demonstrated is less than clear!
Thirdly, the regulations look at hidden costs – in particular that there can be no hidden costs for which the consumer will be bound unless the trader has expressly obtained the consumer's consent. This is aimed at, for example, the ambiguously worded free trial, which eventually leads to payment and the automatic ticking of boxes indicating, for example, the consumer's agreement to take out an extended warranty for the goods.
Additionally, this states that consumers cannot be charged more than the cost of a basic rate phone call to call a customer helpline.
Businesses are encouraged by BIS to comment on both sets of draft regulations by 11 October 2013 and retailers should consider whether they wish to comment and also be aware of which areas in business may need reviewing to ensure they will comply with this proposals should they come in. Retailers should also gear up for potentially substantial numbers of claims from consumers seeking to exercise their new rights.
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