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knowledge 1 July 2021 |

Government Launches Consultation on Scheme of Consumer Rights Bill 2021

The General Scheme of the Consumer Rights Bill 2021 was published for public consultation by the Department of Enterprise, Trade and Employment on 20 May 2021. The Bill has been heralded as the most significant reform of consumer protection law in decades, consolidating and modernising consumers’ legal rights and remedies, and making it more straightforward for businesses to identify their obligations to consumers. The Bill will also implement into Irish law the EU Digital Content Directive, covering digital content and digital services such as social media, software as a service (SaaS) and streaming services. We take a look at the key points of the proposed Bill and its potential impact on companies providing digital content or services.

Background

The Department of Enterprise, Trade and Employment published a similar draft scheme on consolidated consumer rights legislation for public consultation in May 2015. The progress of the proposed legislation was paused awaiting the adoption of: (1) Directive (EU) 2019/770 on contracts for the supply of digital content and digital services (the “Digital Content Directive”); and (2) Directive (EU) 2019/771 on contracts for the sale of goods (the “Sale of Goods Directive”).

Both pieces of EU legislation were adopted in May 2019, and are required to be transposed by each Member State by 1 January 2022. McCann FitzGerald published a briefing on the key features of those Directives which is available here.

The Consumer Rights Bill 2021 (the “Bill”) under consultation will transpose those Directives into Irish law and consolidate existing legislation. The Bill will also implement a significant part of the so-called Enforcement and Modernisation, or ‘Omnibus’, Directive,1 which aims to implement modernised and harmonised consumer protection rules.

Key proposed reforms contained in the Bill are:

  • Strengthened consumer rights relating to the quality, fitness for purpose, delivery and other aspects of services, together with statutory remedies for consumers where the services supplied by providers do not comply with those standards.
  • Enhanced protections relating to contracts for the sale of ‘goods with digital elements’, which includes smartphones and smart appliances – including a minimum two-year legal guarantee against faulty products.
  • A ‘black list’ of standard contractual terms and conditions that are always unfair.
  • New enforcement powers for the Competition and Consumer Protection Commission (“CCPC”) as against traders who do not provide consumers with the remedies they are entitled to under the Act.

Once enacted, the legislation will revoke the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995 (as amended) and the European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013 in their entirety. Certain provisions of the Sale of Goods Act 1893 and the Sale of Goods and Supply of Services Act 1980, among other pieces of primary legislation, will be amended.

Structure of the Bill

The Bill aims to consolidate in a single piece of legislation consumer protection provisions which are currently spread across numerous pieces of primary and secondary legislation, together with making provision for consumer contracts for digital content and digital services, as discussed in further detail below. The general structure of the Bill is as follows:

  • Rights and remedies in consumer contracts for the sale of goods (Part 2)
  • Rights and remedies in consumer contracts for the supply of digital content and digital services (Part 3)
  • Rights and remedies in consumer contracts for the supply of non-digital services (Part 4)
  • Consumer information and related rights and consumer rights on the cancellation of distance and off-premises contracts (Parts 5 and 6)
  • Unfair terms in consumer contracts (Part 7)

Rights and remedies in consumer contracts for the supply of digital content and digital services

The Bill will provide for specific Irish statutory regulation of digital content and digital services for the first time. Traders in digital content or digital services will have obligations as to conformity with the requirements prescribed in Part 3, and the Bill provides for remedies in the event of failure to comply with those requirements. Remedies include including bringing the content or service into conformity, proportionate price reduction or termination of the contract.

‘Digital content’ is defined as “data which are produced and supplied in digital form, including computer programs, applications, video files, audio files, music files, digital games, e-books and other e-publications”, and includes tangible media which serves as an exclusive carrier of digital content (such as CDs and DVDs).

‘Digital service’ means a service “that allows:

(a) the consumer to create, process, store or access data in digital form, or

(b) the sharing of, or any other interaction with, data in digital form uploaded or created

by the consumer or other users of the service, and includes video and audio sharing and other file hosting, social media, and word processing or games offered in the cloud computing environment”.

Contracts for certain services, such as healthcare, gambling, financial services, open-source software and contracts for the supply of digital content by a public sector body in accordance with the Open Data Directive (Directive (EU) 2019/1024) are expressly excluded from the remit of this part of the Bill.

Significantly, the rights and remedies in the Bill will apply to ‘contracts for the supply of digital content’ where, in lieu of payment, the consumer provides the trader with personal data that goes beyond the minimum personal data necessary for the service to be provided.  The Digital Content Directive gives some examples which illustrate the broad nature of this concept:

  • Where the consumer opens a social media account and provides a name and email address that are used for purposes other than solely supplying the digital content or digital service, or other than complying with legal requirements
  • Where the consumer gives consent for any material that constitutes personal data, such as photographs or posts that the consumer uploads, to be processed by the trader for marketing purposes.

As part of the consultation, views are invited on certain optional provisions in the Digital Content Directive which have not been implemented in Part 3 of the Bill, including the consequences for the contract of a withdrawal of consent by the consumer to the processing of personal data.

Next Steps

The consultation closed on 30 June 2021, with the target for enactment of the new legislation being Q4 2021.

Traders coming within the remit of the proposed legislation should review their standard terms and conditions in consumer contracts in advance of Bill being finalised, enacted and coming into force to identify any potential compliance issues or need for changes to how they operate.

How the finalised Bill transposes the Digital Content Directive will be of particular interest given the potential practical implications of its broad scope on traders in the digital sector and the recognition of personal data as consideration. Submissions in relation to that aspect of the Bill and any changes that might be made in light of those submissions will be closely monitored.

  1. Directive (EU) 2019/2161 as regards the better enforcement and modernisation of Union consumer protection rules.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.