Routes to Market Series: Consumer

So, what do you need to think about?

1. Who are you selling to, where are you selling it and what are you selling?

Who you are selling to

 Firstly, businesses should consider who they are selling to. Where an individual is contracting as a consumer, they will benefit from extensive protections under UK consumer laws. The legal position and contracting rules that apply to business-to-consumer interactions are very different from those that apply to business-to-business interactions. It isn’t always straightforward assessing whether you are dealing with a consumer or not – for example, what is the position if you are intending to sell to your own employee, or where an individual is buying a phone that they intend to use for sending work emails but also for personal use? 

Businesses selling to both consumers and businesses will need to think carefully about how they structure the sales journey to ensure the relevant rules are being met. 

Where you are selling

Different consumer rules will apply depending on how a sales contract is made. If sales are made online or by phone, the position will be different to that where sales are made in a bricks and mortar shop.

What you are selling

Different consumer rules and exemptions also apply depending on exactly what is being sold (e.g. services, goods, digital content). Again, this isn’t always a straightforward assessment. For example, smart home devices like security cameras might only appear to be “goods” but they are often sold in combination with an integrated subscription service. Subscription services are governed by additional rules under the DMCCA which may need to be taken into account.

2. Have you got legal documents in place?

Once it is clear what rules apply, businesses should think about what legal documents need to be in place. 

There are strict rules around how, what and when information needs to be provided to consumers. In practice, businesses will look to address a lot of these information requirements in legal terms and conditions and/or through policies such as a delivery and returns policy. 

Failing to provide the right information, in the right form, and at the right time could be a breach of UK consumer laws, which can have practical as well as legal ramifications. For example, if a consumer has a 14-day statutory right to cancel a contract (i.e. the “cooling-off period”, being the right to cancel a contract, for any reason, within 14 days of when the contract is entered into) and a business fails to tell a consumer about this right in the correct way, the cancellation right could be extended by 12 months.

3. What does the consumer journey look like?

There is a lot more to complying with UK consumer laws than just having the right legal documentation in place. 

UK consumer law applies to the whole lifetime of a trader-to-consumer transaction. Businesses therefore need to consider their commercial practices carefully, in the round. 

Businesses should be aware that there is a lot of regulatory scrutiny around non-compliant consumer journeys. For example, the Competition and Markets Authority (the “CMA”, the UK consumer law regulator) has recently shown a lot of interest in the use of:

• green claims (e.g. saying a product is “green” or “sustainable”);
• harmful online choice architecture ( also known as “dark patterns”, e.g. manipulative online designs such as the use of countdown clocks to create a sense of false urgency);
• fake reviews (e.g. supressing negative customer reviews or manipulating consumers to submit a positive review); and
• subscription traps (e.g. recurring subscriptions a consumer may take-up wrongly assuming they are making a one-off purchase or redeeming a free offer).

Businesses should objectively and critically consider the practices they employ and associated consumer journeys to avoid falling foul of consumer laws and attracting regulatory focus.  

4. What happens if you get it wrong?

The consumer protection law enforcement regime has significantly changed under the new DMCCA. Under the DMCCA, the CMA will be able to enforce consumer protection law directly (rather than having to take each case to court) and it will be able to impose fines of up to the greater of £300,000 or 10% of an infringing business’ global turnover. 

With huge new fines on the table, the risks of getting it wrong are higher than ever. Consumer law risks should firmly be on the agenda of every consumer-facing business’ board.