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The Consumer Rights Act, which comes into force on 1 October, will provide increased statutory protection to purchasers of digital content – which is a new classification of product – and could draw more custom away from the high street.
However, for businesses to fully exploit this opportunity and reap the associated reputational rewards, they must act now to review and amend their terms and conditions to ensure compliance with the new legislation.
Under the Act, individuals will be entitled to a free repair or replacement if quality standards are not met. So, for any faulty digital content, if repair or replacement is impossible or is not carried out within a reasonable time, the individual can ask for a price reduction. And if the digital content itself damages an individual’s device or other digital content, he or she can claim compensation.
Digital content spans any data that is produced and supplied in digital form. It includes the intangible – movie streams, music downloads, e-books, apps, software – as well as content that is supplied in tangible form – DVDs, CDs. The Act is designed to make consumer law clearer and easier to understand and, as such, states that contracts must be transparent and fair, two key areas of action for retailers.
A contract’s transparency relies on the assumption that it can be easily read and digested by the average consumer. To achieve this, contracts must not use legal jargon but be written in layman’s terms.
To ensure compliance, firms should consider holding focus groups with consumers to gauge their ability to comprehend the language and its implications. The contract must also be deemed ‘fair’, a provision that relies on a number of factors, including the assurance that consumers are given a reasonable amount of time to return a faulty product (30 days if the digital content was sold in a tangible form, such as on a CD) and that key clauses are in plain sight, not hidden in the small print.
Any contract must be comprehensible and put the individual into a position where they can understand the significance of the clauses.
Although the law dictates that these new rules should apply to all new contracts entered into after 1 October 2015, firms should also work to tweak existing terms of business. This hinges on their ability to not only include new consumer protective measures, but also to remove previous clauses that may no longer comply with the Act.
For distributors and sellers of digital content, the Consumer Rights Act presents a huge opportunity for growth. Previously, purchasers of ‘intangible content’ were subject to an inferior degree of legal protection, but this discrepancy is corrected by the new legislation. By implementing superior safeguards for their customers, firms can improve the perceptions of, and trust associated with, creators of digital content.
Businesses that comply with the Consumer Rights Act can work to gain a competitive advantage, and draw potential customers who were previously wary of online retailers away from the high street.
The Act also gives regulators the power to squeeze unscrupulous traders out of the market. Investigation and, ultimately, criminal sanctions await those who fail to comply.
Steven Skiba is partner and litigation specialist at law firm Shakespeare Martineau