The Impact of Consumer Law (OCR GCSE Business)

Consumers are Protected by Law

• Companies must treat consumers fairly in their interactions

• The Consumer Rights Act, 2015 is the main law in the UK that covers areas related to the sale of both goods and services, including:

Returns of goods, refunds or replacements

• In most cases, faulty goods can be returned for a full refund within 30 days of purchase

• After this, a partial refund or replacement may be offered, if the fault is the responsibility of the supplier

Delivery of services

• Services, such as home improvements or financial services, must be delivered in an agreed time and provided to a reasonable standard

• Unsatisfied customers can request that work is carried out again or a price reduction agreed

• There must not be unfair terms in contracts, such as hidden fees

Quality

• Goods must be of satisfactory quality, fit for purpose and as described

  • Goods must not be faulty or damaged when purchased

  • They must perform as they are meant to

  • Suppliers must describe them accurately in promotional materials or specifications

The Impact of Consumer Law on Business

• Consumer protection legislation aims to provide a level playing field for businesses

  • This means that no business can gain an unfair advantage over rivals by taking shortcuts or by making false claims about its products

• Meeting the requirements of consumer laws can have a range of impacts on business

Compliance costs

• Businesses must ensure labelling is correct and mechanisms are in place to ensure consumers receive the correct volume of product purchased

• Products must be safe for those handling or consuming them, and should be free from defects

  • Businesses can be fined or be required to pay compensation if products cause harm or damage

Effective quality management

• Quality inspectors may be required to ensure output is fit for purpose and meets specifications before it is sold

• A quality assurance system is likely to require a range of changes, such as:

  • Extensive staff training

  • Possible investment in reliable production machinery

  • A change in culture to ensure a focus on quality throughout the business

Management of returns

• Returned products need to be managed

  • Faulty goods will need to be replaced or refunded at no cost to the consumer

• Recall notices may be required where manufacturing faults are detected

Staff training

• Training of sales staff is required to ensure they behave fairly towards customers and do not make misleading claims

• Staff involved in production of goods need to be trained to identify and correct quality issues

Reputation ranagement

• Customers appreciate an honest, swift and effective response if a business fails to meet its legal obligations

  • They can, with ease, raise concerns through social media, which can reach a wide audience and impact sales

• Public relations, communicating with the media and following legal advice can reduce the long-term impact of reputational damage