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Consumer Law Update: New and Enhanced Consumer Protection Measures en-route following Publication of Consumer Rights Bill 2022

On 22 April 2022, the Irish Government published the eagerly anticipated Consumer Rights Bill 2022, (the “Bill”). It aims to consolidate and update existing consumer protection laws that regulate consumer contracts, as well as introducing new and enhanced consumer protection measures, particularly in the area of digital goods and services.  Publication of this Bill, which looks to revamp the entire consumer law framework, is a gargantuan step towards modernisation of Irish consumer law, and in meeting the needs of today’s tech-savvy consumer.  Minister of State Robert Troy has described its publication as “the biggest overhaul of consumer rights law in 40 years”.

Overview

The primary purpose of the Bill is to align Irish consumer law more closely with our European counterparts by giving effect to a number of pan-European consumer rights Directives, including, inter alia, the following:

  • Directive 2019/770 on certain aspects concerning contracts for the supply of digital content and digital services (the “Digital Contents Directive”);
  • Directive 2019/771 on certain aspects concerning contracts for the sale of goods (the “Revised Sale of Goods Directive”); and
  • The main provisions of Directive 2019/2161 on the better enforcement and modernisation of Union consumer protection rules (the “Omnibus Directive”).  This Directive itself amends the Unfair Contracts Terms Directive 93/13/EEC; the Unfair Commercial Practices Directive  2005/29/EC; the Consumer Rights Directive 2011/83/EU, and the Price Indication Directive 98/6/EC.

The Bill also overhauls the current Irish regulatory framework by repealing and providing amendments to several existing pieces of Irish legislation, collating all existing provisions together in a single enactment. 

Primary Changes under the Bill

There exists a number of notable changes under the Bill, and we set out an example of these below:

(1) Digital Contents Directive:

The Digital Content Directive aims to harmonise certain key rules on the supply of digital content and digital services. The Digital Content Directive applies to any contract where a trader supplies digital content or digital services to the consumer, and the consumer pays or undertakes to pay a price. It also applies when the consumer does not pay a price but provides or undertakes to provide personal data to the trader, unless the personal data provided are only processed for the purpose of supplying the digital content or digital service or for the trader to comply with legal requirements.

Consumer contracts for the supply of digital content and digital services have not previously been the subject of specific statutory regulation. Thus, digital content supplied in intangible form, through downloads, streaming, cloud products, or other means was left unregulated from a consumer contracts’ perspective.  The Bill revises this position by establishing the safeguards set out below.

Safeguards

Right to Supply – Where a digital content or digital service is to be supplied under a digital content or a digital service contract, the trader will ensure that he has the right to supply to the consumer at the time of supply. The consumer has the right to terminate a digital content or digital service contract where the trader does not have the right to supply such content or service.

Subjective Requirements for Conformity – The digital content or service which is supplied under a digital content / service contract must conform, in particular, in regard to “quantity, quality, functionality, interoperability; be fit for the agreed purpose, installed and updated as specified in the contract.  Where a digital content / service contract provides for a “continuous supply” for a period specified in the contract, compliance as to the above conformity must be for the entirety of that period.

Objective Requirements for Conformity – Unless otherwise agreed, the digital content or service must be supplied in the most recent version available. A trader must ensure that the consumer is informed of and supplied with any updates, including security updates, that are necessary to keep the digital content or digital service in conformity with the contract for the relevant specified period. Where there is a lack of conformity, the consumer has the right to have it brought into conformity with the terms of the contract only if this does not impose disproportionate costs on the trader. The trader must bring the digital content or digital service into conformity with the contract: (i) free of charge; (ii) within a reasonable time; and (iii) without any significant inconvenience to the consumer.  The burden of proof as to conformity rests, in most instances, with the trader.

Termination Rights

The consumer is also afforded robust termination rights that cover a number of instances, including:

(i) Where a trader fails to supply the digital content or digital service (including following a direct request of the consumer to do so without undue delay), the consumer will have a right to terminate the contract;

(ii) In circumstances where the trader has failed to bring the digital content or digital service into conformity or refuses to do so (either within a reasonable timeframe or without inconvenience to the consumer), then the consumer will have an immediate right to a price reduction or termination of the contract. However, the lack of conformity must be of sufficient seriousness to justify termination of the contract.  Where the digital content or digital service is supplied other than for payment of the price of the content / service, the consumer will have the right to terminate the contract only; and

(iii) A consumer has the right to terminate a digital content or digital service contract in instances where the original contract has been modified to such an extent that it affects access/use by the consumer (modification must not be minor and termination must occur within 30 days of modification occurring or knowledge of same).

Under the Bill, a consumer is given a general right to withhold any outstanding part of payment to the trader until the trader’s obligations are fulfilled. The price withheld by the consumer should be proportionate to the decrease in value of the digital content or digital supply that does not conform with the contract. The consumer’s decision to withhold payment must be expressed in a statement to the trader.

Redress Options

In addition, the Irish consumer is afforded a robust network of redress options as part of their newly found digital rights including a right to a full refund, exchange or repair when the digital content or digital service contract is not as described, or fit for the purpose intended.  Where the trader is liable to the consumer due to any failure to supply or lack of conformity of the digital content or digital service with the digital content or digital service contract, the Bill provides that a consumer may pursue remedies against the person liable for the failure or lack of conformity. In line with the Statute of Limitations 1957 which provides a six-year period for contract claims, the Bill provides consumers with a six-year statutory time limit to take an action against a trader for any failure to supply or for lack of conformity.

(2)   Revised Sale of Goods Directive

The Revised Sale of Goods Directive applies to contracts for the sale of goods, including goods with digital elements. The Revised Sale of Goods Directive is intended to complement the Digital Content Directive.

Part 2 of the Bill, Sales Contracts, deals with transposition of the Revised Sale of Goods Directive, and seeks to introduce enhanced rights and remedies in consumer contracts for the sale of goods. The majority of the protections afforded to consumers vis-á-vis digital content / service contracts are also applicable in this context, however, there are some notable additions including:

  • Recipients of Gifts – Rights and remedies that apply to the consumer, who is party to the sales contract, will also apply to another consumer who is given the goods as a gift under the sales contract.
  • Passing of Risk – Where a sales contract is concluded between a trader and a consumer, the goods remain at the trader’s risk until the consumer acquires physical possession of the goods (unless given to a carrier commissioned by the consumer in the first instance). 
  • Commercial Guarantees – A trader will be liable for a commercial guarantee to a consumer that was provided by another guarantor unless the contrary is expressed by the trader (a trader will not be liable in circumstances where he gives his own explicit commercial guarantee).  Further to this, where the goods are acquired by another consumer and the guarantee subsists during this timeframe, the benefits of the guarantee will apply to that consumer against the guarantor or the trader.
  • Delivery of Goods / Instalment Deliveries – Unless otherwise agreed, the trader must deliver the goods by transferring physical control of the goods to the consumer not later than 30 days after concluding the contract.  If delivery of the goods is refused or they are not delivered within the agreed period, the consumer will have the right to terminate the contract.  However, the consumer must afford the trader “appropriate additional time for delivery” prior to taking this step.  In addition, the consumer may arrange for termination of the contract if a delivery of goods does not conform to the contract regarding instalments. This right only applies to goods delivered in non-conforming instalments, with the consumer only entitled to the proportion of goods delivered which were non-conforming.

(3)   Omnibus Directive

It is envisaged that the Bill’s transposition of the Omnibus Directive will bring about the most substantive change in favour of the Irish consumer. 

Revision of unfair terms in consumer contracts legislation

The Bill seeks to revise the current unfair terms in consumer contracts’ legislation by:

(i) Strengthening the transparency requirements that apply to contract terms – a trader must ensure that the terms of a consumer contract are transparent.  In this regard, they must meet several conditions, such as:

a. plain language;

b. presented clearly;

c. made easily available;

d. any novel terms are brought to the consumer’s attention;

e. the financial consequences of the terms are understandable; and

f. and it complies with other prescribed requirements.

As in most cases, in the event of a dispute as to the satisfaction of these requirements, the burden of proof rests with the trader.

(ii) Narrowing the exemption from assessment for unfairness of core contract terms –  a term is excluded from assessment for unfairness only if it complies with the transparency requirements mentioned above.

(iii) Extending the scope of the unfair terms provisions the Bill provides that an unfair term of a consumer contract is not binding on the consumer. However, this does not prevent the consumer from relying on the unfair term if they so choose and if the contract can continue in existence without the unfair term, it will continue to be binding on the parties.  The Bill further extends the meaning of an “unfair” term to constitute a “significant imbalance in the parties’ rights and obligations to the detriment of the consumer”.

(iv) Expansion of contract terms presumed to be / deemed automatically unfair – the Bill expands the ‘grey list’ of consumer contract terms presumed unfair and introduces a ‘blacklist’ of terms that are automatically unfair. 

Enhanced Enforcement Powers

The Omnibus Directive, through the implementing Bill, further amends the Consumer Protection Act 2007 to provide enhanced enforcement powers by the Competition and Consumer Protection Commission (“CCPC”), and the Commission for Communications Regulation (“ComReg”). Enforcement powers include increased penalties for breaches of the laws of up to 4% of turnover in the relevant Member State or Member States, or up to €2 million.

Commenting on the Publication of the Bill, Jeremy Godfrey, Chairperson of the CCPC, observed that the Bill “strengthens the CCPC’s enforcement powers when businesses engage in misleading, aggressive and other non-compliant practices”, and that the CCPC “look forward to empowering consumers with information about their newly strengthened consumer rights. and to assisting the business community to understand their new obligations so they can make sure they comply with the law”.

Next Steps

The overarching effect of the Bill’s enactment is that consumer-facing businesses must comply with an array of enhanced statutory protections for consumers, and will be subject to harsher penalties and regulatory enforcement in the event of failure to comply with the Bill’s provisions. Technology and communications / telecoms businesses face a particular challenge due to the pending implementation of the European Electronic Communications Code, which seeks to incorporate new rules which also share a similar ‘consumer-first’ focus.

In this regard, consumer-facing businesses must begin to proactively align their sales practices with these enhanced protections, to ensure continued compliance.  The Bill has completed the First Stage of Dáil Eireann, and now must proceed through the additional stages of the legislative process.  The legislation is overdue, as the national measures necessary to comply with the underlying Digital contents Directive and Revised Sale of Goods Directive were due to be in force by 1 January 2022. The Omnibus Directive is due to be transposed and in force by 28 May 2022. There may therefore be a short-window of opportunity for Irish traders to put in place appropriate compliance measures prior to enactment of the Bill.