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How the Consumer Rights Act will affect the digital industry

Consumer legislation has been updated to take into account the unique nature of digital content – but what does it mean for technology suppliers?

On 1 October 2015, the Consumer Rights Act came into force in the UK, and for the first time the law now includes guidance on IT and digital content. The new act was created to make rules easier and clearer to understand and limit the number of disputes, but how will it affect technology companies and what do they need to do to ensure they meet the new guidelines and not be vulnerable to claims?

In the past, there has always been an element of legal uncertainty surrounding the rights of customers in relation to digital content, for both consumers and businesses. This is particularly the case for the law surrounding tangible media, such as software or music provided via a download or content streamed to a device.

Under the new guidelines, the act will give consumers buying digital content the same rights as if they were buying physical goods – this will affect digital and IT companies as they will need to ensure the terms and conditions they provide to consumers reflect those required by law.

Digital content is now a new category of product

Digital content now also includes data which is produced and supplied in digital form, including forms of intangible digital content, such as computer games, virtual items purchased within computer games, television programmes, films and books.

Digital content is treated similarly to goods – a consumer buying digital content now has the same rights as if buying goods, regardless of the way in which it is supplied. All items must be of a satisfactory quality and fit for purpose. If the digital content supplied does not comply with this, a consumer will have a statutory right to request a repair or replacement and, if a repair or replacement is not possible or is not properly carried out, the consumer will be entitled to a price reduction – which may be 100% of the price charged.

Certain rules also apply to digital content supplied on tangible media. However, it will be the digital content standards that are applicable to tangible media, which differ from standards associated with conventional goods.

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Whereas a consumer may reject physical goods in certain situations, there are no rights to reject digital content and receive a refund of the price and no corresponding obligations on the consumer to return or delete digital content.

The quality standards and statutory remedies of repair, replacement and price reduction only apply where the digital content is paid for, whether directly or indirectly.

Wherever digital content is provided under a contract, even where it is provided free of charge, the trader will be liable for any damage the digital content causes to any device or other digital content.

The act no longer protects businesses – only an individual will be classed as a consumer. However, a person can still benefit from consumer protection if they made a consumer purchase but had used this in a limited way for the business’s benefit.

Need to change processes

These changes demonstrate how any companies working in the digital industry will need to change their processes. They must review their current terms and conditions (T&Cs) and communications with customers. Even if these are T&Cs which govern the use of the website, if the business sells digital content online or makes digital content available free in conjunction with paid products, these will need to be reviewed to ensure they are updated in line with remedies available to consumers.

Technology suppliers will need to change their contracts with consumers or their standard T&Cs so they are updated with current legislation. In particular, they will need to ensure any T&Cs specifically state that goods will be of satisfactory quality, fit for purpose, include the traders right to supply and will comply with description. Suppliers must ensure specific remedies are implemented and they are able to introduce these easily in their current infrastructure.

Businesses will also need to ensure any pre-contract information provided to customers complies with the new legislation – this will include any adverts and communications. For example, if businesses state no refunds are allowed in the small print of an advert in relation to the supply of digital content.

Finally, training will be required to ensure all staff are aware of the changes and the effects they will have on the business. It is important to ensure training is given to avoid any unnecessary disputes with consumers in the future.

With the rise in popularity for digital products, the new Consumer Rights Act is a necessary measure to ensure both the trader and consumer know their rights and to ensure any disputes that do arise can be resolved quickly and efficiently.

Jasnoop Cheema,Greenaway Scott

Jasnoop Cheema is a commercial associate at corporate commercial law firm Greenaway Scott.

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