First, the notice must set out the name of the data controller, which will be the business or organisation that decides what data will be collected and how. It is important to remember that in some cases there will be multiple data controllers, and if there are, all should be named on the notice. Second, the data protection officer (‘DPO’) should be named and contact details provided. Each data controller must nominate a DPO before May. Third, the notice must identify why the data is being processed. If the data is being used for a number of different reasons, each of these should be set out in the notice. If a purpose for processing the data is not identified in the notice the data controller may not be able to undertake such processing. Therefore, businesses need to look into the future to determine the reasons for processing that may arise. However, businesses must bear in mind the principle of data minimisation, which means that only data that is relevant to the purposes identified should be collected. Once the reasons for processing are identified, the notice must also identify the legal basis for processing. the possible legal bases are set out in article 6 of the GDPR. Explicit consent is one possible basis, but others include that data is necessary for the performance of a contract (so it will be necessary to collect address data to dispatch goods sold online by post) or is necessary for the compliance with a legal obligation. If the basis for processing is the legitimate interests of the data controller, the specific interest relied upon must be identified. Finally, where the information is to be transferred to a third party, the potential recipients of the data should be identified.

Other information must be provided if it is necessary to ensure fair and transparent processing. For example, information on the length of time that data will be retained should be set out in the notice.  This period should be “no longer than is necessary for the purposes for which the personal data are processed.” Details of the data subjects rights should be included. All of this information should be provided “concise, transparent, intelligible and easily accessible form, using clear and plain language.” where the data subject is likely to have particularly weak language skills, for example because they are a child, the notice should be written so that a child can understand it. Some thought has been given to using pictures to help understanding.

In the run up to may businesses need to revisit the notices that they provide to data subjects, and amended them to ensure that informed decisions can be made about whether and how data will be provided and processed.

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In order to illustrate this we can take a simple example. The mandatory particulars that are required to be included on the packaging of food include “the name of the food business operator.” The food business operator named on the packaging must either be established in the Union or the importer into the Union. Therefore, every business that wishes to import into the EU post-Brexit will need to alter their packaging to identify either the address where they are established within the Union or an importer into the Union. Alterations to packaging take time, and in order to be ready for life outside the EU businesses need to identify now the steps that they need to take to ensure that they are able to sell into the European Market. The implementation period will be important to allow the changes that need to be made to take place against the background of an awareness of the contents of any trade deal with the Union. In order to make this assessment, businesses need to be skilled in analysing the regulatory landscape. Building this awareness is the aim of the course that I am running at the University of Nottingham Sutton Bonnington campus in April.

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Before considering the regime it is necessary to consider the boundaries of the regulation. It applies to the processing of personal data. Personal data is information which relates “to an identified or identifiable natural person.”  Identification may be direct or indirect. Processing is a long list of operations that can be performed on that data, including the “collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction” of data. A simple example of processing is asking for an individual’s name and postal address, storing that information (usually on a database) and then retrieving and using that postal address to send a Christmas card or marketing information. Similarly, collecting data about an individual from their social media profile, and using this to ensure that the advertisements  on the platform are targeted at individuals likely to purchase the goods or services advertised would amount to processing of personal data.

The new rules affect every business and consumer in the EU. Businesses will be data controllers, as they will be responsible for determining the “purposes and means of the processing of personal data.” Therefore, all business need to be revisiting their data collection, storage and use in the light of the new regulations. This can seem like a daunting task, particularly when confronted with the massive (and not easy to understand) piece of legislation that is linked to above. Fortunately, there are plenty of resources available for those people who have the responsibility for undertaking this process.

The best place to start is with the Information Commissioners Office. The ICO is the data regulator in the UK, and has an important role in helping businesses understand their responsibilities. The most useful document for a business beginning to grapple with GDPR is 12 steps to take now. It provides a series of actions that a business should take in order to prepare for the 25th May. Two important steps could be prioritised. First, businesses should undertake an exercise that allows them to understand the information that they hold and why. This might be an easy exercise if all data is held in one place. However, this is unlikely to be the case, and it may require communication with a number of different actors within the business to draw up a comprehensive list. Second, a business should designate a Data Protection Officer. This will be the person who has responsibility for Data Protection compliance throughout the business. Once that person is identified, the other steps can be undertaken by them. In the next of this series of blog posts we will examine the need for updating privacy notices, which requires businesses to identify the information they hold and the lawful basis for doing so.

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It was agreed that full of goodness was a non-specific health claim, and that the text that appeared on scheme referred to a claim which appeared on the EU list. However, the ASA offer two clarifications for those making non-specific health claims. First, it is necessary that the identification of the approved health claim must be at the same time or after the the non-specific health claim is made. Given the arrangement of the advert the average consumer would not link the text and the “full of goodness” claim, and therefore the advert would breach the Health and Nutrition Claims Regulations. In the altered advert the text remains on screen whilst the “full of goodness” claim is made. Second, the non-specific claim and the approved claim  should bear some relationship. You cannot back a “good for your skin” claim with an approved health claim referring to benefits to digestion. However, in the particular case the approved claim was sufficiently connected to the  statement that the food was good for you, as the average consumer target by the advert would be concerned about skin health and would have understood that the claim was that the product was “full of goodness” for the skin.

The first clarification is clearly right. You must be able to tell which health claim is being relied upon to support a non-specific claim. The second is more debatable. Broad generic claims may be understood as suggesting the food is good holistically, which should not be supported by a narrow approved claim. Is it possible that we are giving the average consumer too much credit to suggest that they will understand that a broad non-specific claim should be read as being narrowed by the approved claim? With individuals focusing on the voice over, rather than the text, the non-specific claim is doing more work than simply informing the consumer that their skin could be improved by consumption, it appears to suggest their health as a whole could be improved. Such claims should be controlled to prevent consumers being misled.

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Consumer law surrounding prize promotions is complicated. Those running such promotions would be well advised to double-check their promotions before they are rolled out to the public. The right terms and conditions are useful. For example, in the case of O’Brien v Mirror Group Newspapers 1472 people thought they had won £50,000, but in fact the conditions provided that each “winner” would be placed in a draw to win one prize of £50,000. The Consumer Protection from Unfair Trading Regulations protect consumers outside the contract.

The regulations provide that a consumer can receive a civil remedy where a misleading practice (here the implied statement that there was, in fact, a chance to win a trip) has induced him or her to enter into a contract. This seems satisfied here, but consumers appear to have been giventhe main thing that they would be entitled to by refunding the money paid for the raffle ticket. However, if a consumer has suffered either financial loss or physical or mental distress as a result of the promotion then there may be a further entitlement to compensation.

Further these regulations make it is criminal offence for a trader to engage in a prohibited commercial practice. The blacklist of prohibited practices is set out in schedule 1 of the Regulations. Paragraph 19 of schedule 1 provides that a person may not “in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent.” This appears to match the situation here. Is what Chesterfield did a commercial practice? This is defined in regulation 2. It seems clear that the initial post on Chesterfield’s website, offering the chance to take part in the raffle, was a commercial communication offering to sell a product (the raffle ticket) to consumers. Therefore, it appears that there has been a breach of the regulations. Whether Chesterfield are criminally liable will depend on whether they can demonstrate that they have a due diligence defence under regulation 17. To take advantage of such a defence, they must show that the breach of the regulations was due to the actions of some other person (who can be an employee) and that they have taken all reasonable precautions to prevent such a breach. This demonstrates why it is important to have a clear audit trail setting out the instructions and training given to the staff running the raffle. Is is through this documentation that the defence may be substantiated.

Without more information it is difficult to come to a firm view on criminal liability, but this case shows that something that looks like a good idea for a promotion may quickly turn into a serious headache, and could ultimately result in a fine or, in extreme cases, a jail sentence.

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Traffic light labels, which are not mandatory but are becoming more common, formed the focus of the “games.” Could the participant work out which of the products had the least fat within the 10 second that most people spend looking at food on the supermarket shelf? It turns out that it is difficult. With labels basing the numbers that appear in the traffic lights on different portion sizes, nimble mental arithmetic was required to successfully answer the questions that I asked. However, the participants improved as they discovered the technique of reading the label. What are those tricks? Tune in and find out, but trust the colours on the traffic lights, as these do not change with portion sizes.

After a long day of filming, I think we all went home satisfied and, hopefully, enlightened. I can’t wait to see how it looks on TV.

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The misleading nature of the marketing was particularly demonstrated by the details on the Nurofen website in September 2013 (since amended but see below).

Source https://www.accc.gov.au/media-release/accc-targets-alleged-false-and-misleading-nurofen-claims

According to the company, no changes will be made to the packaging in the UK. I had a look at the UK website yesterday (14-12-15): http://www.nurofen.co.uk/our-products?adult-pain It described three products as “symptom specific” and two (Nurofen Migraine Pain and Nurofen Express Period Pain) as providing “targeted relief”.
I have been pondering how UK consumer law might address this. The Consumer Protection from Unfair Trading Regulations 2008 (CPUTRs) contain a number of provisions that might be relevant. First, the CPUTRs prohibit misleading actions. Regulation 5(2) states that a commercial practice is a misleading action:

“(a) if it contains false information and is therefore untruthful in relation to any of the matters in paragraph (4) or if it or its overall presentation in any way deceives or is likely to deceive the average consumer in relation to any of the matters in that paragraph, even if the information is factually correct; and

(b) it causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.”

Paragraph (4) refers to a rage of matters. Among them are “the main characteristics of the products” which includes “the benefits of the product” and the “fitness for purpose of the product”. So, might we argue that by describing a product as targeting specific pain when it is no more effective at tackling that pain than the other products, the company has engaged in a misleading action? There are two elements to consider.

First, is its overall presentation likely to deceive the average consumer in relation to any of the matters in that paragraph? If an average consumer is likely to believe that a Nurofen Migraine Pain product was more likely to be successful in tackling migraine pain than a Nurofen Back Pain product then the answer to this seems to be yes. An average consumer for the purposes of the CPUTRs is one who is “reasonably well-informed, reasonably observant and circumspect”. It is certainly arguable that such a consumer would assume the targeted product to be more fit for a particular purpose than the others. Furthermore, the Regulations state that when a product is aimed at a particular group of consumers, the average consumer is the average member of that group. It could be argued that the product is aimed at the average consumer who suffers from that particular ailment and that such consumers will be particularly eager to find a product that deals with their condition. As Suzanne Moore commented in her piece in today’s Guardian: “When ill or in pain, we will pay for any promise of a magic bullet”.
http://www.theguardian.com/commentisfree/2015/dec/14/nurofen-targeted-painkillers-reckitt-benckiser?CMP=twt_gu

Second is the misleading description likely to cause the average consumer to take a transactional decision he would not have taken otherwise? As one example of a transational decision is buying a product, it seems likely that the description of the product as “symptom specific” and providing “targeted relief” is likely to lead the average consumer with a migraine to purchase the product. That is, presumably, what the company intends. Why else would it package the products as it did or present the information on the website as it did? According to a statement from the company, the specific-pain range’s purpose was “to help consumers navigate their pain relief options, particularly within the grocery environment where there is no healthcare professional to assist decision making”. This does not appear particularly convincing. The Medicines and Healthcare Products Regulatory Agency has stated that it has not received complaints about Nurofen in the UK, though whether that will remain the case following the amount of media coverage the Australian case has received remains to be seen.

The front page of the Independent reports today (15-12-15) that the Advertising Standards Authority is examining complaints that television advertisements for Nurofen Express are misleading because they (a) imply that the product directly targets muscles in the head, and (b) give faster relief than standard paracetamol or ibuprofen.

It should be noted that there is no suggestion that the product is inappropriate for the particular purpose. What the company appears to have done is created the impression that one product is more appropriate for a particular condition than the others; and that, the Australian Federal Court found, was not true.

The Australian case has produced considerable comment already. Writing in the Conversation, Michael Vagg notes that the Australian Therapeutic Goods Administration first ordered the claims to be withdrawn in 2011 and speculates that the company knew that it would have to change its marketing if the ACCC instituted proceedings. However, he muses, it may not have wanted to jump before it were pushed (proceedings were first instituted by the ACCC in March 2015). http://theconversation.com/can-the-accc-target-the-source-of-misleading-labelling-52303

Vagg is (understandably) unsympathetic to the company. By contrast, many of the comments posted by way of discussion have been extraordinarily unsympathetic to consumers who have fallen foul of the company’s actions. Words such as “stupid” “idiots” and “ignorant” have been thrown around. It remains to be seen whether the UK authorities are so unsympathetic and also, whether the negative publicity the company is receiving has significant impact on its company’s sales.

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The Supreme Court has handed down judgment in ParkingEye v Beavis. It is a monster, spanning 316 paragraphs. The question of consideration, previously flagged up on the blog, was a damp squib, with all seven judges accepting the parties characterisation of the contract, with consideration consisting of the promise by ParkingEye that Mr Beavis could park and the promise by Mr Beavis to leave within 2 hours. This serves, again, to illustrate the rather limited nature of consideration required to form a contract.

The bulk of the judgment is devoted to the common law penalties rule, with all seven judges agreeing to an important restatement of the law. An analysis of this part of the judgment can be found here. However, this is outside the scope of this blog post. Instead, this post focuses on the part of the decision considering whether the £85 default charge fell foul of the Unfair Terms in Consumer Contract Regulations 1999, which implement the Unfair Terms Directive in UK law. Whilst the Consumer Contract Regulations have now been repealed, they have been replaced by Consumer Rights Act 2015, and the decision in the case has important implications for the determination of the fairness of terms under Part 2.

If a term is found to be unfair then it will not bind the consumer. Regulation 5(1) of the Consumer Contract Regulations provides that a “contractual term… shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.” In making this determination the court must have regard to all the circumstances surrounding the conclusion of the contract, all the terms of the contract and the subject matter of the contract. Section 62(4) of the Consumer Rights Act is to similar effect.

The Facts

Like the rest of the retail park, the car park of the Riverside Retail Park in Chelmsford is owned by the British Airways Pension Fund. ParkingEye provided “traffic space maximisation scheme” to the BAPF. It did not own the land and was not responsible for its upkeep. At the entrance to the car park, and scattered throughout it, were signs, described in the judgment as “large, prominent and legible,” that provides that the car park was free but was for customers of the retail park only, with a two hour maximum stay. In the event that the maximum stay was exceeded a “parking charge” of £85 would be incurred. A parking charge would also be imposed if the customer returned within one hour, parked outside the marked bays or parked in the disabled spaces without displaying a blue badge.

Mr Beavis parked in the car park for two hours and 56 minutes. He received a parking charge notice, demanding £85, which would be reduced to £50 if paid within 14 days. Mr Beavis refused to pay and ParkingEye brought proceedings against him in the County Court to recover the £85 pounds. Mr Beavis argued that he was not bound to pay the charge on the basis that it was unfair under the Consumer contract Regulations, noting that the graylist set out in Schedule 2, an indicative list of terms that may be regarded as unfair, included terms “requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation.” Mr Beavis was unsuccessful both before the County Court and before the Court of Appeal.

The Supreme Court Judgment

The Supreme Court held, by a majority of 6-1, that the requirement to pay £85 was not unfair under the Consumer Contract Regulations, and therefore that Mr Beavis had to pay that amount. Lords Neuberger and Sumption gave the judgment for the majority with Lord Toulson dissenting. What was the basis for this holding? Lords Sumption and Neuberger, whilst acknowledging that the clause fell within the graylist, noted that the list is indicative only, and each term must be subjected to scrutiny in order to assess whether or not it is fair. In carrying out the fairness assessment, their Lordships applied the test set out by the Court of Justice of the European Union in Aziz v Caixa d’Estalvis de Catalunya, Tarragona i Manresa. In referring to the test in Aziz as authoritative they appear to put aside previous House of Lords authority interpreting the regulations, and in particular First National Bank. It is first important to note that a significant element of judgment is left to the national court to determine whether a clause is unfair. However, in making this determination they should be guided by the definitions of “significant imbalance” and “good faith” set out in Aziz:

–        the concept of ‘significant imbalance’, to the detriment of the consumer, must be assessed in the light of an analysis of the rules of national law applicable in the absence of any agreement between the parties, in order to determine whether, and if so to what extent, the contract places the consumer in a less favourable legal situation than that provided for by the national law in force. To that end, an assessment of the legal situation of that consumer having regard to the means at his disposal, under national law, to prevent continued use of unfair terms, should also be carried out;

–        in order to assess whether the imbalance arises ‘contrary to the requirement of good faith’, it must be determined whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations.

The court must also take into account whether the term is appropriate for securing the objectives pursued by the term, meaning that the importance of the term in the contractual relationship must be considered, as these form an important part of the circumstances surrounding the contract. The second criteria requires the party seeking to uphold the term to provide some evidence of their reasonable belief that the consumer would have agreed to the term in individual negotiations.

Applying these tests, Lords Neuberger and Sumption acknowledged that the term did give rise to a significant imbalance, as it allowed ParkingEye a remedy that would not have been available to them at common law. At common law, only the BAPF could recover damages, and only then in trespass to land for the occupation value of the parking space. However, the term did not contravene the requirement of good faith. The Court held that a reasonable motorist would have agreed to the terms of the contract. The court stressed that the motorist was able to avoid the risk of liability by simply not parking at the Riverside Retail Park, perhaps going to shop elsewhere. Further, even once parked, the Court suggested that avoiding liability was simple – “[a]ll that he needed was a watch.” This meant that a reasonable motorist would have reached the same terms through negotiation with ParkingEye, particularly given the appeals procedure and the provision of a reasonable grace period in the industry code to which ParkingEye were signatories. Further, the Court concluded that the charge was proportionate to the interest that ParkingEye (and the BAPF and other shoppers, who are able to park on their visits to the shops) had in the efficient management of car park space. The argument that the charge should be proportionate to the length of the overstay was rejected as a possible, but not necessary, method of ensuring fairness in the term.

In his dissent, Lord Toulson strongly attacked the finding of the majority that the term was in good faith. In particular he challenged the finding that the risk was entirely within the control of the motorist, and argued that the majority had failed to consider the imposition of a charge in circumstances other than an overstay. For example, £85 is charged if the shopper forgets his or her phone and returns within one hour to find it; it is charged if a motorist parks slightly over the line of a parking space because of the terrible parking of the car in the space next to the shopper. Lord Toulson argues that a competently advised shopper would not agree to such a term, but would instead only agree to a term which makes allowances for circumstance, allows grace periods and provides room for adjustment. Lord Toulson suggests that the majority substituted their own judgment of a reasonable clause for the judgment of the consumer, and that ParkingEye failed to discharge the evidential burden of showing that they had a reasonable belief that the consumer would have agreed to the term.

Implications

The judgment means that parking management companies are able to impose default charges on those who overstay, at least where there is a broad interest in ensuring the availability of parking space. However, this probably isn’t the end of the road for motorists who are faced with such a charge. First, in this case there was no challenge to the incorporation of the term into the contractual relationship between the business and the consumer. In many cases this will be an issue, particularly where the notices setting out the default charges cannot be clearly seen prior to the motorist parking. Second, merely because the imposition of an £85 charge was found to be “fair” in these circumstances this is not determinative of the fairness of other parking default charges. The court must examine the term in all the circumstances of the case, and large default charges are likely to be scrutinised carefully by the courts using the Aziz framework. A motorist is less likely to accept the risk of a default charge in circumstances where that default charge is significantly larger that £85. Further, where the car park location is not as closely tied to a set of businesses requiring turnover of available parking space, the courts may be less willing to find that the default charge is proportionate to the objectives pursued by the term. Finally, where the trader either claims to abide by the industry code of practice, and fails to operate grace periods, or where the tactics for recovering default charges can be characterised as aggressive, then the Unfair Commercial Practices regime, set out in the Consumer Protection from Unfair Trading Regulations, may enable regulators to take enforcement action, or for consumers to use the private law rights set out in Part 4A .

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Crowdfunding Contracts

As Rory Cellan-Jones has been reporting, people who pledge money on crowdfunding websites can be disadvantaged when the projects fail to deliver. Kickstarter has a detailed set of terms which govern the relationship between creator and backer, with the creator obliged to “complete the project and fulfil each reward.” If the creator fails to fulfil this obligation, the backers may have the ability to bring a claim for breach of contract against the trader. Whilst the standard required by the contract appears clear, the creator can avoid liability in the event that the project is not completed if they provide information to backers on the progress of the project and “work diligently and in good faith to bring the project to the best possible conclusion.” This is a term which takes into account that “backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised.” Mollick suggests that most projects miss their target delivery date, even though the creators work hard to try and fulfil their promises. It seems fair and reasonable to provide a term allowing an extension in time in the investment contract, particularly where the creator must “offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.”

Whilst the contract between creator and backer exists, backers may be unwilling to seek remedies in contract (or in misrepresentation (or if a consumer the remedy under the Consumer Protection from Unfair Trading Regulations 2008 part 4A) if they have been induced to invest by false information). The amount invested may be small, and the cost of taking contractual action may be large, both in terms of expense and in terms of time. As Leff memorably argued, a private individual would need “superspite” to bring a claim. This means that the Claimant must be willing to inflict damage to him or herself in order to succeed against the Defendant. A further factor that might add to the costs of the case might be the cross-border nature of a crowdfunding dispute. As a creator and backer can be from different jurisdictions, questions of both jurisdiction and governing law may arise. Whilst the Kickstarter terms provide for disputes with Kickstarter to be governed by New York law and heard in New York, they do not provide guidance on the conflict of law questions occurring in disputes between creators and backers. Instead, these must be adjudicated through application of national and European law, not to mention the practical challenges of conducting litigation against an overseas body (particularly if that body is based in a jurisdiction outside the EU).

Crowdfunding and Consumer Protection

Given these challenges, it is likely that public regulation, and regulatory bodies, will play an important role in preventing detriment to backers. The obvious avenue is through consumer law, particularly that governing unfair commercial practices, although where particular sector specific legislation applies this will also play a role. The most obvious example is in relation to food, where food information is covered by a detailed regulatory regime, as are health and nutrition claims. The Unfair Commercial Practices Directive, implemented in the UK by in the Consumer Protection from Unfair Trading Regulations 2008, proscribes “misleading actions.” A presentation (such as on a Kickstarter page) about a crowdfunded project that contains false information (including false information about the development of prototypes or false information about the anticipated progress of the project) will be misleading, provided that it “causes or is likely to cause the average consumer to take a transactional decision he would not have taken otherwise.” Detailed discussion of the transactional decision test and the average consumer standard is beyond the scope of this post, but the result of the transactional decision test is that the Unfair Commercial Practices Directive does not look at the decisions made by actual consumers in response to a false or misleading statement; instead it looks at the effects that the misleading statement will have on a hypothetical consumer who is “reasonably well informed, reasonably observant and circumspect.” A misleading action is a criminal offence, which can be punished with up to two years in jail. However, misleading actions are only criminally prohibited when they are made to consumers.

Typically, investors in projects wouldn’t be seen as consumers. On a traditional funding model investment would be seen as a business to business transaction that would not attract the special protections of the EU Consumer Law acquis. However, the Kickstarter model is different. With its encouragement for large numbers of small investments in return for a reward, perhaps a copy of the good that results from the completed project or for creative possibilities (such as an appearance as a character in a crowdfunded book; a personal interaction with the creator; or a memento provided by the backer), the model doesn’t look like professional investment, but instead more like a model that involves a relationship between business and consumer. This is supported by the findings of research into Kickstarter, which shows that “most of the contributors at any point in the funding cycle are one-time backers that likely come from the entrepreneur’s own social circle.” This can be contrasted with peer-to-peer lending sites, such as Prosper, which may seem much more like investment businesses, depending on the practice of the .

In order to assess whether backers have the protection of the Unfair Commercial Practices Directive, it is first necessary to decide whether one of the parties is a consumer. Consumers are defined in the Unfair Commercial Practices Directive as “individual[s] who in relation to a commercial practice is acting for purposes which are outside his business.” It appears that in most cases the backers will not be professional investors, and will therefore be consumers. These backers will see the project not as a investment, but as a potential pre-sale of something that has not yet been created. They should therefore be protected as consumers and not treated as investors. Second, one must decide whether the creator is a trader. Traders as defined as those “acting for purposes relating to his business.” In some cases the creators are clearly businesses, but in others the status is less obvious (for example, projects involving arts or dance). Where the creator is not a trader, the relationship will be a consumer-consumer contract, and outside the scope of consumer law. The backer will be thrown back on the contract, with the challenges discussed above. Finally, it must be demonstrated that the misleading action is “directly connected with the promotion, sale or supply of a product to or from consumers.” In most cases the Kickstarter page will be concerned with the promotion of a product, and in some cases the reward will involve supply. Product is defined broadly to mean any good or service, so will cover most projects funded on Kickstarter or the rewards offered by the creator. However, it may be argued that where the project is neither involves the production of a good or the performance of a service, and the reward is intangible, then the Unfair Commercial Practices Directive is not engaged.

If the Directive is engaged, and a misleading action can be shown, enforcers may be able to obtain an injunction to prevent the misleading information being published. This power is found in the Enterprise Act 2002 part 8. Following the changes to the Enterprise Act by the Consumer Rights Act 2015, public enforcers may also be able to secure redress for backers who have suffered loss as a result of misleading actions by creators.

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Today is the day that the Consumer Rights Act 2015 comes into force. According to the Government Press release, this will make the law easier to understand, and enable consumers to buy, and businesses to sell, with confidence. It puts a number of consumer rights into one place, and makes some important changes to the law that applies when consumers purchase goods, services of digital content.

Right to a refund where goods are not satisfactory

The Consumer Rights Act reflects the standards that were required of goods by the previous legislation. Goods must be satisfactory and must be fit for purpose. Where they are not, the primary right available to consumers will be to return goods within 30 days and recieve a full refund. Whilst such rejection of the goods had previously been possible, the timeframe in which consumers were able to do this was unclear, leading to refusals by traders to honour this right. Of course, where the goods are perishable, the time period will be reduced. The right to reject an piece of fruit does not last 30 days! If a consumer chooses not to exercise the right to reject, or if the 30 days have elapsed, they are able to demand a repair or replacement of the item in question. Only if the replacement or repair fails to bring the goods into confrmity with the contract will a refund be possible.

Digital Content

Before the introduction of the Act, when a consumer brought an app or downloaded a movie, it was unclear how faults would be handled. Some academics argued that the digital content should be treated like goods, where as others though that it was more like a service. From today the rights and remedies that apply in the purchase of digital content are clearly defined. Digital content is a third catagory of product, neither good nor service, although like goods it must be satisfactory and fit for purpose. If the digital content is not satisfactory orfit for purpose, or indeed does not match a demonstration which induced the contract, the consumer will be entitled to a repair or replacement to bring the digital content into line with thier entitlements, and if this is impossible a price reduction or refund. In addition, however, if an app damages your hardware the trader must repair your hardware or provide you with compensation.

Services

Where a service provider fails to exercise reasonable care and skill in performing the service a consumer will be able to require him or her to do it again. So where an electrition fails to properly peerform a rewiring the consumer will be able to ask the electrician to perform the task again. Where repeat performance is not possible, or where the trader does not comply with the request, the consumer is entitled to a price reduction, including a reduction of the price to nothing.

Unfair Terms

The Act brings together all the law governing the legality of contractual terms. Terms in all consumer contracts must be fair. Some terms are automatically void (such as those that seek to exclude liability for personal injury or death) and some are contained in a so-called greylist, which identifies terms that have the potential to be unfair. Where a greylisted term appears in the contract the courts will be particularly keen to examine the circumstances of the case in order to evaluate whether the term is fair or otherwise. Where term is unfair it will not apply. Further, traders must ensure that

Not only, but also…

Although the Consumer Rights Act is likely to steal the headlines, it is merely one part of the wide ranging reforms to consumer law that have taken place in recent time. This time last year the consumer was given new rights to claim damages where a trader had enaged in misleading or aggressive practices prior to making a contract. There have been new regulations which allow consumers to cancel contracts and which tell traders the information that they must give to consumers before the contract is made. And traders must now identify an Alternative Dispute Resolution platform competent to deal with disputes between them and thier consumers, although they do not have to agree to use the provider in thier disputes. The idea is that this will reduce the costs for both parties and allow mutually acceptable settlements to disputes between consumers and traders.

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