Whether you’re a florist, a digital agency or a plumber, the UK has consumer laws in place to protect your customers when they purchase products or services from your small business. Our legal experts from FSB Legal Hub explain what you need to know about the Consumer Rights Act.
What is the Consumer Rights Act?
The Consumer Rights Act (2015) harmonises the rules regarding the supply of goods, services and digital content, when the contract is business-to-consumer (B2C). It aims to protect consumers against poor-quality products and unfair business practices or contract terms with regards to transactions, repairs, refunds and delivery. A consumer is defined as “an individual acting for purposes that are wholly or mainly outside that individual’s trade, business, craft or profession”.
Another piece of legislation that protects consumer rights is the Consumer Protection Act 1987, which ensures that manufacturers meet safety standards. Consumers can claim compensation if the product is defective and caused personal injury or damage to property.
Does this law apply to business-to-business sales?
No. The Sale of Goods Act 1979 (as amended) still sets the rules for business-to-business (B2B) contracts.
How does the Consumer Rights Act affect businesses?
This legislation only protects the consumer when they are dealing with a Trader, defined as “a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf”. It outlines what rights a consumer has and what your obligations are as a goods or services provider in the event of a dispute. It does not cover private sales between two individuals where the seller/service provider is not a trader.
What are the terms?
The terms of the Consumer Rights Act cover a series of major areas. Your business must conform to certain standards or conditions.
A seller must have a “good title”, meaning you must have the right to sell the product. Items under a hire purchase usually can’t be as the finance company is technically the owner.
Sellers who deal in stolen goods won’t have a good title and won’t have the right to sell goods. It’s worth pointing out that you might not realise you’ve sold goods which are stolen. However, if this happens, you run the risk of the goods being returned to the rightful owner and your business having to pay compensation to the consumer you sold them to.
The description you provide for every item you sell must be accurate, whether in-store or on your website. From colour and dimensions to the features they have, this needs to be correct to avoid misleading consumers.
Goods which are sold must be of a satisfactory quality. They must work properly and be undamaged. This requirement includes a range of criteria that products are assessed against to be classed as having satisfactory quality. These are:
- Appearance and finish
- Suitable for the intended purposes
- Free from minor defects
Fit for purpose
The goods should be fit for the purpose they are supplied for, and in addition If the consumer explains exactly what a purchase is for, the item provided should be reasonably fit for that specific purpose. For example, a customer might want to buy a drill capable of drilling into brick. Not all drills can do this, but by stating this is what they need the drill for, they should be recommended and sold something capable of accomplishing that task.
These areas cover most instances where a product can be returned and form the basis for a lot of disputes regarding refunds or exchanges. Of course, there can be arguments about what constitutes satisfactory quality and fitness for purpose. It may be that the trader believes the consumer has misused or damaged the item, or it may be that they simply do not accept it is defective, and in the worst case scenario this would ultimately be up to the judge if it went to court.
The law also applies to second-hand items, however, as it stands to reason a second-hand product won’t be in as good condition as if it was bought new, this has to be factored in when considering what the consumer is reasonably entitled to expect. For example, you can’t buy a 10 year old second-hand car for £2,000 and expect the same level of quality and durability as you would if you bought it new for £15,000.
Standards for services
There are also certain standards that apply if you supply a service.
- You must carry out the service with reasonable skill and care or as agreed
- You are bound by the information you give to the consumer (verbally or in writing) – this includes quotations and any promises about timescales or results
- If you didn’t agree a price or a time for completion, the service must be provided at a reasonable price and completed within a reasonable time
B2C contracts under the act typically include a requirement that you, as the trader, must deliver the goods to the consumer within 30 days, unless agreed otherwise. The goods are your responsibility until they are with your buyer. Failure to stick to the rules means that a consumer may cancel the order and request a full refund.
What are remedies?
Remedies is the term used to cover the options open to the consumer when there are issues with the goods and/or service and therefore breaches of the implied terms under the Consumer Rights Act. In business-to-consumer situations this usually means that the consumer can:
- reject an item and claim a refund
- claim a repair or replacement for faulty goods
- claim either a partial or full refund instead if the goods are out of stock
These remedies vary according to how much time has passed since the goods were provided or the service was completed. For example, with regard to goods:
- In the initial 30 days after receipt of the goods the consumer has a “short-term” right to reject the goods if they are faulty. This means that they can, if they wish, request their money back in full.
- Once this 30 days has expired, the consumer’s remedy changes and generally speaking they can only request a repair or replacement of the faulty goods. The repair/replacement must be done within a reasonable time and at no cost to the consumer. The trader can refuse one of these remedies if it is disproportionately expensive compared to the other.
- If after at least one attempt at repair or replacement the goods are still faulty, the consumer has a “final right to reject”, meaning they are again entitled to ask for their money back. However in these circumstances the amount refunded can be reduced to take into account to amount of time the consumer has had the goods and the amount they have used them
What are the rules regarding risk?
As a trader, it’s important to know that the goods remain your risk until they come into the physical possession of either the consumer or a person identified by the consumer to take possession of the goods. If the goods are delivered to a carrier commissioned by the consumer (and not one offered by you) then risk passes to the consumer on delivery to that carrier.
Distance and doorstep selling
Traders should be aware that under separate laws the consumer has a “cooling off” period, that is to say a right to change their mind and cancel the contract in certain scenarios. These are:
- Distance contracts – when the contract is entered into exclusively by distance means (for example internet, telephone, mail order).
- Doorstep/Off-premises contracts – where the contract is entered into away from the trader’s premises – generally at the consumer’s home or place of work.
The consumer’s cooling off period is 14 days from either the date of the receipt of the goods, or from the date of the contract when the contract is to provide services. There are of course further nuances to these rules and advice should be sought where appropriate.
Brushing up on business law?
It can be difficult to keep track of the number of laws that surround the supply of goods and/or services and to ensure you don’t find yourself, and your business, on the wrong side of the law.
There is a huge amount of guidance including factsheets and precedent documents on the FSB Legal Hub, and members should of course be aware that they can always ring the 24/7 legal advice line whenever they encounter issues in this area.
Legal compliance is just a click away
With FSB Legal Hub, you’ll have legal documents at your fingertips. Search over 1,300 documents, templates, policies and more, on everything from tax to cyber security. Checked by real lawyers, fully compliant and easy to use.