Consumer Rights Act 2022 – Developments and Learnings over the Past Two Years

Introduction

In November 2022, the Consumer Rights Act 2022 (the “Act”) was enacted and (with the exception of s.161) entered into force. The Act implements the Digital Content Directive (2019/770), the revised Sale of Goods Directive (2019/771) and the Omnibus Directive (2019/2161 amending the Consumer Rights Directive, Price Indication Directive, the Unfair Contracts Terms Directive and the Unfair Commercial Practices Directive) into Irish law. The Act modernised and consolidated consumer protection legislation in Ireland, aligning it more closely with consumer protection rules across Europe and introduced changes to strengthen consumer rights and expand trader obligations, increase service provider accountability and transparency, and enhance the protection for consumers of digital content and services. The Act also afforded the Competition and Consumer Protection Commission (“CCPC”) new enforcement powers and significantly increased the penalties for infringements.

In addition, earlier this year, the Representative Actions for the Protection of the Collective Interests of Consumers Act 2023 (the “Representative Actions Act”) was commenced. The Representative Actions Act transposes the EU Collective Redress Directive 2020/1828 and allows groups of consumers to be represented by designated “qualified entities” in proceedings in respect of infringements of a wide array of EU consumer protection laws, including, among others, the Act.

Sales Contracts

Part 2 of the Act strengthens the rights of the consumer in the context of contracts for the sale of goods including goods having digital elements enabling their proper functioning. Examples of how this is achieved include the requirement that the goods remain at the risk of the trader until the consumer is in their physical possession (except where given to a carrier commissioned by the consumer) and the obligation (subject to certain conditions) on the trader to deliver the goods no later than 30 days from the conclusion of the contract. The Act also extends the rights and remedies of the buyer to consumers who receive goods as a gift under the sales contract.

Digital Content Contracts and Digital Services Contracts

Part 3 of the Act (which transposes the Digital Contents Directive) is applicable to any contract whereby the trader supplies digital content or digital services to a consumer. Part 3 applies both where the consumer undertakes to pay or pays a price and where the consumer provides personal data (except personal data collected by the trader to comply with legal requirements or personal data required for the purposes of supplying the digital content or digital services) to the trader in exchange for the digital content or service.

Traders must ensure that they have the right to supply the digital content or digital service to the consumer at the time at which it is to be supplied, otherwise the consumer is entitled to terminate the digital content contract or digital services contract. In case of disputes, the trader has the burden of proof that it had the right to supply. Traders must also ensure that the digital content or digital service provided to the consumer is in conformity with the respective contract. If it is not, then (under certain circumstances) the consumer has the right to either terminate the contract or to have the digital content or digital service brought into conformity with the contract, or to a reduction in price proportionate to the decrease in the value of the digital content or digital service.

Any term of a contract between the trader and the consumer which purports to or has the effect of excluding or restricting the liability of the trader under the provisions of Chapter 2 of Part 3 of the Act (relating to consumer rights in digital content contracts and digital service contracts) is not binding on the consumer.

Service Contracts

Part 4 of the Act amended Part IV of the Sale of Goods and Supply of Services Act 1980. As a result, terms such as the subjective and objective requirements for conformity with the service contract are implied into every service contract. Further, the service contract cannot exclude or restrict the trader’s liability in relation to the supply of service, the obligation for the service to be in conformity with the service contract, obligations for compliance with the subjective and objective requirements for conformity with the service contract, implied terms of the service contract and the reasonable price to be paid for the service.

Consumer Information, Cancellation and Other Rights

Part 5 of the Act transposed the Omnibus Directive and sets out the requirements relating to the information to be provided to consumers in the context of on-premises, off-premises and distance contracts, the right to cancel and inertia selling.

Unfair Terms in Consumer Contracts

Part 6 of the Act revoked and replaced The European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (S.I. 27 of 1995) (the “Regulations”). The main differences between the Act and the Regulations are that the Act introduced a “black list” of terms which are always deemed unfair and it also extended the scope of the “grey list”. The “black list” includes (among others) terms the effect of which is to exclude or limit the liability of a trader for the death of or personal injury to a consumer arising from an act or omission of the trader, to require a consumer to pay for goods that have not been delivered or digital content, a digital service or a service that has not been supplied, to require a consumer to bear his or her own costs in respect of any arbitration, to give a trader the exclusive right to determine whether goods are, or digital content, a digital service or a service is, in conformity with the contract, and to confer exclusive jurisdiction for disputes arising under the contract on a court in the place where a trader is domiciled unless the consumer is also domiciled in that place.

Proceedings and Penalties

Part 7 of the Act strengthened and widened the enforcement powers of the CCPC and the Commission for Communications Regulation and introduced fines of up to 4% of the trader’s annual turnover in Ireland and relevant Member States, or up to €2 million.

Representative Actions

Under the Representative Actions Act, qualified entities may bring actions on behalf of groups of consumers. A qualified entity must be an independent legal person not influenced by persons other than consumers, possess a non-profit-making character, be able to demonstrate that it has a legitimate interest in protecting consumer interests provided for in a relevant enactment and make publicly available information demonstrating its compliance with the other criteria. The Irish Council for Civil Liberties was designated as Ireland’s first (and, as at the time of writing, only) such “qualified entity”. A register of qualified entities is maintained by the Minister for Enterprise, Trade and Employment.

Qualified entities are permitted to charge a modest fee to a consumer requesting to be represented. And the amount of the fee and time period within which the fee charged must be paid must be specified on the qualified entity’s website. Where the consumer fails, neglects or refuses to pay the entry fee within the time specified, the qualified entity can refuse to represent the consumer.

Where an alleged infringement affects or is likely to affect consumers in more than one Member State of the EU, more than one qualified entity designated by different Member States may bring a representative action. When a representative action is brought by a number of qualified entities, they must nominate a lead qualified entity and inform the competent court. All qualified entities participating in the representative action in question are bound by its outcome.

CCPC 2023 Annual Report

In 2023, the CCPC ran advertising campaigns to raise both consumer and business awareness of the new consumer rights and obligations to consumers under the Act.

The CCPC updated its website to take account of issues experienced by consumers and to provide information and guidance to businesses on the new obligations arising from the Act. The CCPC’s Nursing Home Guidelines were updated to reflect the changes to the regulation of unfair terms in consumer contracts under the Act and over 500 engagement letters were issued to nursing homes.

The CCPC carried out online inspections of 43 businesses to establish their compliance with obligations under the Act.

Compliance notices were served to a number of businesses directing them to amend their respective websites to ensure the information available to consumers regarding cancellation rights in relation to distance sales contracts accurately reflect the legal rights a consumer may avail of under the Act.

Flatley v Austin Group Ltd

In June of this year, the High Court delivered its first judgement on the Act in the case of Flatley v Austin Group Ltd [2024] IEHC 359. The case was brought by professional dancer and businessman Michael Flatley who claimed that an arbitration clause in his home insurance policy amounted to an “unfair term” in a consumer contract as it did not expressly state that Mr Flatley would not have to bear his own costs in respect of any arbitration (relying on section 132(1)(e) of the Act). As the insurance policy preceded the entry into force of the Act, Mr Flatley claimed that once the Act had come into force, the insurance company should have amended the terms of the policy.

The court rejected Mr Flatley’s claim that the arbitration clause was an unfair term in a consumer contract on the grounds that Section 132(1)(e) stated that a term in a consumer contract relating to arbitration is unfair where it provides that the consumer must pay his or her own costs, in the interpretation of the court, regardless of the outcome. The clause in the policy at hand did not expressly vest the cost with the consumer.

In addition (among others), Mr Flatley claimed and the Court rejected that the arbitration clause lacked transparency which also rendered it unfair an unenforceable against him. The Court did not analyse in detail the meaning of the term “transparent” but indicated that for such a claim to be successful a claimant would need to justify “… which words or phrases in the clause were difficult for him to understand (if he had read it) or indeed which words or phrasing would prevent a person of normal intelligence from concluding that they had agreed to refer their disputes to arbitration”

This judgement is notable in that it provides guidance on the interpretation of core aspects of the Act such as “transparency” and “unfairness”.

Conclusion

The main takeaway from the recent developments in consumer law discussed above is that the CCPC has, to date spent a significant amount of time and resources in increasing consumers’ awareness of their rights and business’ awareness of its obligations. One of the focal points of enforcement to date has been the information provided by traders to consumers regarding cancellation rights in relation to distance sales contracts.

Businesses should ensure that their websites, contracts and consumer practices take account of the enhanced statutory protections for consumers and that businesses are cognisant and compliant with their statutory obligations.