14 December 2020
Radar - December 2020 – 2 of 8 Insights
The EU has made a lot of progress on consumer protection in the last year but the legislation it passed at the end of 2019 and in early 2020 will not apply in the UK and UK businesses will not need to make changes when selling to consumers in the UK. The UK will, however, now be faced with a decision – how far to emulate the EU and make cross-border consumer sales easier continuing beyond the end of the Brexit transition period. Either way, as the law develops, UK businesses selling to consumers in the EEA will need to make any required changes to their terms and conditions and business practices.
The Draft Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018, made under the Withdrawal Act and subsequent statutory instruments, broadly make the following changes to existing domestic laws:
The changes are minor and at most, require limited changes to terms and conditions. Essentials of consumer protection law in the UK will not change as a result of Brexit. Immediately after 31 December 2020, UK consumers buying from UK businesses will have the same rights as previously and the CMA will have the same enforcement powers regarding domestic transactions. The law will remain the same but the Supreme Court and Court of Appeal (and equivalent level courts in the devolved administrations) will be able to depart from existing CJEU judgments subject to applying the same tests they would be required to apply in order to depart from their own previous decisions.
UK businesses directing their activities to EU consumers must comply with UK law at a minimum but may face enforcement locally if they fail to comply with local national consumer protection law which will largely reflect EU-level law.
Inevitably, COVID-19 had an impact on consumer protection issues, particularly in respect of cancellations and refunds. The CMA launched an investigation into complaints about refunds as part of a programme of work and we reported on its statement on COVID-related refunds in May, and on its updated views in September.
We also covered the impact of COVID on supply chains and on consumer protection in April. For more on data privacy issues raised by the pandemic, see the data privacy section and see here for our full range of articles on the impact of COVID-19.
CMA investigation into misleading online reviews
The CMA has launched an investigation into misleading online reviews on major websites. It will look at whether sufficient measures are being taken to protect consumers and how the websites currently detect, investigate and respond to fake and misleading reviews. While there are no allegations that any website has acted illegally, the CMA wants to ensure they have robust systems in place.
Law Commission consultation on ownership of goods rules
In July, the Law Commission published a consultation paper on proposed draft legislation to modernise the rules on when consumers acquire ownership of goods under sales contracts. It considers the current rules are outdated and do not take sufficient account of transactions carried out online where goods are paid for in advance. If adopted, the draft Bill would take effect as an amendment to the Consumer Rights Act 2015.
CMA supplementary note on transparency in consumer enforcement cases
The CMA published the outcome of its August consultation on when it should publicly name parties being investigated for consumer law breaches. The CMA concludes that it will now be standard practice to name parties when an investigation is announced and when issuing a consultation letter. It will be clear that no assumption should be made as to guilt of the named party and any decision not to proceed further with an investigation will be announced publicly.
CJEU looks at duty of court to assess fairness of consumer terms of its own motion
In March, the CJEU held that national courts must assess the applicability of certain consumer law (including the Unfair Contract Terms Directive or UCTD), even if the parties have not raised the issue. In the UK, this issue is addressed under s71 CRA which provides that where there are proceedings before a court which relate to a term of a consumer contract, the UK courts must consider whether the term is fair even if none of the parties to the proceedings has raised the issue or said they intend to raise it. It is unclear whether this requires the UK courts to consider the fairness of undisputed terms but it does go further than the UCTD as interpreted by the CJEU in this case. Similar issues were looked at again in November in a Romanian reference. The CJEU said the courts could can facilitate negotiations by the parties of substitute terms (which the parties have always been free to agree) and confirmed these would also be assessable for fairness.
CJEU ruling on exemption from fairness test under the Unfair Contract Terms Directive for national rules
The CJEU departed from an Advocate General opinion in a case involving an allegedly unfair term in a B2C loan agreement. The AG suggested that while contract terms reflecting the default position under national law are exempt from the fairness test under the Unfair Contract Terms Directive, the presumption that the legislature had intended to establish a reasonable balance between the parties to the contract was rebuttable and, as such, could be investigated by the courts. The CJEU held that this was not the case. The AG also suggested that if a national court found a term to be unfair, it could modify the contract. The CJEU, having held that the term in this case was outside the fairness assessment, did not consider this issue.
CJEU ruling on how much consumer needs to pay on withdrawal from partially performed services contract
The CJEU looked at the assessment of costs payable by a consumer to a trader under Article 14(3) Consumer Rights Directive, which requires payment of "an amount which is in proportion to what has been provided until the time the consumer has informed the trader of the exercise of the right of withdrawal, in comparison with the full coverage of the contract". The CJEU said that:
CJEU case on cancellation of bespoke goods contracts
The CJEU ruled in a reference from Germany that the exception to the withdrawal right that applies to consumer contracts for bespoke goods, applies from the time of conclusion of the contract and not from the time when the trader begins to make the goods.
by multiple authors
by multiple authors