Digital content in the consumer world

The Consumer Rights Act 2015 (“the CRA“) came into effect on 1 October 2015 replacing three major pieces of consumer legislation – the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations, and the Supply of Goods and Services Act. The CRA was introduced to simplify, strengthen and modernise the law with the aim of giving the consumer clearer rights.

The Act is divided into three parts:

1. Part 1 deals with consumer contracts for goods, digital content and services.
2. Part 2 deals with unfair terms.
3. Part 3 contains miscellaneous provisions including new enforcement powers.

Despite its intention to consolidate consumer legislation, there are still a number of pieces of legislation and regulations that have to be read in conjunction with the CRA to achieve a full picture of consumer rights.

One of the primary objectives of the CRA was to protect consumers against unfair contract terms and notices. Over three years on since its inception, the impact of the CRA has not been as significant an overhaul in the legal world as expected. This could be because businesses are treating consumers fairly but it is more likely that consumers are unlikely to be fully aware of their rights under the CRA or if they are, they are unwilling to pursue them given the uncertainty of costs and process involved.

The introduction of the CRA also brought a necessary update to consumer law on digital content due to the ever increasing shopping in the digital world and the downloading of materials.

Digital content – what’s new?

The provisions in the CRA are the first time that consumers have clear legal rights for digital content. In particular, the CRA allows consumers the right to repair or replace faulty digital content such as online films, games, music downloads and e-books.

The distinction between ‘goods’ and ‘digital content’ was considered by the Court of Appeal in Computer Associates UK Ltd v The Software Incubator Ltd [2018] EWCA Civ 518. The Court of Appeal held (reversing the judgment of HHJ Waksman QC at first instance) that the supply of software in the form of a download is not a ‘sale of goods’ for the purposes of the Commercial Agents (Council Directive) Regulations 1993 (“the Regulations“). The Court of Appeal found that it was impermissible to interpret “goods” beyond its ordinary, commercial meaning and therefore as Computer Associates only provided the software electronically (no tangible media was ever provided) it was not correct to pursue a claim under the Regulations because they only apply to an agreement if the agent was authorised to negotiate or conclude “the sale or purchase of goods” on behalf of the principal.

Gloster LJ noted that the CRA has come up with a new concept of ‘digital content’ rather than extending the definition of ‘goods’ to include software. Within the judgment Gloster LJ commented that ‘this court cannot simply ignore the weight of judicial authority that supports maintaining the tangible/intangible distinction’.

It is therefore important that where digital content is being considered the relevant legislation and regulations are referred to.

What quality standards on digital content can the consumer expect?

• Satisfactory quality – there are three factors to consider when deciding whether the content is satisfactory:
  (a) any description provided;
  (b) the price paid; and
  (c) other relevant circumstances (including advertising and labelling).
• Fit for particular purpose.
• As described.

What remedies relating to digital content can the consumer expect under the CRA?

• Repair or replacement – must be done within a reasonable time and without significance inconvenience to the consumer. This is a consumer’s first step.
• Reduction in price – only available if neither repair nor replacement is possible or they are not carried out within a reasonable time.
• Repair of damage – if damage is caused to the consumer’s device, the consumer is entitled to have the damage repaired or financial compensation.
• Limited automatic refund right – the consumer is entitled to a full refund if the trader has no right to supply the digital content; this may be difficult to enforce in practice.

If a complaint is received, what should a company do?

• Review its cancellation, returns and complaints handling policies.
• Review the time in which the complaint has been made.
• Consider each complaint individually.
• Be aware of the different remedies available for digital content.
• Deal with the compliant within a timely manner.

Summary

Digital content is still a relatively new area of law which is advancing rapidly and there will be some ambiguity on the law which will be developed over the years through case law. Businesses will therefore need to approach the law in a logical manner where there may be gaps and apply a common sense approach whilst case law in the meantime seeking specialist legal advice where necessary.