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By | OUT-LAW.COM 30th October 2012 10:02

OEMs and sellers must pay refunds on software faults - OFT

Likewise on dodgy film downloads, DVDs etc

Businesses that sell digital content to consumers should generally be responsible for providing refunds when services connected to that content fall below "quality standards" due to faults with the content, the Office of Fair Trading (OFT) has said.

The UK's consumer protection regulator said that consumers should have a "right to reject" digital content even though that material is often bought under licensing conditions. It said that consumers should generally be able to obtain redress for faults with digital content from retailers, even in circumstances where the fault relates to related services that are provided by others.

The OFT's views were contained in a document detailing the regulator's response (78-page/724KB PDF) to a Government consultation on reforms to the UK's consumer protection law framework.

"In general terms, we consider that the party with whom the consumer has contracted to supply the digital content (either themselves directly or through use of third parties such as a related service provider (RSP) should take responsibility [for ensuring that digital content is of a satisfactory quality once the related service has been performed]," the OFT said.

"If the consumer has no choice over who supplies the related service, and the choice of RSP has been made by the supplier (with whom the consumer has contracted to supply the content), the supplier should take responsibility for any faults in the supply even if caused by RSP. In that case, the consumer should be able to seek redress from the supplier as the party which whom he/she has contracted, whether or not the fault lies with the supplier or RSP. A consumer cannot reasonably be expected to apportion blame as between supplier and RSP," it said.

"[In circumstances where] the RSP properly performs a service but there is a fault with the digital content (provided by the supplier) which makes it fall below the quality standard ... we consider that, given that there is a contract between the consumer and supplier, the consumer should be able to seek a remedy against the supplier and it would be for the RSP to seek a contribution from supplier," the regulator said. "We consider that it is essential that, if consumers are to have greater confidence when buying digital content overall, the ability to obtain redress quickly and without an onerous burden of proof is essential."

Currently under the Sale of Goods Act consumers have a right to reject goods they have purchased from retailers and receive a full refund if the goods they have bought do not correspond to how they were described, are not of satisfactory quality or are not fit for purpose. These rights only apply where consumers are said to not have accepted goods. Consumers have a "reasonable time" in which to inspect or examine goods they purchase before they can be said to have accepted them.

The Government has proposed replacing the 'reasonable time' qualification and instead providing consumers with a set 30 day period during which they could return faulty goods for a full refund. Consumers would also be given a seven-day period to examine repaired or replacement goods, even if this period takes them over the 30 day limit under the Government's plans.

The OFT said that it would be confusing to consumers if they were only able to achieve redress against manufacturers of digital content simply because the content had technically been licensed to them and not sold as a "traditional good" by retailers.

Therefore it said consumers should be able to exercise their 'right to reject' with retail suppliers of digital content. It said that, generally, those suppliers should also be responsible for below standard related services they do not provide in circumstances where faulty digital content they supplied is to blame for those services not meeting the quality standards.

"For the sake of simplicity and effectiveness, we consider that, as far as possible, the consumer rights should focus on the quality of the end product provided to the consumer by the supplier," the OFT said. "While it is true those consumers may have a relationship not only with the retailer but also with the software manufacturer (for example under the terms of a licence), we consider that the primary relationship is with the retailer which supplied the product and that the retailer should have responsibility for ensuring that the product meets the quality standards."

"The separation of the digital content from the related service is potentially confusing for consumers insofar as it provides different legal rights," the OFT said. "A consumer is unlikely to understand technical distinctions but will be aware that the software he/she has bought does not work as intended. We consider that, if there is a problem with the operation of purchased software such that it does not meet quality standards, the consumer should be able to seek redress from the supplier."

"Consumers would not need to differentiate between elements of the ‘service’ and the content and would therefore be able to obtain redress more easily thus increasing confidence," it added.

The issue of what "quality standards" suppliers of digital content should have to meet has yet to be determined, but the OFT said that it would "expect a quality standard to include functionality and interoperability" and that "appearance and finish may not always be relevant".

The regulator also said that it should not be the responsibility of consumers to prove what is wrong with digital content. The burden instead would be on suppliers to show that there is not a fault with digital content that gives rise to consumers' right to reject it, it said.

The OFT also said that in circumstances where consumers have exercised their right to reject faulty digital software, the software should be deleted from consumers' computers. However, it said that the onus should be on the supplier to delete the software themselves where this is "feasible".

"In principle, we accept that faulty software that has been rejected by the consumer should be removed from the consumer’s device," the OFT said. "If feasible, it should first be the responsibility of the supplier to remove it provided that, in doing so, it is a ‘clean’ uninstall which does not alter or damage the consumer’s hardware or software in any way. If a consumer has an obligation to delete content, it should be recognised that not all consumers will have the knowledge or ability to do so without further assistance from the supplier."

The OFT also said that Government plans to allow businesses to deduct money from any refunds they make to consumers for the use consumers have made of faulty goods, service or digital content was not the correct approach.

"The consumer has paid for the entire content and in order to repurchase will then have to pay the full price for a new item as it is not possible to pay for part of a film which has been downloaded, a CD, DVD or similar," it said. "Even if this were possible, the consumer’s expected experience of the digital content has been reduced. The consumer should be entitled to a full refund in order to be able to purchase the product again. There are also likely to be disputes over what is a reasonable deduction as it appears it will be at the supplier’s discretion to set the amount deducted and the consumer will have little leverage to negotiate."

Copyright © 2012, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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