In October 2015, the Consumer Rights Act came into effect. The act outlines certain rights that every consumer now has when buying products and services in the UK.
It’s important for small business owners to understand the act, what it means, and how to stay compliant to ensure they’re not infringing on any of their customer’s rights.
In this guide, we’ll be going over the specifics of the Consumer Rights Act, including:
- What is the consumer rights act?
- Who’s protected under the consumer rights act?
- Why small businesses should care about the consumer rights act.
- When does the consumer rights act not apply?
Understanding consumer rights is an essential part of starting a business to prevent any nasty surprises. Check out some of our other articles for more information on what to expect when starting a business.
What is the consumer rights act?
The act outlines the obligations that all businesses have to their customers when trading with them.
Specifically, the act says that any products you sell need to:
- Be of satisfactory quality.
- Be fit for purpose.
- Match the description.
- Be installed correctly (if you’ve agreed to install the product as part of the sale).
If you sell a product that breaks any of these rules, a customer has the right to a refund, repair, or replacement. For example, if the product is broken, poorly made, or installed incorrectly (or not at all).
Similarly, if the customer was misled about the product from the way it was advertised, the customer can take action under the consumer rights act.
Who’s protected under the consumer rights act?
Rather than businesses and customers, The Consumer Rights Act refers explicitly to “traders” and “consumers”.
If you’re doing anything related to your business, you’re counted as a trader. So basically, any time you’re carrying out business operations as a limited company, charity, sole-trader, or trading organisation.
On the other hand, a consumer counts as anybody dealing with a trader as a private individual. This typically refers to customers and clients paying for your products or services.
Although, if you’re buying on behalf of a business, you’re not technically a consumer, so you won’t be protected under the consumer protection act. So, for example, any business-to-business (B2B) deals aren’t protected.
In practical terms, the legislation applies whenever a consumer does business with a trader.
As soon as money swaps hands, an unwritten contract is formed between the two parties and the consumer is officially protected under the act.
What action is required under the consumer rights act?
As we mentioned above, the Consumer Rights Act sets specific requirements for products sold by a trader. If the product doesn’t meet those requirements, the consumer is entitled to a refund, repair, or replacement.
But what does that mean in real terms?
For 30 days after the sale, the consumer can reject the product if it doesn’t meet the requirements outlined by the Consumer Rights Act. If they’re right to reject the product, they’re entitled to a full refund.
After that, the trader then has to give a refund within 14 days, usually asking for some kind of proof of purchase.
If the consumer waits until 30 days after the initial purchase, the trader isn’t legally required to refund them. Instead, the trader is only required to repair or replace the item. This only counts for up to six months after the initial purchase.
The repair or replacement has to be free and completed in a reasonable amount of time. If the repairs or replacement takes too long or doesn’t work, then the consumer can:
- Ask for further repairs.
- Ask for another replacement.
- Ask for a price reduction.
- Ask for a refund.
Finally, if the consumer has suffered other problems because of the faulty products, like property damage, they’re allowed to claim additional compensation (sometimes called “damages”).
To claim damages as a consumer, you can ask the trader directly, claim on your insurance (but this will drive up your payments), or take legal action.
If the trader ignores your complaint, but you don’t want to take them to court, you can contact the citizen’s advice bureau for guidance.
Why small businesses should care about the consumer rights act
As a business, understanding the Consumer Rights Act is important for two main reasons:
- It’s better for your customers. You’ll know exactly what they’re entitled to, and how to help them resolve their issues so they have the best possible customer experience.
- It’s better for your business. You’ll know exactly what your legal obligations are if you receive a complaint.
In short, it’s better from both a customer service and a legal perspective.
When does the consumer rights act not apply?
Although the Consumer Rights Act is mainly for protecting customers, it’s important to know when they’re not entitled to any kind of refund or compensation.
A consumer isn’t protected under the act in these circumstances:
- If the consumer was made aware of the problems with the product before the sale.
- If the consumer has damaged the product themselves.
- If the consumer has just changed their minds about wanting the product.
- If the product is unsuitable for a purpose that it isn’t really meant for.
- If the product is damaged because of normal wear and tear.
These are circumstances in which a business isn’t legally required to take any action. A lot of businesses provide more relaxed return policies to increase customer loyalty.
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