UK businesses need to wake up to implications of looming consumer law changes

United Kingdom

13-12-2013

• Majority of UK businesses will need to review and update their sales practices, both online and offline, in order to comply with proposed changes in consumer law when they come into force in 2014

BUT

• 64% of UK business leaders are unaware of the proposed changes

• 60% expect that it will have some level of impact on their businesses, but 37% are unsure of what the impact will be

Today, (13 December 2013), the Consumer Rights Directive will be enacted across the EU, affecting businesses that sell goods via door-to-door sales, off-premises sales and distance selling – including online selling. These businesses will have until June 2014 to ensure they comply with the new guidelines.

Further extensive changes to consumer law are due to come into force during 2014 as a result of the upcoming Consumer Rights Bill, but a recent survey by global law firm Eversheds has shown that two thirds (64%) of UK business leaders are unaware of the proposed changes and over a third (37%) are unsure of what impact it will have on their business.

This will be the most radical overhaul to UK consumer law in three decades. It aims to clarify and simplify consumer rights, making customers both better informed and better protected when purchasing goods or services. In particular, it will modernise consumer law to address digital content, a major sector which has emerged since existing legislation was written over 30 years ago.

Although many business leaders said they were unaware of the impending changes, almost half (49%) believe that some changes are needed to UK consumer law and, when questioned in detail about the content of the Bill, the majority of respondents were positive about the key proposed changes.

In particular, 71% of respondents welcomed the proposed increases in the prominence and transparency of contract terms. The new proposed laws will be relevant to all types of consumer contract terms, including those on websites and incorporated in apps for example, as well as the more traditional printed terms and conditions. Some of the requirements are likely to pose particular challenges for technology retailers, for example those who supply software and data products via mobile phones and similar media where space is limited to incorporate legal terms.

In addition, 70% of respondents agreed that new laws are needed to deal with the provision of digital content such as apps, games, music and films. The proposed changes will mean that digital content will be treated in legal terms more like goods rather than as a service as is currently the case. This will mean that different consumer rights apply, which is a key change to get to grips with for businesses that provide software and data downloads.

A further 67% of respondents support a new statutory remedy for defective services whereby the service will either need to be re-performed or the price reduced and 61% welcomed the introduction of a statutory time period of 30 days during which consumers can reject substandard goods and receive a full refund.

Once made aware of the content of the Consumer Rights Bill, whilst 37% of respondents were unsure of what impact it would have on their businesses if introduced, a further 60% acknowledged that it would have some level of impact, with additional training needs, increased administrative burden and increased cost being cited as potential areas of concern.

Matthew Gough, partner at global law firm Eversheds, said: “The changes outlined in the Consumer Rights Bill are well overdue, especially in terms of accommodating advances in technology. Clarification and simplification of the law will bring benefits for consumers and businesses alike, but many businesses appear to be unaware of what is coming and unsure of the impact it will have on their businesses. Ignorance is bliss at the moment, with only 26% of respondents expressing concern about the impact this change will have on their business. In coming months it is vital that many more businesses familiarise themselves with the changes ahead and ensure they are prepared to review and update their sales practices, both online and offline, in order to comply with the changes when they come into force.”

For more information contact

Lucy Sulkin
Eversheds LLP
t: +44 (0) 207 919 0683
m: +44 (0)777 026 6290
e: LucySulkin@eversheds.com 

Disclaimer

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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