What Business Owners and traders need to know about the Consumer Rights Act 2022

The Consumer Rights Act 2022 (the Act) was signed into law by the President on 7 November 2022 and came into effect on 29 November 2022. The Act updates and consolidates consumer rights law and transposes certain EU Directives into Irish law, in particular the Digital Content Directive, giving additional rights to consumers when they purchase digital content and digital services.

Overview of the Act

The Act makes widespread changes to consumer protection law and introduces additional obligations on traders selling to consumers. The Act will also strengthen remedies for consumers and increase penalties for traders if they breach the law. The Act applies to all written and oral contracts, and also to contracts implied by law.

The Act amends the definition of a “consumer” to mean an individual who is acting for purposes that are “wholly or mainly outside the person’s trade, business, craft or profession.” The “wholly or mainly” requirement is new and deals with a situation where the contract is concluded for purposes partly within and partly outside the person’s trade. If the trade purpose is not predominant, the person can be considered a consumer and avail of the rights under the Act. Some of the changes traders and consumers should be aware of include the following:

1. Goods: Goods must conform with objective and subjective requirements in the Act, that is be fit for purposes for which goods of the type would normally be used, be delivered with any necessary accessories, installation instructions, correspond with any sample provided and possess qualities normal for that type of goods.

2. Clear Terms: The Act strengthens the requirements as to consumer contracts being in clear language – onerous terms must be brought to the consumer’s attention and the financial terms must be clearly understandable.

3. Commercial Guarantees: The pre-existing requirement that guarantees are written in plain and intelligible language is repeated and there is a new requirement that the language used in any guarantee must be concise. (These requirements also apply to commercial guarantees given with hire purchase agreements). An important change in the Act is that traders will be liable for commercial guarantees provided by other guarantors unless they expressly indicate the contrary or they give their own guarantee.

4. Greater right of redress: If a business cannot or will not provide a repair or replacement for a faulty good or service purchased by a consumer, the consumer will now have the right to seek a reduction in price, to withhold payment for goods or services which have not been fully paid for, or to cancel the contract and receive a full refund from the business. Any redress must be free of charge. Also, where a consumer buys and gifts goods, the recipient of the goods will be entitled to exercise all rights of the purchasing consumer under the Act.

5. Exclusion of Liability: The prohibition on traders excluding or limiting their liability in respect of certain statutory obligations is further extended in the Act. For example, where a trader has an obligation under the Act to deliver goods under a sales contract they cannot limit or exclude their liability.

6. Unfair Terms: Any term is unfair if contrary to good faith it causes an imbalance in the parties’ rights to the detriment of the consumer. The Act enhances the non-exhaustive list of contractual terms which will be presumed to be unfair terms (grey list) and extends the list of terms that are automatically prohibited (blacklist).

7. Reviews: The Act prohibits fake reviews by consumers, and places obligations on traders to ensure any reviews posted on their website come from verified and real consumers. Traders will need to demonstrate the reasonable and proportionate measures they have taken to ensure that their customer reviews are authentic. This can only be welcomed.

8. Digital Content: There are also new protections in relation to digital content – audio and video files and computer games – and digital services, such as streaming services, cloud computing and social media. These include the right to a full refund, exchange, or repair when a good or service is not as described, or not fit for purpose. Traders must notify consumers of the availability of and supply necessary updates to ensure digital content and services conforms with the contract, and must inform the consumer of the consequences of failure to install any update.

9. Enforcement Powers: Under the Act increased powers have been given to the Competition and Consumer Protection Commission (CCPC). These powers will enable the CCPC to apply for court declarations and injunctions against traders and businesses who mislead their consumers.

10. Penalties: Under the Act increased penalties for breaches of consumer legislation are introduced. Fines payable by traders and businesses not exceeding 4% of annual turnover in the relevant Member State or Member States or €2 million where such turnover information is not available may be imposed.

If you are a trader or business and you sell to consumers what you should do:

• Review Terms and Conditions: Your terms and conditions may require amending to comply with the Act. The use of unfair terms may lead to certain terms being unenforceable against consumers. Further, statements in which consumers rights are being restricted unlawfully, may lead to criminal prosecution against both businesses and directors and officers of a company.

• Review Practices and Processes: Review internal processes to ensure compliance with the Act, particularly in relation to after sales processes (for example ensure updates are provided as are necessary to maintain goods), and redress processes in the event of faulty or damaged goods. Consider enhanced verification to ensure that any product reviews on your website are genuine.

• Insurance Cover: Investigations under the Act have the potential to be lengthy and more costly than investigations under previous comparable legislation, traders should ensure they have adequate insurance in the event of having to make a claim. A discussion with your insurance broker may be advisable.

Conclusion

The Act substantially amends Irish consumer law, imposes increased obligations on traders and businesses while the penalties for contravention of the Act have increased significantly.  Businesses operating in Ireland are strongly recommended to review the operation of the Act and identify any changes to their business that may be needed to ensure compliance with the Act.

If you have any questions about the Act or this article please do not hesitate to contact roisin.caulfield@whitneymoore.ie, or michael.coleman@whitneymoore.ie or your usual Whitney Moore contact.