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Consumer Law Update: New and Enhanced Consumer Protection Measures under the Consumer Rights Act 2022

On 29 November 2022, the eagerly anticipated Consumer Rights Act 2022 (the "Act") entered into force (with the exception of section 161, commencement of which will follow). The Act consolidates and updates 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. Its enactment marks a significant overhaul of Irish consumer law and a gargantuan step in adapting to meet the needs of today's tech-savvy consumer. Minister for State Robert Troy previously described the Act as the "biggest overhaul of consumer rights law in 40 years".

Background

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

  • The Digital Contents Directive (2019/770) on certain aspects concerning contracts for the supply of digital content and digital services;
  • The Revised Sale of Goods Directive (2019/771) on certain aspects concerning contracts for the sale of goods; and
  • The Omnibus Directive (2019/2161) on the better enforcement and modernisation of Union consumer protection rules. 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 Act 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.

Overview of the Act

The Act applies to all written and oral contracts, as well as combinations of both, between traders and consumers. It also applies to contracts implied by the conduct of the parties.  We have set out below some of the key provisions of the Act.

Part 2 of the Act – Sales Contracts

Part 2 of the Act transposes the Revised Sale of Goods Directive. This section applies to contracts for goods, including goods that have digital elements that are necessary for them to function properly.  It is important to note that it does not apply to supplies which fall under the scope of the Digital Content Directive as implemented in Part 3.

Interestingly, Section 13 of the Act allows for the Minister to make regulations to bring into scope any transactions by which consumers provide personal data to a trader instead of paying for the price of the goods under contracts for the sale of goods with digital elements.

The Act introduces 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.

Part 3 of the Act – Digital Content Contracts and Digital Service Contracts

Part 3 of the Act transposes the Digital Contents Directive. It 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 is 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 Act 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 Act, 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 Act 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 Act 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.

Part 4 of the Act – Service Contracts

This Part amends Part IV of the Sale of Goods and Supply of Services Act 1980 (non-digital services, in respect of consumers). One noteworthy change is brought about under section 94 of the Act. This provision stipulates that service contracts will no longer be permitted to exclude or restrict the trader's liability in relation to the following:

  • supply of service;
  • service to be in conformity with service contract;
  • subjective requirements for conformity with service contract;
  • objective requirements for conformity with service contract;   
  • implied terms of service contract; and
  • reasonable price to be paid for service.

A breach of this provision will constitute an offence. 

Part 5 of the Act – Consumer Information, Cancellation and Other Rights

This Part of the Act replaces the Consumer (Information and Cancellation Rights) Regulations 2013 (S.I. 484 of 2013) and implements a number of updates from the Omnibus Directive.  It deals with key aspects of consumer contract rights including:

  • information requirements for on-premises, off premises and distance contracts
  • the right to cancel and
  • inertia selling.

Part 6 of the Act: Unfair Terms in Consumer Contracts

The European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (S.I. 27 of 1995) are revoked and replaced by the provisions of Part 6 of the Act.

The Act reforms the previous 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. 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 Act 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 Act 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 Act expands the ‘grey list’ of consumer contract terms presumed unfair and introduces a ‘black list’ of terms that are always unfair. Examples of consumer contract terms that shall always be deemed unfair (subject to section 132 of the Act) include:

  • to exclude or limit the liability of a trader for the death of or personal injury to a consumer arising from an act or omission of the trader;
  • to require a consumer to pay for goods that have not been delivered or digital content, a digital service or a service that has not been supplied;
  • to grant the trader a shorter notice period to terminate the contract than the notice period required of the consumer; and
  • to exclude or hinder a consumer's right to take legal action or exercise a legal remedy.

Part 7 of the Act – Proceedings and Penalties

Part 7 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”) to ensure consumer rights are upheld.  The Act provides for new and reinforced powers of enforcement for failure by natural persons or bodies corporate to comply with its provisions including increased fines of up to 4% of turnover in the relevant Member State or Member States, or up to €2 million.

Jeremy Godfrey, Chairperson of the CCPC, previously remarked upon the "[strengthening of] 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”.

This Part also provides for penalties for a person who commits an offence under the Act and sets out a list of indicative and non-exhaustive criteria that a court shall take into account in sentencing. Provision is also made for offences by bodies corporate and the defence of due diligence. It also allows for compensation orders under circumstances where convicted traders are liable for loss or damage to consumers.

Next Steps

The Act's overarching impact 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 non-compliance with the Act. While the new rules are not vastly different from the previous consumer law rules and instead simply expand and consolidate them, the Act is nevertheless an important piece of legislation.  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.

While the Act provides important clarity and certainty, consumer-facing businesses must now ensure that their sales practices conform to these new stringent obligations or face significant penalties.