Refunds under the Consumer Rights Act 2015 - deductions for use by customer

As we have been advising, under the Consumer Rights Act 2015, a customer has two types of rights with regard to refunds if there is a fault with the vehicle. The first is the 30 day ‘short-term right to reject’ and the second is the ‘final right to reject’ – more on that next time.

Under the short-term right to reject, the customer appears to be entitled to a full refund or as the Act says “the consumer is entitled to receive back the same amount of money”.

So under the short term right to reject, even if the customer has had the vehicle for 29 days of the 30 day period, they appear to be entitled to a full refund.

Interestingly, car dealers do get a special mention with regard to refunds under the final right to reject.  Normally, a retailer cannot deduct any amount for the use the consumer has made of a product if the refund is made in the first six months. However, in the case of a motor vehicle, a deduction can be made for the use the customer has had of the car. Now not to get too excited, this does not automatically mean that the customer only has to accept the trade value at the time of the refund but, there is certainly room to negotiate although any final decision would be up to the courts to decide if necessary.  

As a couple of points, refunds should be made “without undue delay” and certainly no more than 14 days after the agreement to refund and they should be made using the same means of payment as the customer used so a credit payment = a credit card refund. And no, you cannot impose a fee for the refund on the consumer.

If you want to learn more on the Consumer Rights Act, you can listen to our recent three part special which is now available in one podcast as Episode 33 of the Car Dealer Podcast.

 

Authors: Nona Bowkis

Published: 03 Sep 2015

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Nona Bowkis - Lawgistics Ltd (19/05/2016)
Hi Zoe, well, Trading Standards and Citizens Advice are both advising consumers that deductions can be made from day 1 and so this is what is happening in practice. There is no guidance on the level of deduction except that you can’t simply give the current trade value and it has to be a genuine deduction for usage - some dealers are looking at what it would have cost the customer to rent a similar vehicle for the period in question but there is inevitably some negotiation. In regards to the nature of the payment, the Consumer Rights Act 2015 states at Section 20 that: “If the consumer paid money under the contract, the trader must give the refund using the same means of payment as the consumer used, unless the consumer expressly agrees otherwise”. So its cash unless your customer agrees to the transfer.
Zoe (19/05/2016)
I have a customer returning a car for refund, at what point can you start charging for fair usage? Also if they paid in cash and it has been banked do I HAVE to return cash or is bank transfer/draft or debit card refund acceptable? Thanks in advance
Nona Bowkis - Lawgistics Ltd (16/05/2016)
Thanks for coming to the site but we only advise motor traders and not consumers and so cannot answer your queries. You are best advised to contact a consumer organisation such as the Citizens Advice Bureau or talk to a solicitor
Matt (16/05/2016)
Hi, as a counter point, having just been through a really bad sale. Where a vehicle was listed by a dealership knowing full well that there were a multitude of problems with it. Some of which rendered the vehicle unsafe, but despite this they chose to keep quiet and sell it on without addressing any of its large list of problems. I wont list them as there really are too many, but suffice to say that it definitely falls into the category of unsatisfactory, unfit for purpose and not as described. My take on the act itself in relation to second hand vehicles, it that's it promotes honest selling practices. If the faults had been identified I would of walked away, but as they weren't I ended up forking out 13k for a vehicle that needed thousands spending on it to put it right. Even though the vehicle has been rejected and back with the dealer for several weeks I'm still waiting to get my money back. That said I believe its forthcoming, however I am curious to any insight you can offer over the issue of my part exchange contribution. I am aware that it will have to be returned to me as part payment (as they still have it) but I cannot find anything that relates to the issue of who is responsible for covering the cost of its return (as the dealer is 200 miles away from me). As the trader is responsible for return costs when goods are repaired/replaced or rejected it would stand to reason that they meet the cost of returning my old car to me but as I cannot find anything specifically about this I'm not sure how to proceed especially as I've already endured more than enough financial loss as a result of this sale. I also need to confirm that the old car does have to come back in the same condition as it was given to them in (as I'm pretty sure its not-some potential body work issues) and whether or not I have the right to reject that form of refund based on difference of condition. I'd be grateful for any insight you can offer, as frankly I'm at the point of pulling my hair out, and seriously considering court action.
Nona Bowkis - Lawgistics Ltd (08/09/2015)
Hi David, yes it does seem disappointing that Motor Traders were not better represented. However, they were clearly considered at some point as motor vehicles are the only goods to which a deduction for the customer’s use may be made in the first six months. We at Lawgistics have already come up with some creative legal arguments which we will be putting to the test when the opportunity arises.
David (08/09/2015)
I am really surprised that the Motor Trade Associations have not launched a challenge to the Right to Reject clauses. These are second hand goods and should not be grouped with the same overall view that covers brand new goods. Trade bodies should be ashamed of not lobbying for used car sales to be exempt of this right.



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