A guide to consumer rights for small businesses

Customisable business insurance
10 March 2022
10 minute read

The UK has a long and distinguished history of consumer protection. Methods such as hallmarking metal goods have been used to protect the public against fraud in Britain since 1300AD. In more recent history, much of the modern framework of consumer protections has been built up in the second half of the 20th Century through the UK’s membership of the European Union (EU) and a long series of directions and regulations.

But what about the UK of today, in the 21st Century, especially now that the UK has left the EU? How are present-day consumers’ rights protected. Furthermore, what impact do the laws and regulations that enshrine these rights have on the millions of small businesses that form the backbone of the UK economy.

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The Consumer Rights Act 2015

The principle piece of legislation that currently supports the protection of consumer rights in the UK is the Consumer Rights Act 2015. In essence, the new law streamlined and replaced existing legislation under the Sale of Goods Act, Unfair Terms in Consumer Contracts Regulations 1999 and the Supply of Goods and Services Act 1982, while adding significant new regulations surrounding the sale of digital products.

The new law aimed to modernise the system of consumer rights protection that had, until that point, fallen behind advances in the provision and distribution of goods and services. In order to combine previously separate rules and regulations, the new act covered four broad areas:

  • Goods
  • Digital content
  • Services
  • Unfair terms in contracts

The legislation was intended to protect consumers and adapt existing rules and regulations to suit the realities of 21st Century business. In order to help small businesses comply with the law and remain successful, competitive and trusted by consumers, we have broken down the key elements of the act and how it impacts your business’ operations.

How consumer rights impact small businesses

The laws that govern the protection of consumer rights in the UK, specifically the Consumer Rights Act 2015, apply to all businesses, big or small, from the largest of retailers like Tesco and Sainsburys, through to sole trader businesses run by a single person.

Given that SMEs make up staggering 99.9% of the UK’s business population, with small businesses accounting for 99.2%, and that Superscript prides itself on being a champion of small businesses, let’s focus on how these regulations affect the small business community.


The Consumer Rights Act stipulates that all physical goods sold by any business (or ‘trader’) to a consumer must be:

  • of satisfactory quality and fit for a particular purpose
  • installed correctly (if installation is included in the contract of sale)
  • sold as described
  • a match of any sample or model

Consumers are entitled to a 30-day period after they purchase any goods from your business in which they can exercise what is called a ‘right to reject’ the product if it does not meet the standards stated above, for instance if it is faulty, incorrectly installed, or does not match the sample.

During that 30-day period, you must offer a full, 100% refund to any consumer that asks for one if the product fails to meet the necessary standards.

The only exception to this is when the expected life of the goods is less than 30 days. In this case, you should make clear when selling the product what the expected life of the product is.

As a small business, you should be aware that your obligation to the consumer does not end after the 30-day period has ended. Beyond this time limit, a consumer can claim a ‘repair or replacement’ of the goods if they are faulty or do not meet the standards stated above. If the repair fails or is unavailable, then the consumer has a right to a price reduction (up to 100%) or a final right to reject the product and claim a 100% refund.

Consumer rights

Digital products

One of the most significant additions to consumer rights legislation that came into effect in 2015 surrounds the issue of digital products.

Just like with physical goods, digital products (such as music downloads, video or mobile games, apps and films) must be:

  • of satisfactory quality and fit for a particular purpose
  • as described, including system requirements

If your small business produces or distributes digital content in exchange for money then you should be aware of these standards, and the rights that consumers of your digital content enjoy in regards to their purchase.

If the digital content that your customer has bought from you is faulty, then you must offer the customer either a replacement product, a way to repair their purchased product, a price reduction, or a partial or full refund.

However, unlike with goods or services, where a consumer enjoys a 14-day ‘cooling off’ period after entering into a contract in which they can cancel their contract without financial penalty, downloaded digital content works a little differently. If your business sells downloadable digital content, then as soon as the customer downloads their purchase, they are considered (under the terms of the Consumer Rights act) to have waived their right to a ‘cooling off period’.

‘Freemium’ content

These legal minimum standards for digital content also apply to the increasingly popular ‘freemium’ content model, whereby an app is free to install and use, but a user must pay to access more than the most basic features, or to remove adverts.

This is of importance to small and medium-sized businesses in the UK who develop or distribute ‘freemium’ digital content such as mobile games with in-app purchase options, an industry that has ballooned to be worth an estimated £550 million to the UK economy by 2020.

Any digital content that includes purchase options after being downloaded must abide by the standards set out in the Consumer Rights Act, even if it is free to initially install.

Important exclusions to know about

If your business produces and sells or distributes digital products, then there are certain reasonable situations in which consumer rights are subject to exclusions. They include:

  • If you draw attention to any unsatisfactory aspect of the digital content before any contract is made (eg. if a computer game you’ve developed is in beta testing phase and may contain bugs)
  • If the customer is allowed to examine the digital content before any contract is made between the trader and consumer where such an examination should reveal any aspects that are unsatisfactory. This can include a trial period.


When a customer pays your business to provide a service, they can expect that the service in question will be:

  • performed with reasonable care and skill
  • completed for a reasonable price
  • completed within a reasonable time or within a specified timescale (if one is provided)
  • completed in accordance with any information either said or put in writing to the customer (such as assurances, price quotes and timescales)

If you, as a business, fail to meet the standards set out above (particularly with regards to reasonable skill and care) when you providing your service, then your customer has a right to:

  • request a repeat performance within a reasonable timeframe with the business bearing any necessary costs
  • a price reduction of up to 100% of the price of the service if a repeat performance is not possible of you are unable to repeat the service within a reasonable timeframe

Example: You run an interior design business, specialising in decorating venues for parties. You quote a client £1500 to prepare the decorations and furnishings for a large event and your contract specifies that the work will be completed in time for the party’s start at 6pm. Due to staff shortages, you do not complete the installation of the furnishings by the party’s start time. Because the party is a one-off event, a repeat performance is not applicable or possible, so your customer is entitled to request a price reduction because of the failure to fulfil your contract.

If you agree with your customer that they will receive a refund (of any amount), then you must pay this refund back to the customer within 14 of the refund being agreed.

There are certain exclusions to the consumer’s rights when paying your business for services:

  • If the outcome of the work you undertake does not achieve the customers desired outcome, even though you have delivered the work on time and with reasonable care and skill
  • Where the failure to deliver the services paid for is directly because of the actions of the consumer

Unfair terms in contracts

A key area that is covered by consumer rights legislation is that of unfair terms in contracts. Two of the important pieces of legislation that the Consumer Rights Act replaced were the Unfair Contracts Terms Act 1977 (UTCA) and the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCR).

This is of real importance for small businesses that enter into contracts of sale for either goods, services or digital content because any contract that is deemed to contain ‘unfair terms’ is not binding on a consumer.

Under the Consumer Rights Act, the government expanded an already existing list of terms that are considered unfair to be included in a contract, known as the Grey List. This list is extensive but some of the principle terms labeled as being unfair include:

Exclusion of liability for death and personal injury, faulty products, delays and poor service
Unequal cancellation rights between traders and consumers
Requiring consumers to pay for services not supplied
Excessive notice periods disproportionately high sum in compensation for consumer cancellation
Trader’s right to cancel without notice
Binding consumers to hidden terms
Retention of prepayments on consumer cancellation
Binding consumers while allowing the trader to provide no service
Unfair enforcement powers
Transferring inappropriate risks to consumers

In the case of services, whether it is written into a contract or not, there is always an implied term that the service will be provided with reasonable skill and care. You cannot, as a service provider, include any term in your contract that excludes this.

For small business owners, it is vitally important that you know and understand what is included on the full Grey List before you start drafting contracts for the sale of goods or services, to avoid any claims being made against you by consumers.

Protecting your small business

Refund and returns policy

One way in which to ensure that your business complies with all relevant consumer protection regulations is to make sure that you have a clear refund and returns policy, especially in the retail sector and that this is displayed prominently in your business premises or website.

The details of your refund and returns policy will depend somewhat on whether you trade in goods, services or digital products. Whatever your product or service, however, your refunds and returns policy must meet the legal minimums specified in the Consumer Rights Act and outlined above.

However, you can choose to go beyond the standards set out in the legislation and offer more generous refund and return periods to customers as a show of good faith and to encourage trust in your brand.

If you are preparing to write your business’ policy, then Business Companion have created a useful guide to creating a refunds and returns policy that can help you prepare your own document.


Many of the laws and regulations in place to protect consumers rights in the UK revolve around two areas:

  • The quality and integrity of the product or service being sold
  • The way in which the product or service is described and advertised

Superscript’s business insurance provides SMEs with protection on both of these fronts, in the event of a claim made against your business by a consumer.

Product liability

In essence, product liability insurance covers any products you sell to consumers, either physical goods or digital products. Consumers have a protected right to expect that the products they buy will meet certain safety and quality standards, but with long supply chains, this can be difficult to guarantee in every case.

If a consumer is injured or their property damaged by a product you sell (even if you did not manufacture the product yourself), product liability insurance can help with your legal and compensation costs in the event of a claim.

Media liability

As a business (or ‘trader’ to recognise the term used in the Consumer Rights Act), you have a responsibility to consumers to advertise and market your goods and services accurately. Even if your business would never deliberately mislead customers, mistakes do happen and there are times when consumers’ rights are infringed by accidentally misleading or negligent marketing.

Thankfully, Superscript’s media liability insurance covers negligence in media content and advertising, including website, blogs and social media. You’ll be covered for the legal costs, fines and compensation that arises from claims against you.

Business to business (B2B) contracts and consumer rights

Crucially, it is important for small businesses to understand that business to business (B2B) sales and contracts operate in an entirely different way to business to consumer (B2C) transactions.

Businesses are not protected by the Consumer Rights Act 2015 and generally do not enjoy the same protections as individuals or households when it comes to the sale of goods or services, or entering into contracts. For instance, consumer rights protections such as a 14-day ‘cooling off period’ upon entering a contract do not apply between businesses.

The only significant recourse that businesses have against unfair contract terms entered into in B2B contracts is provided by the Unfair Contract Terms Act 1977. This states that a supplier business cannot add exclusion clauses into their contracts with your business that excuse them from:

  • Injury or death
  • ‘Unreasonable’ negligence leading to loss or damage
  • Providing ‘unreasonably ‘ poor quality or faulty goods

If your business has entered into a B2B sales contract that you believe is unfair or you have been accused of breach of contract by another business, then you may wish to consider legal protection insurance. This insurance can allow small businesses to cover their commercial legal affairs as efficiently as large organisations with in-house legal teams.

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This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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