For the first time in the UK, the Consumer Rights Act 2015 (“CRA”) contains provisions implying certain consumer-facing rights and remedies into contracts for digital content.
So businesses providing digital content to consumers, or to consumer-facing organisations, will need to pay particular attention to the changes introduced by the CRA.
Digital Content: Are your digital products or services captured by the wide definition of “digital content”?
Issue: Digital content is defined widely in the CRA as any “data that are produced and supplied in digital form”. The result is that the digital content provisions apply not only to more “traditional” digital products such as apps, music, ringtones and downloaded or uploaded software, but can also extend to cloud computing. Software and SaaS cloud computing offerings have, to date, largely been treated as a supply of a “service” and therefore subject to a more limited obligation to provide the service with “reasonable care and skill”.
Action: Traders should review their products to determine whether they should be classified as “digital content” and so will be required to meet the higher minimum statutory quality standards specifically applicable to digital content.
CRA vs CRD: Which regime is preferable for digital content?
Issue: Traders often prefer to fall within the “digital content” provisions of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations (“CCRs”) because they can disapply a consumer’s cancellation rights for digital content (if all of the criteria are met). However, under the CRA traders are likely to be better off if their products fall under the “services” regime, because the implied rights and remedies are less extensive than under the “digital content” regime.
Action: Be aware that the benefits of labelling products as “digital content” under the CCRs will come with additional cost under the CRA.
Implied rights: Does your digital content match the description?
Issue: Every contract to supply digital content is to be treated as including a term that the digital content will match any description of it given by the trader to the consumer.
Action: Businesses should pay particular attention to any information provided to consumers as part of ad campaigns (whether through point of sale, packaging, social media or any other medium), in store or by the frontline sales team, as this information could be implied into the contract and so render an entire agreement clause ineffective.
Implied rights: Will your digital content remain as described?
Issue: Digital content could (and should!) be constantly revised, upgraded and updated. That’s one of the many benefits of a digital product. Yet the legislation in some ways precludes this. Updates and upgrades are discussed below, but products must remain “as described”, so businesses will have to be careful not to tie themselves down with their description of their products. For example, arguably a digital service advertising the inclusion of the “Filmflix” app in its line-up could be in breach of this right and afford consumers a remedy if the app is subsequently removed, whether for technical, commercial or other reasons.
Action: Ensure your product’s evolution is not restricted by the description.
Upgrades and updates: Do you comply with the new provisions on upgrading and updating content?
Issue: The legislation contains multiple provisions relating to the “right” of a trader to make upgrades and updates to digital products. Each of these provisions needs to be carefully considered and potentially addressed. For example:
(i) the “right” to make upgrades and updates must be specifically referenced in the terms and conditions.
Action: Review terms and conditions to ensure adequate mention is made;
(ii) the product must remain as initially described when the contract was made, which in some cases could preclude certain changes being made.
Action: Ensure business is adequately briefed and understands potential limitations for future product development; and
(iii) the revised “grey list” of potentially unfair terms includes a term which “unilaterally without a valid reason alters any characteristics of the digital content”.
Action: ensure any rights in the terms and conditions are drafted so that they are not likely to be deemed unfair and struck out.
Implied rights: “Fit for purpose” may not mean what you think it does (…and it’s likely to be a lot worse than you think)
Issue: The new legislation implies a term into the contract that the digital content is fit for a purpose communicated by the consumer to the trader (even though this purpose may contradict the terms and conditions, or be contrary to the ordinary use of such content). This could potentially lead to consumers implying inappropriate provisions into contracts.
Action: Ensure your business is aware that any communications from consumers should be dealt with appropriately, to avoid implying any onerous terms into the contract.
Implied rights: Is your business facing a liability gap?
Issue: The end provider of digital content is responsible for any third party content or software, even though the end provider may not have any contractual protection from their licensors/suppliers (i.e. there may be a “liability gap”).
Action: Ensure the quality rights (i.e. the rights relating to satisfactory quality, as described and fit for particular purpose) and your liability under the implied remedies are properly backed off in your upstream agreements.
Damage to devices and content: What is your exposure?
Issue: Traders are now liable in statute in certain situations where digital content they provided causes damage to devices or content on a consumer’s device.
Action 1: Consider your liability position and whether you should limit your liability for this category of loss in your terms and conditions (and whether any limit is likely to be “unfair” under the unfair contract term provisions).
Action 2: If your content is supplied or licensed by a third party make sure you back off your liability in your agreement with the supplier or licensor.
How does the UK compare with the rest of Europe and the US?
We have conducted a survey of our European and US offices to see how the Consumer Rights Act compares to local law in other jurisdictions. Please contact John Davidson-Kelly for a copy of the survey.
Want to know more?