This document summarizes proposed reforms to consumer rights regarding digital content in the UK. It defines digital content as content supplied digitally such as software, videos, music and apps. Existing consumer rights laws provide some protections but issues have arisen as digital content is not clearly classified. The proposals aim to create a new category for digital content and new statutory rights ensuring digital content is of satisfactory quality, fit for purpose, matches its description and is accessible for a reasonable time period. The rights would provide remedies such as repair, replacement, reduction in price or refund. The impact on businesses would be a need to review terms and conditions and consumer-facing policies to comply with the new rights and regulations.

1. Consumer Rights in Digital Content
Andrew Tibber

2. Overview
 What is “digital content”?
 Existing consumer rights
 What’s the problem?
 Proposals for reform
 Impact for business
Consumer Rights in Digital Content

3. What is “digital content”
 Content that is digital – duh!
 “supplied in digital format as a stream of zeros
and ones so as to be readable by a computer
and give instructions to the computer”
 Software, videos, films, music, games, e-books,
ring tones and apps
 Delivered on physical media (discs) and
downloads/ streaming
Consumer Rights in Digital Content

4. BTW
 The internet economy contributed £100bn to UK economy
in 2007 (7.2% GDP)
 Growing at 10% a year
 Will account for 10% of GDP by 2016
 Bigger than construction, transport and utilities
 $200 billion spent globally on digital content in 2010
 Online gaming revenue predicted to grow to $28.3 billion
in 2015
Consumer Rights in Digital Content

5. Existing consumer rights

Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations
2008

Competition Act 2008

Consumer Protection (Distance Selling) Regulations 2000

Consumer Protection from Unfair Trading Regulations 2008

Consumer Rights (Payment Surcharges) Regulations 2012

Electronic Commerce (EC Directive) Regulations 2002

Enterprise Act 2002

Provision of Services Regulations 2009

Sale and Supply of Goods to Consumers Regulations 2002

Sale of Goods Act 1979

Supply of Goods (Implied Terms) Act 1973

Supply of Goods and Services Act 1982

Unfair Terms in Consumer Contracts (Amendment) Regulations 2001

Unfair Contract Terms Act 1977
Consumer Rights in Digital Content

6. Goods
 Sale of Goods Act 1979, implied terms
-
Section 12(1) – seller has right to sell goods (condition)
-
Section 12(2) – free from undisclosed
charges/encumbrances; quiet possession (warranties)
-
Section 13 – goods will match description (condition)
-
Section 14 – goods supplied in course of biz will be of
satisfactory quality & reasonably fit for purpose (conditions)
 Remedies – (1) common law: right to reject, damages;
(2) EU: repair, replacement, reduction of price, rescission
 Cannot exclude as against consumer (UCTA)
 Similar protection for other forms of contract for supply of goods
(eg hire purchase, part exchange) in Supply of Goods (Implied
Terms) Act 1973 and Supply of Goods and Services Act 1982
Consumer Rights in Digital Content

7. Services
 Supply of Goods and Services Act 1982
 Implied term that work/service will be
performed with reasonable skill and care
 Innominate – so remedy depends on
seriousness of breach and
consequences
 Excluding liability (other than for
death/PI) subject to reasonableness test
(UCTA)
 Consumer has much less protection for
services than for goods
Consumer Rights in Digital Content

8. What’s the problem?
Goods
Services
Skyfall (DVD)
?
?
Skyfall (Netflix)
?
?
MP3 download
?
?
In-game purchase
?
?
Consumer Rights in Digital Content

9. What’s the problem?
 2010/2011 – value of financial losses + lost time in EU = €64 bn
 Problems with quality = €7.5 bn
- Poor visual/sound quality
- Corrupt content
 Problems with access = €10 bn
- Unexpected service interruptions
- Interoperability
- Technical protection measures
 Problems with information = €33.5bn
- Awareness of technical requirements/compatibility
- Content being of poorer quality than expected
- Lack of information on complaints and redress
Consumer Rights in Digital Content

10. What’s the problem?
 32% of consumers do not take action (Consumer Focus)
- Uncertain how to obtain redress
- Low value of download
 Ts and Cs put consumers off (Which?)
- 7 out of 9 investigated do not offer refunds
- Most Ts and Cs exclude liability for damage to s/w
 Many consumers assume they have rights and remedies which they
may not have – gap between expectations of consumer and trader
 Risk to business of time and money spent on unnecessary disputes
 Risk of reputational damage
 Consumer confidence undermined
Consumer Rights in Digital Content

12. The proposals
 New category of digital content in consumer law
 New statutory rights for digital content
 New statutory remedies for faulty digital content
Consumer Rights in Digital Content

13. New category of digital
content
 “Data which are produced and supplied in digital form”
(taken from CRD)
 Distinct from “Goods”: “any tangible moveable items”
 Clause 15: goods do not conform to contract if include
digital content which does not conform
 “Consumer”: “an individual acting for purposes that are
wholly or mainly outside that individual’s trade, business,
craft or profession”
Consumer Rights in Digital Content

14. New statutory rights for
digital content
 Paid-for content
 Also free content where associated with paid-for digital
content, goods or services, eg
- given away with magazine;
- in-app purchases
 May be extended where evidence in future of detriment,
eg where provided in exchange for personal data
Consumer Rights in Digital Content

15. New statutory rights for
digital content
 Satisfactory Quality (Clause 36)
- Similar approach to that taken for goods
- Aspects of quality include fitness for purpose, freedom
from minor defects, safety and durability
- Must meet standard that a reasonable person would
consider to be satisfactory taking account of
description, price and all relevant circumstances
- Eg standard for 69p app not as high as for £5.99 one
Consumer Rights in Digital Content

16. New statutory rights for
digital content
 Fit for purpose (Clause 37)
 Description (Clause 38)
- Content must match trial version
- Includes CRD requirements to provide information about
characteristics, interoperability and functionality
 Time (Clause 39) –
- Trader liable for quality issues up to the earlier of:
(1) delivery to consumer’s device; or
(2) an intermediary (eg ISP) within control of consumer
- MMOs/Cloud – access to content should be available for a
reasonable period of time during which quality rights will
apply
Consumer Rights in Digital Content

17. New statutory rights for
digital content
 Right to modify (Clause 42)
- Permits updates in accordance with Ts and Cs but
subject to quality rights
 Right to provide content (Clause 43)
- Different to goods because right is limited to use
(ie licence)
- Entitled to a refund in default
Consumer Rights in Digital Content

18. Remedies
 For failure to conform to the contract
- Repair or replacement (Clause 45)
- Reduction in price (Clause 46)
- Refund where no right to provide content (Clause 47)
 No right to reject unless provided on tangible medium
 Does not affect other available remedies, eg damages
 Compensation for damage to device or other digital
content
 Liability cannot be excluded (Clause 49)
Consumer Rights in Digital Content

19. Impact for business
 Consumer Rights Bill does not alter law on B2B contracts
 No firm timetable for progress of Bill but CRD must be
implemented by 13 December 2013,
and in force by 13 June 2014
 Consumer Ts and Cs and EULAs will need to be
reviewed to check they are not unlawfully limiting liability
 Awareness raising for eg complaints departments re new
consumer rights
Consumer Rights in Digital Content

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