Brexit – the Potential Impact on Consumer Law

9 March, 2017

Retailers and businesses offering goods and services to consumers will be watching Brexit developments closely to know what effect Britain’s exit from the EU will have on consumer law.

The Current Situation

The UK has robust consumer protection legislation in place, not least the recent Consumer Rights Act (CRA), which consolidated a great deal of existing law. While the laws governing UK consumer protection were implemented locally (and so will remain in force post-Brexit) much of their drafting was directed by EU legislation (which ensured that all member states had broadly the same measure of protection for consumers).

What might change?

While Brexit may (depending on what form it takes) enable the UK to repeal its existing consumer protection laws, this seems unlikely given the general trend toward consumer rights. Instead, the issue will more likely be what the UK does in response to future EU directives on consumer law, and whether it complies with these advances or forges its own path.

This issue may arise sooner rather than later, as the increase in online shopping and provision of digital content mean consumer law has been struggling to keep up with changes in B2C interactions. The EU is currently considering two draft directives which would deal with these areas.

How this may affect UK businesses?

Digital Content Directive

The EU has not yet imposed a unified approach towards digital content regulation. The UK is something of an outlier among member states in that its CRA includes a specific set of rights and remedies in respect of digital content.

The proposed Digital Content Directive aims to impose a maximum level of harmonisation among member states to encourage cross-border provision of digital services. The Directive (as drafted) inevitably differs from the CRA. Significantly, the Directive would apply to digital content supplied in return for a consumer’s personal data (rather than simply their cash) and would involve a different burden of proof where digital content is defective (consumers would not have to show that the defect existed at the time of delivery).

Online Goods Directive

The CRA deals with “distance” contracts, which includes goods sold online. Among other protections, it provides consumers with a right to reject goods. The EU’s proposed directive conflicts with the CRA in several areas, and as it also requires the maximum level of harmonisation, the UK would have to repeal certain parts of the CRA to achieve compliance.

Conclusion

It remains to be seen whether the UK will update the CRA to reflect these directives (when they are finalised). In any event, any divergence between the UK and EU on consumer law, data protection, product liability or marketing and advertising will need close monitoring to ensure that cross-border traders are compliant with and prepared for both sets of legislation.