Lord Stevenson of Balmacara
Main Page: Lord Stevenson of Balmacara (Labour - Life peer)Consumer Rights Bill
Lord Stevenson of Balmacara Excerpts“( ) Digital content as defined under section 2(9) shall have the same rights as goods under this Act.”
Lord Stevenson of Balmacara (Lab)
My Lords, Amendment 31A is also in the names of my noble friends Lady Hayter and Lord Knight of Weymouth, whom we welcome back this afternoon. He is too often away from our business and of course has great expertise in this area.
In his report, Consumer Rights In Digital Products, prepared for BIS in September 2010, Professor Robert Bradgate starts by saying:
“One might be forgiven for thinking that the questions addressed in this report would have been answered before now. Digital technology is now well established and widely used; consumers are familiar with and regularly purchase digital products and, indeed, some of the core questions considered in this report were first considered by a common law court as long ago as 1983 and first came before the English Commercial Court in a reported case in 1988. Nevertheless, there is as yet no wholly authoritative and satisfactory statement of the legal rights consumers enjoy on purchase of digital products. The area is not covered by subject specific legislation, and it is not clear whether digital products fall within the existing consumer protection regime of legislation such as the Sale of Goods Act 1979 … or the Consumer Protection Act 1987. This must be regarded as unsatisfactory”.
That is a bit of an understatement, I think, and it is good that the Government are now bringing forward proposals to try to codify and update the law in this area.
Last week in Grand Committee we talked about tangible goods and services but, in reading further the report I have just referred to, I noticed that there were some comments about the general propositions of introducing consumer legislation that have not yet been taken into account. Professor Bradgate says:
“It is generally accepted that the commercial community favours certainty in the law; the original Sale of Goods Act 1893 was passed on the request of the commercial community, which wanted a clear and accessible statement of the law governing contracts for the sale of goods. Equally, lack of certainty in the law is contrary to the interests of consumer buyers and may be exploited by suppliers to deny consumers their rights. It will rarely be economical for a consumer to take professional advice on a claim relating to even a relatively expensive consumer purchase, let alone to initiate legal proceedings”—
that is the point we have been making. He goes on to say:
“A clear, authoritative statement of the law would therefore be in the interests both of businesses and consumers”.
Chapter 3 concerns contracts where a trader agrees to supply digital content to a consumer. Digital sales are different from goods or services and there has been substantial debate over whether or not they are similar to goods. In particular, as most digital content is bought online, the trader and consumer do not meet and that makes it even more important to have clear rules about what each can expect and what to do if things go wrong. This is increasingly the way in which we will obtain goods and services in the future so we ought to try to use this Bill to at least get the principles right.
Why does digital content matter? In the UK entertainment sector, digital music, video and games now account for 43% of total spend; digital video games were worth £1.17 billion in 2013; 99.6% of the 189 million singles sold in the UK in 2012 were digital downloads; and 27.7% of British consumers downloaded or streamed music legally, meaning that it affects some 17.5 million citizens, especially young consumers, as 95% of 16 to 24 year-olds buy digital content. There are various other figures, including a 40% increase in spending on digital videos through downloads and recent research that puts the UK as the leading European country for total digital content spend per capita.
It cannot be sensible for the Government to be sanctioning two different regimes for tangible and intangible goods and services, and even if that situation prevails at the end of this Bill, I very much doubt that the courts will actually stand for it. Simplification and clarification of the law in this area should make it easier for businesses to understand and comply with their responsibilities; to explain and communicate to consumers what their rights under the law are; and for consumers to understand and assert their rights when things go wrong and they receive poor service.
The recent and continuing proliferation of portable internet-connected devices, including tablets and smartphones, has provided consumers with many more opportunities and new ways in which to access, purchase and consume digital content. The pace of development in the digital content sector—with new device launches, a broadening array of new products and services, and a sharp growth in digital content sales of all types—make efforts to clarify digital content rights and remedies in order to protect consumers timely and welcome. Our amendment seeks to align the rights for digital content with those for goods as far as is possible.
The department has produced and recently circulated a useful note on the differences between digital and tangible goods, for which I am grateful. The main issue between us is the question of whether, if digital content is provided in an intangible form and does not meet quality standards, the consumer should be restricted to a right of repair or replacement only. We strongly believe that the consumer should in such cases have both a short and a long-term right to reject digital content.
I draw the Grand Committee’s attention to the BIS Select Committee’s scrutiny of the Bill, which makes the case rather well. In paragraph 120, it says:
“The remedies for faulty digital content differ from those for goods. Unlike faulty goods, which a consumer will be able to reject within 30 days and receive a full refund, consumers will not automatically have a short-term right to reject faulty intangible digital content. The Government’s argument is that this is because digital content is not provided on a tangible medium”—
which seems somewhat circular—
“where it is downloaded or streamed and therefore ‘cannot be returned in any meaningful sense’. However, consumers will have a short term right to reject digital content sold on a tangible medium (such as on a DVD or CD)”.
In paragraph 121, it says:
“The different remedies available for tangible and intangible digital content in the draft Bill would … embed inconsistency into consumer law. Consumer groups argued that consumers experience intangible digital content in the same way as tangible digital content, as a good, and therefore would expect to be able to reject it and receive a refund if the statutory rights are not met”.
It is also worth also quoting the consumer organisation Which?, which said:
“We believe that it is inappropriate for the law to deny consumers an appropriate remedy due to the perceived risk of certain behaviour from a minority of others. Further, where digital content is purchased that is not as described, a replacement or repair will often not be a suitable remedy”.
Now, I accept that the concept of “returning” intangible goods does not easily sit with digital content and that digital content is very easily copied and can be very difficult to delete from a device, certainly by those of us without technological skills. However, the situation we are in is that a consumer who has bought intangible digital content which turns out to be faulty has the right to a full refund only in one particular area: if the trader did not have the right to provide the digital content in the first place. If any of the other statutory rights that are available to everybody else for goods and services are not met, the consumer does not have access to a refund. The Bill does not provide a short-term right to reject or even a second-tier remedy of rescission of contract for intangible digital content, which means that a consumer would not be able to obtain a refund if any other statutory right were breached, on the basis that intangible content cannot be returned. That simply cannot be right.
Is there not a way through this? I note in the BIS Select Committee report that the Government were arguing at one stage that it may not be necessary to require a consumer to return or delete unsatisfactory digital content, on the basis that,
“existing legislation adequately protects IP rights”,
of the supplier. In other words, where a consumer has rejected the download, she or he ceases to hold rights in that material, and any subsequent copying or use would be a breach of IP rights. Can the Minister advise me if my reading of the situation is correct? If that is the case, it seems to create the ability to bring consumer rights on intangible goods to the same level as rights on tangible goods, so that we have parity.
I agree with the BIS Select Committee that we ought to remedy the existing inconsistency in the Bill, and that there should be a short-term right to reject and a final right to reject in relation to intangible digital content. At the very least, the Bill should require that in these circumstances there is an obligation on the consumer to delete the relevant intangible digital content. In addition, the Government should set out in detail their legal advice on the question of IP rights if the right to reject is adopted.
Professor Bradgate, whose report I quoted at the start of my remarks, says:
“It is therefore recommended that the 1979 Act be amended by way of an extension of the definition of goods to apply provisions of the Act both to goods, and to digital products … and to include power in the amending legislation for Her Majesty’s Secretary of State to apply the Act by Statutory Instrument to new developments as they arise”.
Why did the Government not follow his advice? I beg to move.
Lord Knight of Weymouth (Lab)
My Lords, I too applaud the Government for wanting to legislate on this area, because it is moving very fast and we will have to keep coming back to it. My noble friend has reminded us of the importance to the nation of the digital economy and we see, as an example, the huge numbers of people now being employed in it and the exponential rate at which vacancies are occurring. Indeed, we have a committee of the House looking at digital skills at the moment. It was a joy to see the noble Baroness, Lady Harding, being introduced into the House today to add some expertise for us in this area. Perhaps when she has had a chance to settle in she can visit this subject on Report. I also remind the House of my interests as managing director of online learning for TES Global and the somewhat overegged expertise, to which my noble friend referred, coming from my professional work in the last six months.
I would, obviously, agree that, given the importance of the digital economy and the extent to which it is now in the mainstream of how many of us live our lives, it is important to have, as far as possible, a single regime for consumers and producers on how this works, because that makes it more intelligible to us all. I am pleased that, in this clause, the Government are giving powers to the Secretary to State to look at exchanges other than by money. For instance, in subsection (3), some of these powers can be brought to bear if personal data are being exchanged rather than just money. When does the Minister think that these powers might be used? We know that many of the services most of us consumers use are notionally free, in respect of monetary exchange, but those of us who bother to read the terms and conditions know that we are getting these services for free in exchange for the platforms being able to use our data. So there is a very real exchange of something of huge value to us and this is of increasing public concern. I am of the view that the Secretary of State should be thinking actively about when these powers might be used. I would be interested in any guidance which the Minister could give.
It is also a delicate area because of the nature of iterative change of digital products. These days, it is likely that most producers of digital products will take advantage of the fact that they can alter them on an hour-by-hour basis, not just day by day or week by week. It is perfectly normal, and in the good interests of innovation, for products which are not functioning perfectly to be iteratively improved without them having to be returned, which might be the case if they were real products. We obviously need to legislate with iteration as well as agility in mind. Although I endorse the notion that, for the mainstreaming reason, we should, as far as possible, have the same regime, it is important to think about whether there are aspects where digital products might need slightly different consumer rights. If I were to purchase software on a CD and it did not work, I would expect to be able to return it and get something that did, or my money back.
However, if I am downloading an app from an app store, be it the Apple Store or Google Play, and I paid only 59 pence for it, these days I would probably just tolerate it not working well. If it did not work, I would go and buy another one for 59 pence. I am not that fussed about getting my 59 pence back. But it might suit me, as a consumer, to be able to say to the producer of the app via the platform, “It doesn’t work and you have 28 days to put it right”. I have then not wasted my 59 pence. That is a different approach to returning it and getting my money back, but there is merit in thinking about different sorts of rights, given the ability of producers to iteratively improve.
Finally, a point which would be worth ensuring is not far from the forefront of your Lordships’ minds is the fact that many of these digital products are co-produced, in some cases by minors. We all know the stories of 14 year-olds who suddenly become millionaires after having created a brilliant digital product. The notion of the producer being a powerful individual is not necessarily true, so we need to ensure that whatever digital consumer rights we create are viable in relation to the producers of the goods we are talking about. On that rather rambling basis, I am happy to support my noble friend and I look forward to the Minister’s reply.
Baroness Neville-Rolfe
The department always keeps the operation of new regulations under review, and I can certainly follow up with the precise detail on this provision, if that is helpful.
The noble Lord, Lord Knight, also asked whether the consumer could require a trader to delete any data that they may have collected. In a sense, the answer is similar: it would be a significant departure from the current regime, which traders are familiar with, and of course data protection rules need to be complied with at all times.
The noble Lord, Lord Stevenson, I think asserted that consumers have the right to a refund only if the trader did not have the right to supply it. However, as I have just said under my second general point, the consumer can get 100% of their money back under Clause 44(2) if a repair or replacement cannot be made within a reasonable time or without significant inconvenience.
In conclusion, I have heard the argument in favour of giving intangible digital content the same rights as goods, including applying the short-term right to reject. I realise that there are strong views on both sides of this debate and a keenness to get this area right. We are already improving the situation for digital content by providing new rights when consumers buy digital content. There may be some attractions to the idea of providing exactly the same rights for digital content as goods, but the issues are not clear cut and a balance has to be struck with the impact on industry. To exactly align the rights for digital content and goods could have severe consequences—to the detriment of industry, which would have to bear the costs, and consequently, I fear, to consumers, who might suffer from reduced product offerings, reduced innovation and, ultimately, higher prices. I therefore ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for her response, although I am very disappointed in it. I also thank my noble friend Lord Knight for his contributions. It is obviously going to be a lively afternoon if this is the rate at which he intends to intervene. I encourage him to do so, a bit like “Angry Birds”—or is that the wrong analogy? Just while I have him in my sights, his support for me was, I think, generous but perhaps a little lukewarm on the central point, which we might have a talk about afterwards. However, I also felt two things about what he was saying—which I think is relevant to the debate; I am not trying to pick on him. I agree that very often the download level, at which you are paying a matter of pence for things, can look very trivial, and that perhaps makes the effort of trying to remove the charge uncertain; but there are people in this world who look after the pence and hope that the pounds will look after themselves. For all people we have to be sure that there is not a massive rip-off taking place on a big scale. Prices are important, but they are not the only determinant.
Secondly, the failure to find a way in which one can return intangible downloads is also a way of cluttering up one’s computer. I think that I would be quite pleased if I got rid of some of the stuff that I have wittingly or unwittingly received in my computer which is slowing it down. These are points that we perhaps might come back to.
My main argument is that there is a lack of consistency in approach here. It is therefore not really about the detail, it is about the principles of this. In light of the fact that the consumer can experience some types of digital content in both tangible and intangible form, it seems unarguably the case that we need to have a single remedy and a single process under which that is operating. I think that we are building in problems for ourselves as a society if we do not get this right at this stage, and I fear that the Government are getting it wrong.
There is also a danger that the market will become skewed if one regime is seen to be effective and efficient for tangible goods but there is another for intangible goods. The better consumer protection for tangible goods and materials will be of benefit, and higher prices may even be applied to that area. Again, that would distort the market, which I thought was what we were trying to avoid. The cost elements of the two platforms are an issue to which we would have to return.
The Minister said she was worried about consumers’ willingness to try new and innovative products, but we are not hearing—as we have in previous debates in this Committee—that it is an important tenet of consumers’ interest in new products and innovative solutions that they have security in their rights. If they do not have easy, effective and properly organised rights as regards intangible goods, they will be less likely to take innovative material. That would be bad for innovation and our economy.
The Minister said that what we were asking for was a step too far but, as we heard from my noble friend Lord Knight, there is a huge asymmetry in the relationship between the traders now operating on the internet and consumers. He gave an example about the benefits that come back to producers in the form of personal data and the unwillingness of the Government to take that on board as a serious issue. If a consumer takes a free download in return for providing personal data but has no redress in terms of what the data are used for if he chooses to reject the material he has downloaded, there is a new asymmetry that we need to think carefully about.
Lord Knight of Weymouth
I am most grateful to my noble friend and I apologise if I am getting tedious. Through him, I say in response to the Minister’s response to my intervention that this is something that the Government need to think carefully about. We recently had the case of Snapchat and the pictures saved through Snapsaved.com that were released, involving a gross invasion of people’s privacy. If people decide that they do not want to risk that and therefore want to delete apps and cookies from their systems, it is reasonable for consumers to demand that those data, such as their pictures, should then be deleted by that producer.
Lord Stevenson of Balmacara
I thank my noble friend for his intervention.
In conclusion, the argument that it is not possible for us to legislate in this area, because it is just too uncertain and difficult to require consumers to behave appropriately in relation to the products that they have downloaded or bought in an intangible form, does not stack up. It would be perfectly possible, as was recommended originally by the first report received by the Government on this matter, to place a legal duty on those who wish to return digital downloads to delete them, and if they do not do so, to rely on what was implied by the Minister—that there may be rights available to the producer to ensure that anyone who tried to reuse material that they wished to return would be subject to penalties under the law. We are placing a lot of responsibility on consumers to take up matters through the courts. Why should there not also be some responsibility in the hands of the producers?
We will return to this point but, in the mean time, I beg leave to withdraw the amendment.
“( ) For the purposes of this Act, intermediary services which enable access to digital content by being a platform for introducing a consumer to a trader shall also not be considered to have supplied digital content.”
Lord Stevenson of Balmacara
My Lords, Clause 33 sets out which contracts to supply digital content are covered by this chapter. It clarifies that the chapter will apply to contracts between a trader and a consumer where a trader agrees to supply digital content that has been paid for with money; associated with any paid-for goods, digital content or services; or paid for with a facility, such as a token, virtual currency or gift voucher. As well as dealing with the substantive issue raised in the amendment, it would be helpful if the Minister can indicate whether “freemium” games and other free downloads are covered by this clause.
The substantive part of the amendment aims to make the distinction between intermediary trader services and a trader explicit. The reason why online platforms, from small bulletin boards to sites such as YouTube, eBay, Amazon, Facebook, Twitter and so on, are so beneficial is that they allow anyone anywhere to instantly connect with billions of people around the world. Before, if you wanted to speak to a large audience, you needed to own a broadcast tower. If you wanted to reach consumers around the world directly, you needed to set up store fronts. Now, all it takes is a website host, YouTube or eBay and you can connect with a global audience.
Baroness Neville-Rolfe
My Lords, I enjoyed the graphic picture described by the noble Lord, Lord Stevenson, of how things have changed and the smaller scale of everything as a result of the digital world. Despite his comments on the previous amendment, I think that we share a common goal: to legislate for the consumer of digital content in a 21st-century way.
One of the main aims of the Bill is to provide clarity on what rights consumers have when goods, digital content or services are substandard. I am sure that we are all agreed that one of the things that a consumer needs to know is to whom they should go when things go wrong. Intermediary businesses also need to be clear on when the rights do and do not apply to them, particularly when they are developing new and innovative business models. The digital content quality rights are contractual rights consumers have when they pay a trader to supply digital content to them under contract.
The noble Lord, Lord Stevenson, asked whether freemium products were covered by the clause for those who are not as digitally aware as some among the younger generation. A good example would be “Smurfs”, which is a free game but users can buy additional content within the game such as a house for Smurfers. The basic model is free but consumers then pay, sometimes at premium rates—hence the term freemium—for enhancements and additional features. Where a consumer pays for digital content and the trader provides it under a contract, the quality rights apply. This means that the initial free product will not attract the quality rights. However, the later paid-for features will, indeed, attract the quality rights. This includes being fit for the purpose for which they were bought—that is, to use in connection with the free product. Those of us who have studied the proceedings in another place will know that “Candy Crush” occupied a great deal of time among Members, to their great delight.
The noble Lord also asked what happens when the two matters come together and whether the quality rights that apply to the paid later additions then change the status of the free product. I will come back to him on that point.
The digital content chapter covers a consumer contract with the trader who supplies the digital content and not the intermediary who introduces the consumer to the trader, as they are not supplying that digital content. The intermediary will be covered only if they also supply digital content as part of their business. For example, if a consumer buys a computer game from an online trader such as Green Man Gaming, Green Man Gaming is the trader, in the same way as if they buy a board game from WH Smith, WH Smith is the trader.
If the consumer uses a search engine to find a trader from whom they can buy the game, the contract is not between the search engine and the consumer. The same is clearly true in the physical world. If the consumer uses Yellow Pages to find a shop, Yellow Pages is not the trader.
What consumers need to know is who the trader is. This information needs to be clear and transparent. I know that this is not always the case in the digital world. However, the consumer contract regulations, to which we referred in our discussions last week, came into force in June, particularly in respect of distance sales. They require that the identity of the trader and their contact details are provided to the consumer before the contract is made. This applies to digital content as well as to goods and services. Therefore, the proposed amendment is not necessary because this is how our reforms work. The rights apply against the trader the consumer has paid for the supply of digital content and not against the intermediary. The name and contact details of the trader have to be provided to the consumer under those regulations. I therefore ask the noble Lord to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the Minister for her response. I take it from that that there is now agreement and clarity about the role of the intermediary, which I fully accept. I am glad to have on the record that the trader is the person with whom the consumer is contracting to provide a particular good or service delivered digitally and that the role of the intermediary is not involved unless they are also supplying either directly or indirectly material which could be called digital and it would be a paid-for service. I am also grateful for the confirmation that the consumer contract regulations will apply to that.
What I am not quite so happy about is the point raised by my noble friend Lord Knight about free downloads and what constitutes a free download—that is, not for monetary consideration—in the digital world. I wonder if the Minister would take that point away. It obviously comes up in relation to the freemium type of arrangement, but there are wider considerations here. I do not understand why the Government are taking a rather pure view of the fact that the trigger point appears to be the transfer of cash for a product that is already embedded into something that has been downloaded. The vanilla version—if I can use that term—of the game is clearly being used and operated in a traded way even though money is not being exchanged. There must be a reasonable expectation on both sides that a later development in that process would be for money to be exchanged so that the game could be enjoyed at a higher level. If the rights to it kick in only at the point at which consideration passes, then we are not covering the point at which the free version somehow interferes with and reduces the enjoyment of the player. It is perhaps too complicated to deal with here, but I would be grateful if we could exchange letters on this point. With that, I beg leave to withdraw the amendment.
“(aa) any claim made by the trader as to the outcome the digital content will achieve,”
Lord Stevenson of Balmacara
Your Lordships will be glad to know that this is my third of three amendments, and then I will have a rest and noble Lords will have a rest from me. Then again, you may not wish to know that the noble Lord, Lord Clement-Jones, will follow; with his detailed knowledge and expansive style, he may be in the same position.
Clause 34 requires that digital content sold to consumers must be “of satisfactory quality”, according to the expectations of a “reasonable person”. I am sure that it is obvious to all concerned that there are several different factors that will affect whether or not the quality expectations of a reasonable person are going to be met. These factors are: any description of the digital content, the price paid and its state and condition, as well as any other relevant circumstances. That is a very broad definition. The clause sets out that the content should be free “from minor defects”, and this is to be judged by the “reasonable person” standard, too. Therefore, a reasonable person could be said to expect a music file to work without playback problems, but if the software is complex it may be impossible to release a perfect version, and so the reasonable person would be expected to accept minor defects.
However, consumers are reporting problems with digital content. A recent EU study found consumers reporting one or more problems at, in the category of music, a level of 16% of downloads; for games it was 16%; for ringtones it was 19%; for antivirus software it was 23%; and for e-learning—presumably not TES—it was 22%. Our amendment would protect consumers where claims are made about the outcomes of a digital purchase. This follows on from the debate last week about tangible goods and what is “satisfactory”. There are obviously differences in relation to digital content. If, for example, a piece of antivirus software claims to remove all viruses or that it will protect your computer for two years and it turns out that it does not, a consumer should be able to rely on this outcome claim in being able to prove that this digital content is or is not of satisfactory quality.
In this area there are major differences between what the least and the most knowledgeable people understand about the products they can purchase, and therefore about what their expectations should be. The draft legislation assumes that digital goods should have a clear and specific purpose. That may seem a straightforward aim: it seems like an obvious truth that a product should do what it says on the tin. However, the short history of digital innovation shows that frequently the most successful innovations do not happen in ways that were expected when they first began. Amazon, Google and Facebook are obviously now used for much more than simply buying books, providing lists of links or student dating, although I gather from my children that Facebook still does have that function.
So, given that flexibility of purpose is both valued by consumers and critical to the evolution of digital goods, surely the legislation should take care that assumptions about the need for digital goods to have a specific purpose do not stand in the way of the innovation that consumers value and expect developers to deliver. Obviously, the ordinary consumer knows that they will need antivirus software before going on to the internet but they may not know how it works, what it will and will not stop and the nature of the latest threats. This places them in a far weaker position if they are negotiating with a trader.
If the consumer specifies that the digital content will be used for a particular purpose, the digital content must be fit for that particular purpose. For example, if a consumer tells a trader they want a piece of educational software for their preschool child and finds that it is in practice only suitable for an older child, we need to be able to say that it would not be fit for that particular purpose.
The clause also covers digital content supplied for a particular purpose, even where that is outside the usual purpose of goods of that type. This may be most applicable to specialist software, where a person may be seeking to use software in an innovative way. For example, PowerPoint can be used to design posters as well as doing slideshows, so a trader could conceivably sell this software for that purpose. However, posters designed using this software are not really of good enough quality to print and use and there are much better products available to do this. So, in some senses, it is not fit for purpose. This could be a problem for small businesses which may buy a piece of software off the shelf because they cannot afford a bespoke version and are then in trouble when it turns out not to be able to function as they intended.
Amendment 35 seeks to cover any public claims made by the trader about what the software may or may not be able to do that is not a usual function which would affect whether it is fit for purpose. This is a somewhat complex issue and will only apply in rather limited circumstance as interactions between buyer and seller will generally be private and not made publicly. So the amendment is quite narrow and would cover, say, a scenario where a trader was asked about a product in a public arena, such as a trade fair, and said, for example: “If you want to design posters without paying for specialist software, download PowerPoint for half the price and use that”. The consumer could then rely on this right by saying that the public statement did not achieve the quality outcomes that they needed. I beg to move.
Baroness Jolly (LD)
My Lords, for the first time, this Bill clarifies what rights consumers have when they buy digital content. Those rights include that the digital content be of satisfactory quality. If, before making a decision to buy, a consumer relies on a claim as to the outcome of digital content, it is, in many cases, absolutely right that this claim should be taken into account when assessing whether the digital content is of satisfactory quality. It may not, however, be appropriate when the claim relates to factors such as the subjective enjoyment of the content, such as an action game trader saying that the game will give the consumer “the greatest thrill of your life”. Thank you to the Bill team for that one.
That is why, as with goods, one of the factors taken into account in an assessment of satisfactory quality is “other relevant circumstances”. Again, I would like to stress that Clause 34(5) provides that this includes,
“any public statement about the specific characteristics of the digital content”.
This could include key outcomes. Where a consumer has relied on a claim made by a trader as to the outcome of the digital content, in many cases they will therefore already be able to take this into account when judging whether or not the digital content is of satisfactory quality.
When we discussed the question of outcomes relating to goods, the noble Baroness, Lady Hayter, distinguished claims about the physical characteristics of goods from claims about the outcome that the goods were supposed to achieve. Noble Lords may remember that there was much talk about the efficacy of washing machines and washing powders. However, statements about digital content may form part of the description—if the statement says that a calendar will include details of all public holidays, for example. Consumers have clear remedies if digital content, like goods, is not as described.
Where consumers are deliberately misled—again, as we have discussed in relation to goods—consumers are also protected under the Consumer Protection from Unfair Trading Regulations. The Government have given consumers a private right to redress if these regulations are breached, and we have clarified that they will apply to sales of digital content. These changes came into effect on 1 October. Under the Bill and the regulations, therefore, it is clear that there is strong consumer protection in place in relation to claims made by traders as to the outcome that digital content will achieve.
Earlier in Committee, the noble Baroness, Lady Hayter, expressed the view that if statements about outcome are already covered by the legislation, this should be included in the Bill to provide clarity to consumers. There may be a number of unintended consequences if that happened here. First, although it will in many cases be appropriate that public statements about the outcome of digital content should be taken into account when judging satisfactory quality, as with goods, a requirement that all statements be taken into account is not a practical option. Such a specific requirement would lose the necessary flexibility that we have under the current provisions. It would draw in statements made in advertising that are not intended to be taken literally. For example, an advertisement might state that a brain training app will turn you into the next Einstein, but a particular concern of the digital content industry, much of which is based on creative content, is that it would draw in statements as to the subjective enjoyment that the consumer would get from the digital content or the artistic merit of that content, which fall outside the meaning of “quality” that is understood in the Bill.
Secondly, there is a risk around narrowing the interpretation of “relevant circumstances”. The more circumstances that are specified as included, the greater the risk that the concept will be narrowly construed. As such, the Government consider that the Bill already provides the appropriate balance and flexibility in determining whether digital content is satisfactory. However, we can address the noble Lord’s point about providing clarity to consumers that statements about the outcome of digital content and goods are relevant factors in an assessment of “satisfactory quality”. This point will be set out in the guidance we will provide when implementing the Bill.
On Amendment 35, I do not dispute that it is important that consumers are protected if digital content is not fit for an advertised purpose. As we have discussed, the Bill provides this protection in Clause 34. The standard of satisfactory quality can include digital content being fit for its usual purpose and takes into account public statements made not only by the trader, but also by the producer or any representative of the trader or the producer. Clause 35 addresses a slightly different situation. Whereas Clause 34 refers to the purposes for which digital content of that kind is usually supplied, the purpose of Clause 35 is to ensure that consumers are protected when they rely on the trader’s judgment. If consumers make known to a trader that they intend to use the digital content for a particular purpose, and if it is sold to them on that basis, the clause clarifies that the digital content should indeed be fit for that particular purpose.
Let us take an example. A consumer may want to purchase an app that tells them whether or not their device is level, for the purpose of building a home extension. The consumer emails a trader to ask if the app can be used as a spirit level for building the extension and receives a reply stating that it would be suitable. So the trader has been made aware of the customer’s intentions for the app and has sold it on that basis. The consumer should be able to rely on the fact that the spirit level app will be accurate enough for their needs in constructing the house extension. Clause 35 protects the consumer even if the intended use is not the usual purpose for the digital content. Public claims about the digital content may not be relevant here. This clause is all about situations where the consumer is seeking the advice of the trader for less usual purposes, which may not be public. Indeed, this amendment may cut across the consumer protection that Clause 35 provides. Clause 34 already covers claims as to the quality or usual purpose of the digital content. I hope, therefore, that the noble Lord will be prepared to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the noble Baroness for her comments, although I am slightly alarmed by the example of the spirit level app. However, that may have more to do with my technological ineffectiveness in terms of dealing with the tools of the trade; we can talk about that later. The key to some of these issues is better guidance because it is clear that we are in new territory here. What works for tangible goods may not be as effective in terms of intangible goods, and I think that that is common ground between us. Obviously we cannot see the guidance now, but I would ask the noble Baroness to advise me, not necessarily from the Dispatch Box, whether it will be available for consultation before it is issued and whether there will be the usual round of discussions with trade bodies, producers, consumer bodies and others. That would be helpful in terms of getting us to the right place. With that, I beg leave to withdraw the amendment.
“(4A) The trader is required to provide full details of the total cost of digital content prior to sale, including details of any additional service fees or charges that could be incurred by the buyer in purchasing the digital content.
(4B) The information set out in subsection (4A) should be portrayed prior to sale and the explicit consent to purchase digital content at this price sought prior to sale.”
Lord Stevenson of Balmacara
My Lords, Amendment 39 aims to ensure that a consumer is aware of their statutory rights and what that means in practice ahead of any purchase. The purpose is twofold: to ensure that consumers have those rights at the forefront of their thinking when they place the order, and the corollary of putting the rights as they are offered back in the mind of the trader. That is obviously important for digital content because traders and consumers do not interact in real time. We still have a situation where the nature of the transactions for any digital goods is new for many people and where the technical information around content lies outside many people’s normal experience.
In that context, consumer rights need to be spelled out as clearly as possible—possibly more so than for traditional goods—so that they are not an additional complicating factor. The consumer should be required to acknowledge that she or he has received that information. Another part is to ensure that all the details of costs—including potential or optional costs—are available to the consumer before they download. As previously indicated, that is especially important for online sales: consumers are not on the forecourt of a car salesroom and they cannot ask the questions that arise out of a discussion about the physical object that they are about to buy. As I am bound to say, if the Government insist on maintaining their view that digital rights are curtailed relative to equivalent tangible goods, then surely greater prophylactic measures need to be in place.
The amendment would be a good thing in its own right, but it would give statutory force to the OFT’s recommended principles for the online game industry. These include being upfront about all costs, including the download cost, unavoidable costs once downloaded and optional extra costs. All material information about the game should be provided upfront before download or play begins. That will include what the game does, how it works, compatibility with hardware, whether the game contains advertising or marketing material, and how personal data may be collected, stored and shared. Information about the business providing the game or app should make clear who the consumer is contracting with and how they can be contacted in case of queries or complaints, or if they wish to seek redress. The OFT’s principles also make it clear that in-game payments are not authorised and should not be taken unless the payment account holder—often a parent in the case of many of these purchases—has given his or her express, informed consent.
It is also interesting that the Advertising Standards Authority works to similar guidelines on price advertising in its code, which is set out by its Committee of Advertising Practice. Those guidelines include that price statements must not mislead by omission, undue emphasis or distortion; they must relate to the product featured in the marketing communication. Quoted prices must include non-optional taxes, duties, fees and charges that apply to all or most buyers. If a tax, duty, fee or charge cannot be calculated in advance, perhaps because it depends on the consumer’s circumstances, the marketing communication or advertisement must make it clear that it is excluded from the advertised price and state how it is calculated. Marketing communications that state prices must also state the applicable delivery, freight or postal charges. If the price of one product depends on another, marketing communications must make clear the extent of the commitment the consumer must make to obtain the advertised price. Lastly, price claims such as “up to” and “from” must not exaggerate the availability or amount of benefits or discounts likely to be obtained by the consumer.
I mention those because they are relevant to the amendment: there is a lot more than simply putting a blanket price on a product. I am sure that all of us have been caught to some extent by not seeing prices. This will sometimes apply to tangible goods as well as intangible goods, but it is much worse for intangible goods because, as we have said, there is a lack of direct contact. For all these reasons and the ones already indicated, it would be interesting to hear the Government’s response to this. We should strengthen this clause for the benefit of consumers and traders. I beg to move.
Lord Knight of Weymouth
My Lords, I was hoping to catch my noble friend before he sat down, but I am sure he will save up his response. I am extremely sympathetic to the amendment, given that I have signed it with him. I have a question on in-app purchases. In the course of the Committee we have discussed the iterative nature of improvement and change. It is difficult for some suppliers to anticipate all the potential in-app services that may evolve over the life of an app, for example. Is it my noble friend’s intention that the supplier of the services should set out, as far as it can foresee, what the potential cost would be of further digital content that is not completely upfront, but that it would not be completely bound by the clause if it then chooses to offer something additional?
Lord Stevenson of Balmacara
My Lords, that is an interesting point. I think that the intention behind the amendment was to restrict the applicability to purchases and the information available at the time that purchase was made. However, it is a fair point to suggest that where a purchaser clearly has intentions to upgrade or change the product in some way, there is a case for that being signalled at the time that the purchase is originally made—that other options or, indeed, if it were mandatory, extra charges could be coming down the line. Perhaps the Minister could respond to that point.
Baroness Jolly
My Lords, this amendment relates to communication of the costs that the consumer will face. This can be particularly important for digital content provided under the “freemium” model, discussed earlier in Committee, where the original digital content may be provided for free, but consumers have the opportunity to purchase extensions and improvements to this content through “in-app purchasing”. That is why the Government are committed to providing clarity and transparency to consumers when it comes to costs.
I am sure that noble Lords will be happy to know that the Consumer Contracts Regulations, which came into force in June of this year, ensure that the trader provides information to the consumer about the total price, including taxes, before the sale is made. Under the regulations, this will have to be clear and comprehensible to the consumer before they buy. The Bill makes it clear that this information becomes part of the contract and cannot be changed without the consumer’s express consent. Furthermore, the regulations make it clear that the consumer’s express consent must be given before any payments are made in addition to the main price.
We have also made it clear that pre-ticked boxes, where the trader has already ticked the “agree” box for the consumer, are not enough to signify express consent for those additional payments. This should go a considerable way towards ensuring that a consumer knows exactly what they are buying before they commit to it. Under the “Unfair Terms” part of the Bill, which is still to come, additional charges will not be able to be hidden in the small print.
Legislation to provide clarity on pricing and a clear obligation to pay is already in place. However, we are all aware of cases where young children in particular have racked up high bills relating to in-app purchases in games. This is an issue for enforcement. That is why the then Office of Fair Trading conducted an investigation into children’s online games at the end of last year, which resulted in the publication of a set of principles for games manufacturers in January, based on the Consumer Contracts Regulations and the Consumer Protection from Unfair Trading Regulations.
The noble Lord, Lord Stevenson, asked me to clarify whether the Office of Fair Trading principles applied to the online games industry. The amendment would provide a statutory basis. So the OFT principles are based on statute. They are based on the Consumer Contracts Regulations and the Consumer Protection from Unfair Trading Regulations. I am therefore confident that the OFT—now, of course, rebadged as the CMA—already has the legal toolkit that it needs. To reiterate this, the CMA, as it is now known, is currently looking into industry’s compliance with these principles and will consider enforcement action in necessary cases.
Lord Stevenson of Balmacara
I thank the noble Baroness for giving way. I am interested in what she said about the principles being set out in an OFT report but I am not clear where we ended up. Perhaps she would reflect on that a little more so that I have a better understanding of it. The principles bite quite hard on this problem, so if they were to be given statutory backing, that would go a long way towards answering the other points that are made in my amendment. Can she confirm whether that is the case? Is she saying that the impact of the Bill as it currently stands is such that it would incorporate the set of principles identified by the OFT or is she not? It is a simple question.
Baroness Jolly
That is my understanding, but I sought to check the point with my team before it goes into Hansard. They already have statutory backing in the regulations. We are already there.
Lord Stevenson of Balmacara
Just to be troublesome, the Advertising Standards Authority is not a statutory body, although it does still exist where the OFT does not. As we have heard, it is now part of the CMA. Is it also the case that the ASA’s principles, which again bite hard on this problem, would be considered to be part of the statutory provision or not? I am happy to wait for a reply because I appreciate that it might take more time.
Baroness Jolly
Rather than mislead the noble Lord, I shall send him a letter and copy it to all noble Lords who are concerned with this debate.
I shall proceed with my response. We are pleased that the games trade associations have responded positively to these principles since the industry does have a duty to behave responsibility. Of course, parents too have a responsibility, for example, to turn off in-app purchases. I confess that I did not know they exist, but my kids are a bit big for them now. I hope that, as a result of this action, we will continue to see progress on compliance with the regulations in this area, and I would therefore ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
My Lords, I am grateful to the Minister for responding to these points and I look forward to receiving a letter. On reflection, if the letter could cover both the OFT, now CMA, principles and the ASA principles, that would be a lot better.
We share a concern on the generality of these issues. These games are incredibly popular and are played by loads of people, but the particularity of the problem which we have identified is that the danger arises because it is mostly children who are engaged with them. Yes, it is possible to switch off the in-app acquisitions elements that are part of the process of playing games these days, but I still think that there are many concerns which will surface in other areas alongside those, such as exposure to advertising and so on. They form part of the value chain of the very products we are talking about. Although we are dealing with a first level of concern here, I worry that we will need to come back to this, perhaps in some other forum, and question how it is that the almost addictive quality of the game-playing capacity that now engages among young people in this and many other countries is being accompanied by a new mode of trading which is not just purchase based but, as we have heard, is about acquiring personal details on purchasing habits that help to inform trading activities, particularly as they affect children. However, these issues are broader that what we have before us and no doubt we will come back to them at some point. In the mean time, I beg leave to withdraw the amendment.
“( ) If the trader becomes aware of digital content that is faulty, it is the responsibility of the trader to take all reasonable steps to inform the consumer affected so that he may exercise their statutory rights.”
Lord Stevenson of Balmacara
My Lords, we are circulating around the issues that come with the new trading activity of intangible goods. This amendment deals with the unique qualities of digital content which are, as we have heard, often updated and upgraded, in some cases almost hourly and certainly on a regular basis, once someone has bought into the arrangement. Indeed, it may well be that some of these updates are a requirement to keep the program going. As we heard earlier, antivirus software has to be updated and changed simply to cope with the developments of hackers.
Our Amendment 40 would require a trader to take reasonable steps to inform a consumer if the trader becomes aware of faulty digital content. Many digital products containing complex software are released on the understanding that the item will not be 100% perfect, and certainly not when it is released. The details of coding and the size of the programs mean that it is not always possible to spot problems. Furthermore, the product often has to run on different operating systems and, as I have said, antivirus software has to be constantly updated. This clause would simply require providers to inform those who have downloaded a defective product about the problem as soon as they become aware of it so as to allow consumers to make an informed choice about their rights to repair or refund or, indeed, as we would argue, to return.
I think that the Government accept that the software industry needs the flexibility to be able to publish and sell programs that contain minor problems. This is a good thing, as anything other than that would be unworkable, as we have heard. This flexibility is, as we have heard, not properly written into the Bill. The software industry has concerns, which the BIS Select Committee has reinforced, about requiring digital content to be free from minor defects. Our amendments would go some way towards resolving that. I beg to move.
Baroness Jolly
My Lords, when the issue of the trader’s responsibility when they are aware that they have a digital content product that is faulty was discussed in the other place, much reference was made to inaccurate mapping software that continued to be offered to consumers even after it was known to be faulty. Examples like this are embarrassing to the businesses in question. No reputable manufacturer wants to release an inadequate product, especially in these days of Twitter, Facebook and other social media, where news of such faults spreads really quickly. When problems such as this do occur, it is in their best interests to act quickly to resolve them. Consumers vote with their feet. In the case of the inaccurate mapping software, consumers simply switched back to a competitor’s product.
It is therefore in the interests of traders and manufacturers who find themselves with a faulty product to act quickly to produce an update to rectify the fault, and to ensure that consumers receive that update. Of course, in the case of updates to apps, downloaded products or products that are uploaded and then registered online, manufacturers already proactively inform consumers when updates are available.
However, the amendment has implications that would be burdensome on business and, at the least, an unwelcome irritation to consumers. The effect of the amendment would be to require traders to make consumers aware that there is a bug before they provide an update. This would seem to introduce an unnecessary step in the process, particularly for those consumers who have not already noticed the bug. It could also be burdensome for businesses, especially small businesses, if the result is an increase in complaints that have to be handled, diverting resources away from the important issue of producing the update.
Of course, I am not discouraging consumers from complaining to traders where their rights have been breached—quite the opposite. The Bill aims to empower consumers to assert their rights. However, encouraging consumers to claim a remedy where they might otherwise not have noticed that there was a fault, and a repair was already being produced by the trader, seems unnecessary. I therefore ask the noble Lord to withdraw the amendment.
Lord Stevenson of Balmacara
I thank the Minister for her response. I will read carefully what she has said and consider it. I did not agree with her view that this might in some senses be unwelcome to consumers. I think we are underestimating the worries that many people have when they buy material that is then subject to problems, and they need to be updated about that. Nevertheless, for the moment, I beg leave to withdraw the amendment.
Lord Knight of Weymouth
My Lords, I have considerable sympathy with my noble friends’ amendment. However, I should like to return to the issue of the iPad of my noble friend Lady King, which she described as “stuffed”, following the iOS upgrade. I am sure that Apple would argue that the modifications embedded in the upgrade are of benefit to consumers, remedy issues or security risks, and improve the functionality of the iPad. Whatever the reason—it may be an old iPad that cannot handle the iOS, or it may be user or Apple error; I do not know the circumstance of her iPad being “stuffed”—the point that I am trying to make, certainly when others upgrade their iPads with the new iOS, is that if they have an old version of the device they would be struggling. We know that plenty of software upgrades depend, to some extent, on whether your hardware can cope with all the extra features that Apple in particular include. I wonder whether my noble friend’s amendment can deal with such a scenario in which benefit may apply to most but not necessarily all consumers. The amendment may be better than what is in the Bill, and it may be that I am just pointing out the complexities of this area, but I should be interested in his and any other responses to that point.
Lord Stevenson of Balmacara
My Lords, I am grateful to my noble friend Lord Sugar for putting down this amendment and my noble friend Lord Haskel for adding his name to it and standing in and presenting it for my noble friend Lord Sugar who is unavoidably detained today. As has been said, this is an alternative approach to things which is, perhaps, more reflective of a more dynamic and engaged relationship between consumer and trader in which you have to trust the trader to develop the tools you use and you go forward. It certainly beats the old advice—which I am sure my noble friend Lady King has already tried—that when in trouble switch it off, hope for the best and it will magically work itself out. It is an attractive idea that somebody up there is thinking about how it works and how best to improve it. With the dangers that my noble friend has mentioned, we need to hear from the Minister about how this has been received.
Baroness Neville-Rolfe
My Lords, I am also grateful to the noble Lord, Lord Haskel, for his amendment and for standing in for the noble Lord, Lord Sugar. I look forward to his appearance on the Lord Sugar show.
I recognise that some types of digital content, such as software and games, do, in the words of the noble Lord, Lord Haskel, evolve over time. That is precisely why we introduced Clause 40, allowing updates that were in the terms of the contract. So let me reassure noble Lords that there is nothing in the Bill that prevents digital content traders from providing updates or upgrades, under the terms of their contract, to improve the functionality of the digital content. We have heard several times from the noble Lord, Lord Knight, about the iterative nature of some digital content and I am grateful for his digitally aware intervention.
Clause 40 ensures that, as long as modifications are allowed under the terms of the contract, there is nothing to prevent the trader from updating or upgrading digital content as long as it remains of satisfactory quality, fit for any particular purpose and as described. Such contract terms would be assessable for fairness under Part 2, “Unfair Terms”. The “as described” aspect does not fix the digital content to a static description. The digital content has to match the description but this does not mean it has to be exactly the same as the original description. It simply means that if the digital content is described as containing a certain feature then it should have that feature. However, as long as it has the described features, any additional features would not prevent it from matching, rather as a blouse may match a jacket, although the jacket may have more colours.
To a large degree, the description is in the gift of the trader, as long as it includes the main characteristics of the digital content, its functionality and interoperability. I have heard the industry’s concerns that it needs to be able to provide updates that are made for the consumer’s benefit. Perhaps a feature is taking up too much processing power and slowing everything else down, or perhaps a feature has become vulnerable to a security threat and needs to be removed while it is fixed, to protect the consumer from the threat. Of course it is important that industry is able to act in these cases but I am not convinced by arguments that Clause 40 will prevent it from doing so or slow it down in cases of urgent updates.
Let us assume that a trader has needed to remove a feature of some digital content, either intending to improve functionality or protect from a security threat. What would the trader do next? They would have two options. They could repair the feature to make it work more efficiently or improve security, and then reinstate it. Or they could take a decision that it was a minor feature that not enough consumers used, so they would not reinstate it. If, in that scenario, the removal of the feature meant that the digital content no longer matched the description, as required by Clause 40, the first remedy available to the consumer would be the repair or replacement of the digital content.
In the first option I have just outlined, that is normal industry practice already and is appropriate. A consumer has bought some digital content expecting it to contain the features or perform the functions it was described as doing. If the digital content no longer does that they will be justifiably unhappy and will expect the problem to be fixed. In the second option, where the trader is not repairing or replacing the feature, the consumer would be entitled to some money back. Let us remember that the amount due is unlikely to be the full price paid. It would be an appropriate amount and we would expect this to take into account the use the consumer had already had of the digital content and the continued functionality of the rest of the digital content. So the amount might be small.
Lord Stevenson of Balmacara
My Lords, we question whether Clause 46 is as effective as it might be in this area. Although the debate on the last amendment was very helpful, it served to amplify some of our concerns about how this matter should be dealt with. As the Minister explained, the issue seems to be that there is the possibility of a price reduction if a trader fails to provide, or can neither repair nor replace, digital content if the consumer requires it but the trader is in breach of the requirement to do so within a reasonable time and without significant inconvenience. There is an implication that this is about paid-for content and that it arises from the contract. An obvious question is how it will deal with free downloads. I think I caught the Minister saying that it did apply to free material. I listened carefully to what she said but I am still not quite sure about the implications of this in terms of getting redress. There is also a wider question about how these things are going to be calculated.
My first question is: what is the mechanism under which price reductions and replacement costs are going to be calculated? Is this a matter for the courts or will some guidance be issued? If so, how will it be developed and will it be subject to the usual consultation? If it is not being dealt with by the courts or in documentation issued by the Government, who is going to decide this? Is it an ombudsman’s issue? Will there be a sliding scale of time for usage, given that some digital content such as streaming a film might be for one-off use while others might be for longer, such as an anti-virus software package—which usually covers a computer for a year or longer—or games which might be used for even longer than that? What is the basis on which this will be approached? Is it that you have had it for 12 months and therefore it is a longer or shorter period depending on the original cost? Are there difficulties about digital content that relate to such matters as a consumer having had 11 months’ use out of a piece of anti-virus software that is supposed to last for 12 months but a fault in the program causes significant loss through damaged work files or a personal data breach? Do they get only one-twelfth of the price paid because that is the period of time remaining under the original contract? Presumably there is a way of calculating a scale of loss in relation to the damage caused. If so, will the Minister explain it?
Ending with our favourite fermium apps, how do they work? I gather from the body language and the nods that they will be included, but when do they get picked up? Do you get the full force of the law, as outlined in this clause, as soon as you have downloaded, or only once you have gone on to the premium aspects? How is the balance between the two arrived at? There seem to be so many questions that the clause is not working effectively. I would like to hear further from the Minister before deciding on this matter.
Lord Knight of Weymouth
My Lords, my question returns to something that I have come back to every now and then today. In the context of this clause, has the Minister thought about remedy, not only for damage to a device or other digital content but for damage to reputation? Many digital products now involve co-production whereby users of the product are creating the product. Even something as simple as Twitter is of value purely by virtue of the nature of the contributions of the users. I have given the example of Snapchat, which is possibly the most recent example of this issue, but problems of people suffering damage to their reputation arise regularly. Obviously, they have a potential recourse to law but if we are starting to legislate to protect these consumers, as we should, will this extend to protecting prosumers—an ugly word—that is, consumers who are also producers? For example, a supplier of digital services may have a problem with the privacy setting and, although the consumer has legitimately set up privacy controls to protect his privacy, those have failed and there is then an impact on the consumer’s reputation. Can consumers seek recourse under this legislation or do they have to go through other legal means?
Baroness Neville-Rolfe
I agree—I take the rebuke. Obviously, perfect spelling is very important to the future of civilisation.
As I was saying, the digital content might have introduced a code that has damaged all the digital content on the consumer’s device, including the underlying operating system—for example, as can happen on one’s iPad. In this case, the compensation could be considerably more.
We have already debated the issues surrounding business liabilities under this clause and we have talked a little about the consumer angle. I have listened very carefully to both of the perspectives discussed in relation to this clause and I will read Hansard. I am keen to ensure that we have the balance right here. I think that we have. For that reason, I hope that your Lordships will agree that this clause should stand part of the Bill.
Lord Stevenson of Balmacara
My Lords, I thank the Minister for her comments. By her use of examples she has explained some of the difficulties. She put herself into exactly the position I was trying to bring her to, which is that I do not really understand how this works yet. I now understand the mechanism and that it will apply to free delivery, and anticipating her line of argument, presumably where free apps turn into freemium apps there will be an assessment of both the free part and the premium part because there will be two different elements in the calculation that go towards it. I can see that the issue is about the damage caused rather than the original pricing because there was no price on the free element. However, I still do not quite understand who is doing that. Is this now a matter for the courts or will some new form of arbitration system be set up for problems around free downloads? I am not looking for a response at this point, but perhaps the Minister could write to me.
Baroness Neville-Rolfe
Perhaps I may clarify that obviously it is ultimately for the courts since we are talking about provision for damages and so on. I shall set that out clearly in writing.
Lord Stevenson of Balmacara
I am now slightly more confused because the text of the Bill states that the consumer has a right and can exercise that right against a trader. Is that going to be in the courts in all circumstances? If we are talking about some of the apps referred to earlier by my noble friend Lord Knight, we are considering trivial things which may create a lot of confusion. I cannot believe that the courts will wish to engage themselves with “Angry Birds” and “Candy Crush” users who are annoyed about an issue.
Baroness Neville-Rolfe
Perhaps I have confused the noble Lord by saying that ultimately this is a matter for the courts. However, he will be pleased to know that we are planning to issue guidance in this area which will be subject to the usual consultation. The minor points being articulated by the noble Lord will be the subject of guidance and therefore, it is hoped, will not reach the courts too often.
Lord Stevenson of Balmacara
“A hae ma doots” about that—but perhaps I should not use that term in Hansard. I have some doubts about where this is going, so again perhaps I may request a letter that sketches this out in more detail; I am sure that we will reach an accommodation. In the mean time, I am happy not to press my opposition to the clause.