Legal considerations when trading with consumers

The consumer market is vast and the legislation in place to regulate it and protect consumers can seem daunting to business owners because it is complex and detailed. It is important to ensure that your business is, and at all times remains, compliant – the consequences of your failure to comply can include a contract which is not enforceable against consumers and no obligation on consumers to pay you.

Whether you are selling goods or services to consumers, whether your business is multinational or you are a sole trader, and whether you sell to consumers from retail outlets, online or at your customers’ homes, this guide highlights some of the key principles you should be aware of.

Consumer legislation only protects ‘consumers’ but who is a ‘consumer’?

The Consumer Rights Act 2015 (the CRA) and the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the CCRs) are now the main laws which deal with consumer rights in the UK. The CRA defines a consumer as ‘an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession’.

The CRA and CCRs are the main focus of this guide but there is other legislation that may also apply to some consumer transactions. For example, consumer credit legislation protects individuals, some small partnerships and unincorporated associations. The Data Protection Act 1998, on the other hand, protects data about all living individuals.

Consumer Rights Act and Consumer Contracts Regulations

Key consumer rights and remedies applicable to the sale and purchase of goods, services and digital content are covered by the CRA and the CCRs.

The CRA and CCRs detail the information that you must make available to a consumer before they enter into a contract with you, the terms that your contract must (or must not) contain and the rights and remedies that the consumer has if there are any issues with the goods, services or digital content provided.

Pre-contract information

The CCRs specify certain information that must be provided to a consumer before they enter into a contract with you. The information required varies slightly depending upon whether the contract is being made at a ‘distance’ (e.g. online or by phone), ‘off premises’ (generally not at your business premises, e.g. at the consumer’s home) or ‘on premises’ (not at a ‘distance’ or ‘off premises’, but generally at your business premises) and whether the contract is for goods, services or digital content.

Some of the key information that must be provided for all contracts is:

  • the nature of the goods, service or digital content
  • your identity
  • your trading address and contact details
  • price
  • delivery charges or other costs
  • payment, delivery and performance arrangements
  • complaint handling policy
  • consumer’s obligation to pay for return (if you require this)
  • obligation to pay for services provided during cancellation period (if expressly requested)
  • confirmation of your obligation to supply goods which conform with the contract and
  • details of any after-sales services or guarantees.

For off premises and distance contracts, you must also provide information about the right to cancel, or the fact that there is no right to cancel or that the right may be lost.

Failure to provide all required information can have serious consequences. For example, the contract may be unenforceable against the consumer, they may not be required to pay and their right to cancel may be extended. It is therefore important to ascertain exactly what information must be provided for your particular circumstances and to put in place documentation and procedures to ensure that all relevant points are covered and the information is actually provided.

All pre-contract information is considered a term of the contract and you will be contractually bound to it.  Furthermore, to avoid the consequences of failure to provide highlighted above, you should review what information you provide to consumers before a contract is entered into with them.

Cancellation rights

If the contract is made off premises or at a distance, the consumer generally has a right to cancel (subject to a few exceptions) without giving any reason. The cancellation period is normally 14 days (although this can be up to a year if the right pre-contract information has not been provided) and the consumer is entitled to a full refund. This does not apply to on premises contracts.

The consumer must be given information about their right to cancel, how to cancel and if they have to pay to return any goods.

Some contracts are excluded from the right to cancel e.g., contracts for transport, accommodation or leisure activities on a specified date, personalised goods or goods likely to deteriorate quickly.

The consumer is generally entitled to a full refund (including standard delivery charges) if they cancel the contract during the cancellation period. You can, however, require the consumer to pay the costs of returning the goods and deduct money for excessive handling (that is, using the goods more than is necessary to establish their nature, characteristics and function).

If a consumer expressly requests you to start performing services during the cancellation period then they can still cancel until the services are fully performed.  However, you can charge for the services performed if the consumer expressly requested the services to start during the cancellation period and was given all the necessary information about their right to cancel and their obligation to pay for services received. If any of that information has not been given, the cancellation period is extended and the consumer is not obliged to pay for services provided during the cancellation period if they do cancel.

You therefore need to review your cancellation policies and procedures, and update them accordingly.

Terms and Conditions

You must set out, clearly and in plain English, the terms upon which you will be providing goods, services or digital content to consumers.

All consumer contracts must be ‘transparent’ and there is now a general requirement for ‘fairness’ in all contract terms. In a nutshell, a clause is ‘unfair’ if it is significantly imbalanced to the consumer’s detriment.  Any attempts by you to enforce terms against a consumer will be considered in light of whether they are transparent and fair.

Notices (e.g., like you see in a car park or at a till point) to consumers which relate to the rights and obligations between you and a consumer or which attempt to exclude or restrict your liability to a consumer are also now covered by the CRA and the requirements for transparency and fairness. Notices that do not comply will not be enforceable.

The CRA also sets out some ‘blacklisted’ clauses that are automatically unenforceable. For example, any terms which attempt to limit or exclude your liability for death or personal injury caused by your negligence, or which attempt to restrict the consumer’s statutory rights.

There are also some ‘grey listed’ clauses which are only enforceable if they are ‘fair’. For example, limiting your liability, restricting the consumer’s rights, imposing disproportionately high exit fees if the consumer wishes to cancel a contract, or allowing you to unilaterally change the price.

All consumer terms and conditions and contracts need to be reviewed in light of the general requirement for fairness and specifically looking at whether any clauses are blacklisted or grey listed.

Your obligations

There are various warranties implied into contracts with consumers which you cannot exclude or limit in any way.  For example:

  • Goods must be of satisfactory quality, fit for purpose, as described, match any pre-contract information, sample and/or model seen or examined, and be installed correctly (if installation is provided). Also, any digital content within the goods must conform to the contract
  • Services must be provided with reasonable skill and care and match any pre-contract information and
  • Digital content must be of satisfactory quality, fit for purpose and as described.

Goods must also be delivered ‘without undue delay’ and within 30 days unless another time has been agreed with the consumer.

For services, if the time for performing/providing the services has not been agreed with the consumer, the services must be provided within a reasonable time of the contract being entered into.

You cannot make any charges, in addition to the main price agreed, unless you have obtained the consumer’s express consent to those additional charges in advance. For example, additional charges for packaging, gift wrapping, insurance and extended warranties.

Where you operate a telephone line so that a consumer can contact you after they have entered into a contract, the consumer cannot be made to pay more than the basic rate charge for that call. Premium rates are not permitted for such post-contract helplines.

Consumer rights and remedies – goods

Generally consumers have a right to reject most faulty goods within 30 days and receive a full refund. The time limit cannot be shortened (other than for perishable goods) but you can offer longer if you want. The time period will automatically be extended if you have to repair or replace the goods during the initial 30 days.

Once the time for the initial right to reject has passed, the consumer still has the right to a repair or replacement of the faulty goods. You have one opportunity to repair or replace. If repair or replacement are impossible, or if your one attempt at repair fails, or the first replacement is also faulty, then the consumer has the right to a price reduction or a final right to reject.

If the consumer wishes to reject any faulty goods within the initial 30 day period, the consumer must prove that the goods were faulty when sold. Otherwise, generally, during the first 6 months, the obligation is on you to prove that the faulty goods were not faulty when sold. After 6 months, the obligation is on the consumer to prove that the goods were faulty when sold.

If the consumer rejects the goods after 6 months, you are entitled to make a reasonable deduction from the refund for use that the consumer has had. Before 6 months there is no right to make a deduction (other than for motor vehicles).

Consumer rights and remedies – services and digital content

The consumer has the right to require repeat performance of non-conforming services or, if that is impossible or cannot be or has not been performed within a reasonable period of time without significant inconvenience to the consumer, the right to require a reduction in the price.

The consumer has the right to a repair or replacement of faulty digital content or, if the repair or replacement is not possible or not provided within a reasonable period of time without significant inconvenience to the consumer, the right to a price reduction. A consumer is also entitled to compensation for damage caused to the device or to other digital content.

As with goods, generally during the first 6 months, the obligation is on the trader to prove that the faulty digital content was not faulty when sold. After 6 months, the obligation is on the consumer to prove that the digital content was faulty when sold.


Any guarantee given, whether by you or someone else, for example a manufacturer, is contractually binding on the party giving it under the terms set out in the guarantee and in any associated advertising. Guarantees need to be treated with care and kept under regular review.

How long does a consumer have to make a claim against you?

Generally, the ultimate time limit for a consumer to make contractual claims against you is 6 years from when the breach of contract occurred. If goods or digital content are faulty when sold, the breach is taken to have occurred at the date of sale. If services are non-conforming, then the breach is taken to have occurred at the time of performance (or when performance should have occurred).

In all cases, the consumer may also have general common law rights to claim for damages or specific performance in addition to any rights under the CRA or otherwise.

Other legislation

There is an abundance of other legislation and sector-specific regulations that any business trading with consumers must comply with but which is outside of the CRA/CCRs and the general scope of this guide.

For example, you should also be aware of:

  • the Consumer Protection Act 1987 (direct liability on producers and importers for damage caused by defective products)
  • the Data Protection Act 2018 (the DPA) (see below)
  • the Financial Services and Markets Act 2000 (and associated legislation in relation to consumer credit) (see below)
  • the Electronic Commerce (EC Directive) Regulations 2002 (obligations with regard to online transactions with consumers)
  • the Privacy and Electronic Communications (EC Directive) Regulations 2003 (the Privacy Regulations) (see below)
  • the General Product Safety Regulations 2005 (requirements with regard to the safety of products)
  • the Consumer Protection from Unfair Trading Regulations 2008 (the CPUTR) (see below)
  • the Provision of Services Regulations 2009 (obligations on service providers with regard to information, complaints and non-discrimination)
  • the Equality Act 2010 (with regard to discrimination in the provision of goods and services)
  • the Consumer Rights (Payment Surcharges) Regulations 2012 (restrictions on payment surcharges) and
  • the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (requirements to provide information regarding alternative dispute resolution providers).

We have considered a few of these briefly below.

Data protection, privacy and marketing

If you are trading with consumers, you are likely to be collecting personal data and information about them which must be collected, held and used strictly in accordance with the DPA and associated legislation.

Subject to a few exceptions, anyone who controls personal data must notify the Information Commissioner’s Office of their processing. Notification is a straightforward process and is generally advisable for most businesses.

There are 7 key principles which must be complied with. In essence, these require that personal data must be:

  • processed lawfully, fairly, and in a transparent manner in relation to the data subject (lawfulness, fairness and transparency principle)
  • collected for specified, explicit and legitimate purposes – not further processed in a way incompatible with those purposes (purpose limitation)
  • adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed (data minimisation)
  • accurate and, where necessary, kept up to date (accuracy)
  • kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed (storage limitation)
  • processed in a way that ensures appropriate data security (Integrity and Confidentiality).

In order to process personal data fairly, information must be given to the data subject explaining the purposes for which the data is intended to be processed. For data to be used for marketing purposes, the data subject must have given their consent (unless the soft-oft in exception applies) and can withdraw that consent at any time.

Particular care must be taken in obtaining personal data from or sharing personal data with other parties. This is even more significant if the other party is based outside of the EEA.

Unsolicited marketing by phone, fax, text or email is specifically regulated by the Privacy Regulations. Generally, unsolicited marketing by automated calling systems, fax, text or email can only be carried out with express consent (opt-in) of the data subject. For live calls, the individual must at least be given the option to opt-out.  For further information please see our direct marketing blog.

Unfair Trading

You must treat consumers ‘fairly’ and ‘unfair trading’ is prohibited under the CPUTR.

There is a prohibition on unfair trading generally, as well as specific restrictions on:

  • misleading actions – such as making a confusing comparison with the product of a competitor, failing to comply with a code of conduct, or a false or misleading practice that provides false information or delivers an overall impression that deceives (or is likely to deceive)
  • misleading omissions – which omit, hide, disguise or delay material information and which cause the average consumer to make a decision that they would not have made otherwise and
  • aggressive practices – such as harassment, coercion or undue influence which significantly impair (or are likely to significantly impair) the average consumer’s freedom of choice or conduct and causes (or is likely to cause) the average consumer to make a decision that they would not have made otherwise.

There are also 31 blacklisted practices which are absolutely banned including, practices such as displaying a quality mark without authorisation, falsely stating that a product will be available for a very limited time in order to obtain an immediate decision, making personal visits to the consumer’s home and ignoring the consumer’s request to leave and/or stay away, and describing a product as free (or similar) if the consumer has to pay anything other than the unavoidable cost of responding and collecting or paying for delivery of the item.

Consumer credit

Consumer credit is now regulated by the Financial Conduct Authority and businesses who provide credit to consumers are generally required to be authorised by the FCA.

There are limited exceptions to the obligation to be authorised but they are very specific and it is a complex area. Great care should be taken and a proper review of arrangements should be carried out before relying on these exemptions.

It is important to appreciate that the regulation applies to any provision of credit, and not just to those businesses where providing credit is their main purpose.

Consumer credit is highly regulated and any agreements or arrangements which fall within its remit must strictly comply or risk being unenforceable.

How we can help

Our team has extensive experience in all legal aspects of trading with consumers. We can assist you with drafting terms and conditions, managing consumer rights and remedies, online procedures, data protection compliance and more. For further information on all our commercial services, please contact us.

Disclaimer: This article is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this article.