Consumer Rights Act 2015 – new protections for consumers in the digital environment

Importantly, the CRA has addressed some of the previous uncertainty regarding consumer rights in relation to digital content. In this context “digital content” means data which is produced or supplied in digital form and includes software, apps, games, music and videos, whether or not provided via download, streamed or supplied on some other tangible device. Recognising digital content as a new category of product, the CRA clarifies that in purchasing digital content, a consumer acquires, as far as possible, the same rights as if purchasing physical goods.

Quality standards

Perhaps the most significant impact of the CRA will be the introduction of a set of terms into every digital content contract, imposing quality standards which cannot be excluded.

These terms require that the digital content must be:

• of satisfactory quality (for example, free from minor defects, safe and durable);
• fit for a particular purpose (if the consumer makes it known to the supplier); and
• as described.

These standards will apply to all future updates and modifications made to the digital content.

Pre-contract information (which the supplier is required to provide to consumers in relation to the main characteristics of the digital content, its functionality and compatibility) will also be deemed incorporated into the contract.

New consumer remedies

Where the digital content fails to comply with these new quality standards, the CRA offers consumers corresponding remedies of repair, replacement and price reduction (where the content has been paid for). These are additional to consumers’ existing rights and remedies, for example, under contract law.

However, there is no right to reject the digital content, in the same way that a consumer might be able to reject physical goods, and no right to a refund (except in very limited circumstances). This has been a contentious point, with some commentators considering that this reduces the incentive for suppliers to supply fault-free content in the first place.

Supplier liability

Under the CRA, suppliers of digital content cannot exclude or limit their liability for any breach of the quality standards.

Even when the digital content has been supplied for free, the CRA imposes liability on a supplier of defective content that causes damage to a device or to other digital content (for example, the introduction of a virus). In such circumstances, where the consumer can show that the supplier did not exercise reasonable care and skill, the consumer is entitled to claim compensation from the supplier for such damage.

What is the likely impact?

The scope of the CRA is broad and likely to affect most businesses involved in the supply of goods, services and/or digital content. Suppliers of digital content will be particularly concerned about their liability for damage caused by their content. It will be hard to estimate the potential financial exposure of this liability in advance, which could be enough to put off start-ups from offering free content and taking on this risk.

The timetable for the implementation of the CRA has not yet been finalised, though it is expected that the majority of its provisions will be in force by 1 October this year. Ahead of this, all suppliers of digital content should review their consumer contracts and consider any necessary amendments to their supply contracts and cancellation/returns policies in order to ensure compliance with the new rules.

Sophia Costley

Information contained in this post does not constitute legal advice and is provided for informational purposes only. Recipients should not act upon it, but should seek legal advice relevant to their own situation.