Consumer Law & Consumer Regulation

Consumer legislation generally defines:

• A ‘consumer’ as an individual acting for purposes which are wholly or mainly outside of their trade, business, craft or profession
• A ‘trader’ as a person (individual or legal entity) acting for purposes relating to their business, craft, or profession.

Understanding whether your customers are (or for new businesses, will be) consumers or businesses, or a mix of the two, is important because it can significantly affect your:

• Legal obligations
• Customer contracts
• Pricing structures and cancellation rights
• Overall risk exposure

UK law provides consumers with a greater level of protection than business customers. These protections:

• Cannot generally be waived by the consumer or avoided by the business
• Impose stricter standards for fairness and transparency.

This means you have more responsibilities when dealing with consumers.

When a business is contracting with consumers, the focus should be on ensuring your terms of sale are:

• Transparent – clear, legible and easy to understand
• Fair – they should not alter the balance of rights and obligations the consumer has by law

This means consumer contract terms are:

• Generally shorter
• Written in simple language
• Do not cover many of the issues typically addressed in business-to-business contracts

Consumer law in the UK:

• Implies rights and remedies into contracts for goods, services and digital content
• Requires certain pre-contract information to be provided (much of which automatically becomes a contract term)
• Provides a cooling off period and cancellation rights for certain distance and off-premises contracts
• Prohibits misleading and aggressive sales practices

Generally, the trader cannot contract out of its obligations under consumer law or exclude or limit its liability for their breach.

Traders must not mislead consumers about their rights and terms which attempt to do so will be unenforceable and their use may in itself be a breach of consumer protection law.

Yes, but it’s useful to differentiate the two so that you can include additional terms which only apply to business customers and make clear that certain terms (e.g. cooling off and cancellation rights) only apply to consumers, otherwise you risk giving additional rights and remedies to business customers when you do not have to.

Consumer rights vary depending on how and where the contract is made, for example:

• In-store
• Distance selling (e.g. contracts made online, by phone and by email)
• Off-premises (i.e. a contract made away from the trader’s business premises, e.g. at the consumer’s home)

This affects:

• Pre-contract information requirements
• Cancellation rights

Consumers are entitled to a refund if goods are:

• Faulty
• Not as described
• Not fit for purpose

Different rules apply depending on how the sale is made. If distance selling rules apply, consumers may also be entitled to a refund if they change their mind within 14 days of the contract being made.

Businesses must not:

• Mislead consumers about their rights
• Suggest that rights (such as refunds) do not exist when they do

There are certain items where you only have to offer a refund if they are faulty (and not where the consumer has just changed their mind), such as personalised or custom-made items, perishable items and sealed items that for health or hygiene reasons cannot be returned once they have been opened.

In the UK, consumer law is enforced at a national level by the Competition and Markets Authority (CMA) and at a local level by Trading Standards. The Advertising Standards Authority (ASA) deals with misleading advertising and marketing practices and there are sector specific regulators such as Financial Conduct Authority (FCA).