What is the Consumer Rights Act 2022?
The Consumer Rights Act 2022 (the Act) was signed into law by the President on 7 November 2022 and represents the biggest overhaul of consumer protection law in Ireland.
The Act transposes into Irish law the Revised Sale of Goods Directive, the Contracts for the Supply of Digital Content and Digital Services Directive and the so-called 'Omnibus Directive'.
Why is the Act important?
When the Act comes into effect, it will make widespread changes to consumer protection laws in Ireland. It will create clearer rules for businesses and will also introduce new obligations on traders selling to consumers. Furthermore, it will strengthen the rights and remedies available to consumers and increase the penalties for traders that breach the law.
What does the Act apply to?
The Act applies to all written and oral contracts (as well as combinations of both) between traders and consumers. It also applies to contracts implied by the conduct of the parties.
Apart from regulating the sale of goods and services, the Act will also regulate the sale of digital content (such as computer games and video files) and digital services. The Act will apply to any contract where a trader supplies digital content or digital services to consumers who pay a price or provide personal data, except where the personal data provided is processed by the trader for the purpose of supplying the digital content or digital services or to comply with legal requirements.
What are the key provisions of the Act?
- Conformity - the contract must conform with certain (i) objective and (ii) subjective requirements as detailed in the Act. In the event of any lack of conformity during the 12 month period after supply, the burden of proof shifts to the trader to prove that the supply of goods/services were in conformity with the contract.
- Transparency - the Act strengthens the transparency requirements that apply to contract terms. Traders must ensure that the terms of a contract with consumers are transparent eg in plain language, presented clearly, easily available, with novel/onerous terms being brought to consumers' attention and the terms' financial consequences are understandable to an average consumer.
- Updates to digital content or digital services - the Act provides that traders must inform consumers of the availability of, and supply consumers with, the relevant updates necessary to ensure that the digital content or digital service is in conformity with the contract. The Act also places an obligation on traders to inform a consumer of the consequences of failing to install any relevant update.
- Recipients of gifts – where goods acquired by a consumer are gifted to a third party, that party will be entitled to exercise all rights and remedies under the Act on the same terms as the purchasing consumer.
- Prohibited notices – under the Act, it will be an offence for a trader to display a notice, publish an advertisement or supply goods bearing, or digital content or a digital service displaying in any form, a representation, or to furnish any document which indicates, that (i) consumers' rights under the Act or (ii) an obligation/liability are/is restricted or excluded other than as permitted by the Act.
- Commercial Guarantees – Traders will be liable for commercial guarantees provided by other guarantors unless they expressly indicate the contrary or they give their own guarantee. The pre-existing obligation on guarantors to ensure that guarantees are written in plain and intelligible language is maintained. However, the Act now includes an additional obligation which provides that guarantees must be expressed in "concise" language.
- Exclusion or limitation of liability – contracts will no longer be permitted to exclude or restrict the trader's liability in relation to a list of specified provisions of the Act (such as conformity of goods/service with contract). Breaching this will constitute an offence.
- Unfair Terms – The Act states that a term is "unfair" if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer. It extends the lists of contract terms which are presumed to be unfair (grey list) or are outright prohibited (blacklist). Unfair terms in a consumer contract are not binding on the consumer. However, this does not prevent the consumer from relying on that unfair term if they so choose and if the contract can continue in existence without the unfair term, it will continue to bind the parties.
- Offences and Fines – it is an offence to breach certain provisions in the Act, with secondary liability for officers of a body corporate where it is proved that the offence was committed with their consent, connivance or approval or be attributable to any wilful neglect on their part. It will be a defence for the person to prove that due diligence was exercised, and all reasonable precautions were taken to avoid the commission of the offence.
There is the potential for the imposition of fines or imprisonment on conviction. The Act sets out a list of indicative and non-exhaustive criteria that a Court must take into account when determining the appropriate sentence such as the nature, gravity, scale and duration of the infringement.
A convicted trader will be liable for the costs and expenses of the proceedings and investigation unless the Court believes there are “special and substantial reasons” for not doing so. This is in addition to, and not instead of, any fine or penalty that the Court may impose. A trader may also be ordered, in certain circumstances, to compensate consumers for any loss or damage resulting from the offence. If the Court does grant a compensation order, this may be instead of or in addition to any fine or penalty imposed on the trader.
The Act also amends the European Union (Cooperation Between National Authorities Responsible for the Enforcement of Consumer Protection Laws) Regulations 2020. When this amendment is implemented, these Regulations will specify that, where (i) an offence is committed under specified parts of the Act or certain provisions of the Consumer Protection Act 2007 and (ii) this also constitutes an intra-EU or relevant widespread infringement under those Regulations, then further fines can be imposed of up to 4% of relevant turnover or €2 million, depending on the circumstances.
Increased enforcement powers - increased enforcement powers have been given to authorised bodies including the Competition and Consumer Protection Commission (CCPC). For example, the CCPC can apply to Court for declarations or injunctions.
The Act will come into operation by Ministerial order and while we understand that we have been advised that this will happen before Christmas, no indication has been given as to whether the Act will come into effect all at once or section by section. However, when it does come into effect, the Act will have a major impact on the contractual relationship between businesses and consumers.
In advance of the commencement of the Act, businesses should assess which aspects of the Act will impact them and make any necessary changes to the relevant documentation, such as business terms and conditions, to ensure they do not contain unfair terms and advertising, to ensure they are accurate and not misleading. Business processes should also be reviewed to ensure compliance with this new framework.
If you have any queries arising from this article, please contact Maureen Daly or any member of the Intellectual Protection team.
While all care has been taken in the preparation of this article, no responsibility is accepted for its content which is intended for general information purposes and does not constitute legal advice.