Press release

Consumers and businesses 1 step closer to new Bill of Rights

Consumers will be closer to having enhanced easy to understand consumer rights following the introduction of the new Consumer Rights Bill.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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Consumers will be 1 step closer to having enhanced, easy to understand consumer rights following the introduction of the new Consumer Rights Bill to Parliament by Consumer Minister Jenny Willott today (23 January 2014).

The Bill, which is predicted to boost the economy by £4 billion over the next decade, streamlines overlapping and complicated areas of consumer law from 8 pieces of legislation into 1 easy to understand consumer Bill. It also introduces new rights for consumers and businesses.

Currently, consumers spend more than 59 million hours a year dealing with goods and services problems which cost them an estimated £3 billion a year. This deregulatory Bill will mean consumers and businesses will find it easier to resolve problems with faulty goods, substandard services and, for the first time, corrupted digital downloads.

In the Bill consumers will have the right to:

  • get some money back after 1 failed repair of faulty goods (or 1 faulty replacement)
  • demand that substandard services are redone or failing that get a price reduction
  • a set 30 day time period to return faulty goods and get a full refund
  • challenge terms and conditions which aren’t fair or are hidden in the small-print: for example airlines charging baggage fees will have to make them really clear when consumers are booking to avoid legal challenge

Consumer Minister Jenny Willott said:

For far too long consumers and businesses have struggled to understand the rules that apply when buying goods and services. That is why the Consumer Rights Bill sets out in 1 place key consumer rights for goods, services and, for the first time, digital content.

Well-informed, confident consumers are vital to building a stronger economy. Our plans will mean consumers can be confident about their rights in everyday situations and businesses will spend less time working out their legal obligations when they get complaints from customers.

If passed into the law, the Bill will also give consumers the right to get a repair or a replacement of faulty digital content such as film and music downloads, online games and e-books helping the millions people who experience problems each year.

Which? executive director Richard Lloyd, said:

The Consumer Rights Bill brings consumer law into the 21st century, extending rights into digital content for the first time, and making it easier for people to understand their rights and challenge bad practice. This Bill provides a firm foundation for empowering consumers and will benefit businesses that treat their customers fairly.

Businesses are also set to benefit. Many already provide their customers with enhanced rights. But even the best businesses still have to spend significant time and resources understanding the law and training their staff to apply it, more than they should have to – simplifying the law will reduce burdens.

New measures in the draft Bill that will benefit businesses include:

  • a new requirement for enforcers such as Trading Standards Officers to give 48 hours notice to businesses when carrying out routine inspections, saving business £4.1 million per year. Trading Standards Officers will still be able to carry out unannounced inspections where they suspect illegal activity
  • faster and lower cost remedies for businesses who have been disadvantaged from breaches in competition law
  • a reduction in on going training costs. Businesses will spend less time understanding their obligations or considering different scenarios when training staff

Tom Ironside, BRC Director of Business and Regulation, said:

The new Consumer Bill of Rights is a practical and well balanced set of measures to make rights and duties clearer, both for businesses and consumers. We welcome this initiative, which will help to build trust with customers.

We also appreciate the sensible approach BIS has taken in drafting the Bill, working in close co-operation with us and our members. We will examine the full Bill with interest and look forward to continuing to engage constructively as it progresses towards becoming law.

The government response to the House of Commons Business Select Committee report into the draft Consumer Rights Bill was also published today (23 January 2014).

Examples of where the Bill will provide greater clarity include:

Digital content:

You play a ‘freemium’ computer game – the game was free when you started playing it 5 months ago but since then you have spent quite a bit of money on in-app purchases to improve your character. You’ve also earned some points through game play which you also used to build your character. Ever since you last upgraded your character, following an in-app purchase, the game has failed to work properly. Under the Bill as the digital content is intangible you would be entitled to a repair or a replacement because even though the game was “free”, the in-app purchase was not working as expected. If a suitable repair or replacement is not possible then you would be entitled to some money back.

You buy a CD but when played it jumps erratically between tracks or gets stuck. You try to return it but the retailer says that they don’t offer refunds on CDs. Under current legislation your rights are unclear, but the Bill makes it clear that for faulty digital content bought on a tangible medium such as a CD, you are entitled to a refund within 30 days of purchase.

Services:

You contract a photographer for your wedding, to take photos starting with the ceremony at 1pm on a given Saturday. You pay £2,000 for the service. There is a clause in the contract stating that the maximum discount for any problem caused by the photographer is £1,000. The photographer arrives late, at 4pm, missing the ceremony. The photographer has breached the information in their contract by not arriving at 1pm. The term limiting the price reduction is invalid. The photography service cannot be repeated, as the wedding has happened. Under the Bill, you are entitled to a reduction in price (possibly up to 100%) due to non-compliance with the information provided.

Goods:

You buy a £20 toaster but after 3 and a half weeks you find that it no longer works. Currently, under the law, it is not clear whether you have a right to return the goods and get a refund because it is not clear if 3 and a half weeks is “reasonable time”. Under the proposed Bill you will have a clear right to a full refund as fewer than 30 days have passed.

Unfair contract terms:

You purchase a SoarPrice airlines ticket and see a phrase on the last booking screen that “extra fees may apply”. You tick the box next to it and book your ticket. But when you arrive at the airport you find that you have to pay an excess baggage fee. Currently, SoarPrice could argue that the excess baggage fee was part of the price of the ticket so cannot be challenged for fairness. However, the fee was not brought to your attention when you booked. It was not sufficiently transparent and prominent. Under provisions in the Bill, it will have to be prominent as well as transparent otherwise it could be assessed for fairness in the courts.

Notes to editors

1.The Consumer Rights Bill will be available at Consumer Rights Bill 2013-14

2.Consumers will be able to find out more information on the proposals in the Bill, including examples of how it would affect them at The Consumer Rights Bill

3.The drive to fundamentally reform consumer rights and make sure consumers are getting a fair deal is part of the wider consumer changes the government has been making over the past year. This includes clear upfront information for consumers through the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and the creation of a 1 stop shop for consumer enquiries through the Citizens Advice Service. We also announced draft proposals to give consumers recourse if they had been misled or bullied into buying something they didn’t need nor want.

4.If consumers have any concerns over their rights they should contact the Citizens Advice Consumer helpline on 08454 04 05 06.

5.Key statistics:

  • in a survey by uSwitch published in August 2013 almost half of those surveyed said they had a weak grasp of their rights and a third of them were relying on trial and error when they had a consumer problem
  • in a 2012 survey Consumer Focus estimated that the annual financial cost to consumers from problems with goods and services was £3 billion
  • digital content is a large and growing part of UK economy. Over £1 billion was spent on downloading films, music and games in the UK in 2012. In 2011, over 16 million people experienced at least 1 problem with digital content
  • the government estimates that improvements to the law when purchasing goods, services and digital content will lead to benefits to consumers of £89 million

6,The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:

  • to create the most competitive tax system in the G20
  • to make the UK the best place in Europe to start, finance and grow a business
  • to encourage investment and exports as a route to a more balanced economy
  • to create a more educated workforce that is the most flexible in Europe

Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.

Published 23 January 2014