Comment: More than just a law change – the Consumer Rights Act is a game changer

The new Consumer Rights Act was warmly received by business, media and consumers alike when it launched on 1 October, and rightly so.

As the biggest shake-up of consumer rights for a generation, it will improve customer service, bring greater clarity to company policies, and provide an estimated £4 billion in wider economic benefits over the next 10 years. As a former minister in the Department of Business, Innovation and Skills, I am proud to have designed and championed the act from early consultations to Royal Assent on Parliament’s final day before the General Election.

So, what exactly does the Consumer Rights Act entail? In a nutshell, clearer, more honest information available to the public about the goods or service they are about to receive, before they make a purchase.

In the retail environment, the most dramatic change is the tightening up of quality control. There is now clear legislation in black and white that shoppers get what they pay for – and that they have the right to return the item and receive a full refund, with no quibbling, within 30 days if it is faulty or sold ‘not as described’.

Going even further, the Consumer Rights Act enables online shoppers to return any items within 14 days – even if there’s nothing wrong with them.

What is revolutionary about this change in the law is that it does not just apply to physical purchases; for the first time, digital content such as apps, ebooks, online games and software downloads are included. This gives consumers real power to get the quality goods, service or digital content they are entitled to, whatever they are buying.

Clarity in the law is also positive news for retailers, as it allows them to build a more open and trusting relationship with their customers. A direct conversation between a shopper and a retailer will be able to resolve most disputes quickly and with satisfaction on both sides.

However, it does place more responsibility on the retailer to step up and sort out the problem – and as retailers well know, dealing with returns can be a costly exercise, particularly with widespread problems, such as a faulty batch of goods.

The new Consumer Rights Act will force many businesses to look more closely not just at their returns process, but also the rationale behind items being sent back, if they want to streamline operational profits.

Not enough is known within some retailers about why goods are being returned, or major faults are not being detected until far down the line, when large quantities of that product have been sold.

In order to truly improve customer service, the retail industry needs to focus not just on how to make it easier for shoppers to return items, but also how to prevent customers wanting to send purchases back in the first place.

A great example from consumer electronics; when tested, less than 5% of electrical goods returned on the basis of being faulty actually had a problem. Instead, problems with the set-up instructions, lack of clear advice or poor after-sales service have led to operating errors or malfunctions.

Similarly, in fashion, just 1-5% of customers are responsible for 20% of all returns, meaning there are shoppers who buy frequently that are actually costing companies money, because they send most of their purchases back.

Being able to identify the weak links in the chain can enable retailers to make key changes to reduce return rates – it could be something as simple as adding diagrams to an instruction booklet, or scaling back promotions targeting certain customer segments.

This way, not only is the customer happier because they get any returns issues dealt with promptly and productively, they are happier because they are more likely to get what they want in the first place.

It’s a win-win situation. 

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