Consumer Rights Act introduced to help consumers and SMEs in legal battles » SMEInsider

Consumer Rights Act introduced to help consumers and SMEs in legal battles

The Department for Business, Innovation and Skills (BIS) has introduced a new law that helps customers and small businesses seek compensation from large firms that have fixed their prices.


Fixing prices

The Consumer Rights Act 2015 was introduced on October 1st, with the legislation making it much easier for groups to sue large companies that have formed cartels and are deliberately fixing prices.

If a company is found to be manipulating prices, anyone who has been affected has to ‘opt in’ in order to mount a legal challenge and gain compensation, but due to high legal costs, very few have.

There has only been one case in which a large firm has had to pay out for fixing prices. In 2008 JJB Sports was sued by consumer watchdog Which? for its overpricing of replica football shirts. Thousands of consumers were affected by the price hike, but only people who actively became involved in the case received compensation.


‘Simplify the law for businesses’

The new act changes all this by introducing an ‘opt out’ action that automatically includes every consumer affected into the ‘class’ which is suing for compensation. Business minister Nick Boles has welcomed the new legislation.

‘‘Whether it’s downloading music or buying a fridge freezer, the Consumer Rights Act makes it easier to understand your rights.’’

‘‘UK consumers spend £90 billion a month and it is important they are able to shop with confidence. These changes will also simplify the law for businesses so they can spend less time worrying about unclear and unwieldy regulations.’’

Now when a problem does occur, it will be easier for disputes to be settled.

All claims will have to be approved by the Competition Appeal Tribunal and claimants can receive support from Alternative Dispute Resolution (ADR) providers, particularly when a dispute cannot be settled between a company and the consumer/SME.

There are a number of other key changes in the Consumer Rights Act, including:

  • The Act gives consumers the right to gain a repair or replacement of faulty digital content such as online films and games, music downloads, and eBooks.
  • The chance to gain a refund on all faulty goods within 30 days of purchase. The law was previously unclear on how long this period should last.
  • For the first time there are clear rules for what should happen if a service is not carried out with reasonable care and skill or as agreed with the consumer – the service provider will have to put the service right in line with what was agreed or, if that is not practical, must give some money back
  • Shoppers will be able to challenge terms and conditions which are not fair or are hidden in the small print.

Richard Lloyd, executive director of Which?, has some solid advice for business owners who could be affected by the new changes.

‘‘Consumer law was crying out to be brought up to date to cope with the requirements and demands of today’s shoppers. Getting a refund or repair, dealing with issues with faulty digital downloads and understanding contracts should now all be much simpler.’’

‘‘Businesses must ensure their staff are aware of the changes so they’re not caught out short-changing customers or breaking the law.’’