There are four main laws in Bermuda that govern the regulatory operations of Consumer Affairs and how providers of consumer goods and services conduct business with consumers.
These consumer protection laws exist to make sure that commercial enterprises operate fairly with their consumers. The legislative framework governing the regulatory operations of Consumer Affairs serve to not only ensure that consumer rights are protected but promotes effective commercial competition.
The Consumer Affairs legislative framework restricts commercial enterprises from participating in unfair business practices and offer businesses protection from anti-competitive practices. If a business does not abide by these laws, Consumer Affairs has the discretion to award affected consumers damages against commercial enterprises operating in contravention with the Consumer Affairs' legislative framework.
In addition to imposing financial penalties, Consumer Affairs has the authority to subject key personnel overseeing the daily operations of a non-compliant business to a period of imprisonment so long as the imposition of such a penalty is considered fair and proportionate with respect to the extent of harm caused due to unfair commercial trade practices.
Under the Sale of Goods Act 1978 (“SGA”) retailers of consumer goods are not legally obligated to provide their customers a refund, repairs or a replacement item unless it can be shown that the consumer good was faulty or defective at the time the consumer good was purchased. Consequently, in the absence of a formal return policy a consumer’s ability to return a consumer goods that is not faulty will be restricted.
In the event a consumer has purchased a faulty consumer good from your commercial enterprise, there are several factors that will affect the amount of compensation a consumer they may be entitled to. These factors include, but are not limited to:
As a commercial enterprise it is important to note that your customers are legally entitled to a reasonable opportunity to inspect or examine a consumer good within a “reasonable period” of time prior to and following the purchase of a consumer good.
Unfortunately, the SGA does not provide a formal definition for what is meant by a “reasonable period” of time and will likely depend on the nature of the consumer good (i.e. perishable food items vs. home appliances).
If following the completion of a purchase a customer formally communicates that they are of the view that the consumer good(s) purchased is faulty and that they wish to return the consumer good(s), within a “reasonable period” of time, the SGA recognizes such communication as a formal rejection. As an owner of a commercial enterprise you will likely be required to either:
If a commercial enterprise is willing to provide a refund, replacement good or repairs, it is important to note that providing such a customer service must not cause undue inconvenience to the consumer. Furthermore, the commercial enterprise will likely be responsible for all reasonable ancillary costs (i.e. the physical collection of the faulty good or delivery of the replacement good, etc.).
It is this stage Consumer Affairs notes the importance of consumer good providers making genuine attempts to communicate to their customers that they have an obligation to communicate a fault or defect as soon as possible as the passage of time may compromise their ability to request a refund or replacement.
If a “reasonable period” of time has passed, and the consumer has not identified a fault, the SGA recognizes the passage of time as acceptance of the faulty consumer good; rendering the consumer no longer being entitled to a full refund and may only be entitled to repairs or a replacement consumer good.
If too much time has passed between the purchase of the faulty of the consumer good and the discovery the communication of the fault, as a provider of a consumer good you may be able to argue that the purchased consumer good was accepted in its faulty state, mishandled or misused in such a way that has resulted in the consumer good no longer being operational (i.e. your customer’s contributory actions resulted in the fault).
Having previously discussed the limitations embedded in the Sale of Goods Act 1974 (“SGA”), and consumers not being afforded the legal right to return consumers goods unless they are faulty, Consumer Affairs recognizes that there will be occasions where a consumer gets an instant sense of regret following the purchase of a consumer good (i.e. “buyer’s remorse”).
Buyer’s remorse is typically associated with the purchase of expensive, high-value consumer goods (i.e. motor vehicles, appliances, electronics, etc.) and is an emotional response resulting in feelings of regret, fear, depression and/or anxiety.
It is not uncommon for consumers experiencing buyer’s remorse to seek to return the consumer good and obtain a refund or replace the consumer good with an alternative (i.e. replace blue pens for black or red pens). As a commercial enterprise it is important to ensure that your customers are adequately informed of their consumer rights prior to the completion of the sale (i.e. the terms and conditions outlined in your formal return policy).
Depending on the terms and conditions you have elected to include in your business’s return policy, your customers may not have an automatic right to a refund, repairs or a replacement consumer good if they experience “buyer’s remorse”, especially if:
In addition to stipulating when a customer may be entitled to a refund, repairs or a replacement consumer good, if your business is unwilling to consider the return of non-faulty consumer goods it is worthwhile to stipulate in your formal return policy that in the absence of a faulty consumer good customers will not be entitled to a refund and/or store credit.
Alternatively, when faced with a consumer experiencing "buyer's remorse", your businesses' formal return policy may state that in the absence of a faulty consumer good consumers are eligible for a cash refund and/or store credit which may be used to purchase either:
Consumer Affairs appreciates that it is common for a consumer to purchase a new consumer good to later discover that the consumer good is faulty and/or broken. In such circumstances it is not unreasonable for the affected consumer to return the consumer good and request to have it repaired on the basis that it was:
Appreciating the impact such requests may have on business operations, Consumer Affairs advises commercial enterprises to adopt a formal return policy which specifically accounts for repair requests and that the return policy explicitly outlines what is meant by a “reasonable period” of time for the consumer to communicate the observed fault and request repairs (i.e. within 30 days of purchase).
It is common practice for company return policies to stipulate limitations that dictate when a consumer may be able to have a faulty consumer good repaired at no cost to the consumer. Given the passage of time since the purchase of the consumer good, or the way in which the consumer good was used by the customer, the costs associated with repairing may not be justifiable or the consumer may be liable for damaging the consumer good following their purchase (i.e. the costs to repair match or exceed the costs to provide a replacement).
If a commercial enterprise does not have a return policy outlining when a faulty consumer good may be repaired, the Sale of Goods Act 1978 creates an obligation on the seller to ensure that their consumer goods are of satisfactory quality. For clarity, the criteria that are considered when determining whether a consumer good is of the satisfactory quality includes:
A commercial enterprise’s failure to ensure that a consumer good is of satisfactory quality amounts to what is considered a breach of warranty. A consumer that has been subjected to a breach of warranty is entitled to a refund or reimbursement for the purchase price of the consumer good or a replacement.
If a customer has paid for a consumer service (e.g. a haircut, landscaping, legal services, accounting services, private transportation, etc.), the commercial entity providing the consumer service has a legal obligation to exercise reasonable care and skill commensurate to the level of technical ability expected to be exercised by comparable industry professionals.
If during over the course of providing or upon completion of the requested consumer service a customer discovers that a business failed to exercise reasonable care and skill, Bermuda’s consumer protection legislation entitles the affected consumer to mandate that the business to either:
Bermuda’s consumer protection legislative framework states that, upon discovery of a commercial enterprise having failed to exercise reasonable care and skill, the default position is to require the commercial entity that provided the initial consumer service do so again (i.e. additional and/or corrective services) at no additional cost to the consumer.
In circumstances where a commercial entity is unable to provide additional restorative consumer services, the commercial entity must instead provide the affected consumer with a full or partial refund of the consumer service.
It is at this stage that Consumer Affairs communicates the necessity for providers of consumer services to:
Alternatively, there may be circumstances where the poor quality of service has resulted in harm to the customer and/or their personal property. In addition to providing additional restorative services, it may be worthwhile for the service provider to enter into negotiations with the affected consumer and agree to a discount on the original sales price which accounts for the costs the customer may have incurred in order to resolve the personal harm caused (i.e. medical bills, third party service providing emergency services, etc.). Failure to do so may result in the affected customer pursuing legal proceedings and claim for:
However, depending on the harm caused by the poor quality of service, and the nature of the consumer service provided, it may not be possible to provide additional restorative services due to the fact that:
In this circumstance it is likely that your business will be held liable and will have to provide restitutionary compensation to account for the harm caused (i.e. restore the affected customer and/or their personal property to the same condition prior to the damage was incurred). As a business owner it is important to note that restitutionary compensation is not intended to afford the affect customer the opportunity to profit from the circumstances and to are intended to mitigate harm caused by the services provided. For further guidance on how to handle circumstances where a consumer service has resulted in harm to a customer, please see below.
Good customer service is comprised of a series of activities that occur before, during and after the sale of a consumer good or service which are specifically intended ensure consumer expectations are met and enhance the quality of the customer experience. It is advantageous for a business to provide good customer service because it boosts customer loyalty and attracts new customers.
As a commercial enterprise it is essential that you are aware of the legal difference between a quote and an estimate as it is common practice for a commercial enterprise to provide, at the request of a consumer, a quote or estimate for the costs associated with providing a specific consumer good and/or service.
The purpose of a quote or estimate is to provide a customer with a reasonable expectation for the cost of goods and/or services that may be provided. Given the administrative burden associated with providing a quote or estimate it is not uncommon for commercial enterprises to charge a fee. In the event that a consumer requests a quote or an estimate, Consumer Affairs advises the requested commercial entity to:
Consumer Affairs recognizes the value in “Buy Bermuda”. Unlike online retailers, many Bermuda based many commercial enterprises offering consumer goods and/or services are willing to extend a warranty to their customers.
Bermuda based commercial enterprises typically extend warranties to their customers on the basis that:
The existence of a valid consumer warranty cannot be understated as a warranty serves as a guarantee of quality and typically affords consumers a higher level of protection not currently afforded to customers under Bermuda’s consumer protection legislative framework; so long as the consumer does not act in contravention of the warranty.
In addition to ensuring that business’ customers are protected from purchasing a faulty or damaged consumer good, warranties and guarantees can help to ensure that a business has a reputation for being an ethical and empathetic enterprise.
Although the terms and conditions outlined in each warranty differ, Consumer Affairs advises commercial enterprises to consider the following when drafting their warranty terms and conditions:
In accordance with the legal principles of contract law, if the terms and conditions of a warranty are unclear due to the reliance of confusing and/or overly complex language, in the event a customer seeks to pursue legal proceedings against a business due to their inability to effectively rely on the warranty, it may be argued that the warranty was deliberately drafted in such a way to make it very difficult to rely upon (i.e. overly difficult for a customer to submit a claim). In such a circumstance the warranty and purchase of the consumer good will likely be considered void as it may be argued that the customer purchased the consumer good in reliance of the warranty.
In addition to failing to satisfy the basic principles of contract law (i.e. the terms of the contract must be clear and use plain language), the use of complicated and/or confusing language is considered an “unfair trade practice”. Consequently, Consumer Affairs advises businesses to ensure that their warranties are drafted using clear and plain language that may be easily interpreted by your average customer.
Consumer Affairs advises commercial enterprises to ensure that their business activities are free from fraudulent public communications (i.e. advertising, product pamphlets, customer service, etc.) as it may be argued that such business activities are deliberate attempts to manipulate or coerce a prospective consumer into making a purchase they would not otherwise consider.
Under the Consumer Protection Act 1999, misleading and fraudulent business communication, either directly or indirectly held with a prospective or existing customer, is considered an “unfair trade practice”. Commercial entities found participating in “unfair trade practices” are considered to have committed an offense and may be subjected to financial penalties and/or imprisonment.
As a business owner it is important to recognize that there will be instances where your business practices used to "close" a sale may be legally classified as "undue influence".
Undue influence occurs when a consumer is pressured by a seller to purchase a consumer good, or a seller partakes in misleading statements (i.e. verbal statements, print media, social media) in order to coerce a customer into purchasing a consumer good or service they would not otherwise.
The purpose of this section is to provide guidance on how a business may modify its business practices to mitigate the risks associated with the intentional and/or accidental utilization of undue pressure and misleading statements when interacting with customers.
Consumer Affairs recognizes that there may be circumstances where a consumer may be subjected to fraudulent or misleading sales practices which are intended to falsify the authenticity of a consumer good (i.e. knock-off designer clothing).
Under the Consumer Protection Act 1999, misleading and fraudulent advertising is considered an “unfair trade practice”. Those commercial entities found participating in “unfair trade practices” may be subjected to financial penalties and/or imprisonment.
Consumer Affairs understands that there will be instances where a consumer purchases a consumer good and requests to have their consumer good delivered to their residential address. In these circumstances it is not uncommon for consumers to experience delays in delivery.
It is worth noting at this stage that responsibility for the late, or non-delivery, of the consumer good will depend on various factors. Responsibility for delivery delays will vary depending on whether:
The purpose of this section is to identify circumstances where consumers may experience delays in the delivery of consumer goods and provide businesses guidance on how to mitigate the associated risks.
Consumer Affairs understands that there will be instances where a consumer unknowingly purchases a stolen consumer good from a local retail business. Likewise, there may be circumstances where the local retail business knowingly or unknowingly purchased the stolen good from a supplier.
A commercial enterprise’s willingness to knowingly purchase a stolen good with the intention to re-sell is considered an “unfair trade practice” under the Consumer Protection Act 1999. If following an investigation by Consumer Affairs a business is found to be willfully selling stolen goods to consumers will result in the business being found guilty of a criminal offense and may be punished by imprisonment up to 6 months and/or a financial penalty up to $50.000.
The purpose of this section is to provide guidance on how a business may mitigate the risks associated with accidentally selling a stolen consumer good and the actionable steps a commercial enterprise should undertake when it is brought to their attention that a customer has discovered they have purchased a stolen consumer good from them.
There will be occasions where a commercial enterprise provides a consumer service to a customer which unfortunately results in consumer harm (i.e. a landscaper accidentally damages the fixtures and fittings of a customer’s home during the course of providing services).
It is important to note that under the Consumer Protection Act 1999 and the Supply of Services (Implied Terms) Act 2003, commercial entities providing consumer services are legally obligated to exercise “reasonable care and skill”.
In the event a commercial entity causes damage to a customer (i.e. to themselves and/or their property) as a result of failing to exercise reasonable care and skill in accordance with industry methods of best practice, the commercial entity is considered to be operating in breach of the Consumer Protection Act 1999 and the Supply of Services (Implied Terms) Act 2003.
It is important to note that this legislative obligation cannot be contracted out of, even if the commercial entity has included terms and conditions in their sales agreement which expressly absolve the business of any liability for damages caused as a result of the services provided. The inclusion of such terms and conditions in a sales agreement is considered an “unfair trade term”.
The purpose of this section is to provide business guidance on how to mitigate the risks associated with consumer harm resulting from a failure to exercise reasonable care and skill whilst providing a consumer service.
There will be occasions where a commercial enterprise provides a consumer good to a customer which results in personal harm to the customer (i.e. a faulty washer/dryer results in water damage to a customer’s home, faulty brake pads on a car result in a car accident and physical harm). As a business owner it is important to note that section 14 of the Sale of Goods Act 1978 requires commercial entities to ensure that the consumer goods they provide are “fit for purpose”.
Additionally, there will also be occasions where the purchase of a consumer good may be accompanied by additional consumer services (i.e. the installation of a washer/dryer results in water damage to a customer’s home). It is important to note that in addition to the legal obligations imposed under the Sale of Goods Act 1978, section 3 of the Supply of Services (Implied Terms Act) 2003 requires commercial entities to exercise “reasonable care and skill” when providing consumer services.
In the event a commercial entity provides a consumer good which causes harm to a consumer, due to the consumer good being “unfit for purpose” and/or the associated consumer services were performed absent “reasonable care and skill”, unless there is evidence indicating otherwise the commercial entity will likely be found liable for the harm caused. Even if the commercial entity has a sign or notice saying they are not responsible for damages caused, this contractual term would likely not be legally enforceable as this is considered an “unfair trade practice” due to the company misrepresenting the quality of the consumer good and their technical skills to provide the associated services.
Consumer Affairs appreciates that there will be circumstances where a consumer purchases a consumer service from service provider (i.e. makes a down payment as part of a payment plan or pays in full) and then later wishes to cancel the services either:
(i) Before the services have started; or
(ii) While the services are being provided.
The purpose of this section is to provide commercial enterprises with guidance on how to effectively manage these types of circumstances to ensure that they do not participate in “unfair trade practices”.
As a provider of consumer goods and/or services it is important to remember to always be professional with your customers; even if your business is not legally responsible for the issue that the customer is complaining about.
To ensure that your business and your employees consistently exhibit professional behavior when interacting with consumers, it is important to equip your business is with the tools and resources necessary to effectively and efficiently handle consumer complaints.
In support of the development of good customer service practices and the promotion of strong customer relationships, Consumer Affairs advises commercial enterprises to:
Having all members of staff formally trained on how to manage disgruntled customers will enable your business to effectively handle and resolve customer issues quickly. Furthermore, exercising a degree of compassion and empathy and making genuine attempts to understand your customer's issue will go a long way in building a strong business reputation which will permeate throughout your local community.
Instead of facing the potential risk of negative publicly directly resulting from unprofessional behavior and poor customer etiquette, formal policies and procedures and formal training on how to handle complaints may result in fewer negative complaints. Furthermore, in response to a positive consumer interaction your customers may be willing to provide formal feedback that may be relied upon when developing your company's advertising and promotional material (i.e. customer feedback on a company website, customer testimonials, etc.).
A less obvious route path to achieving excellent customer service is through “relationship marketing”. The purpose of relationship marketing is to enhance existing consumer relationships. Often it is more difficult to attract new customers than it is to retain existing ones. Approximately 80% of a commercial enterprise’s revenue is derived from 20% of its existing customers. Therefore, it may be argued that is in the best interest of your business to make genuine efforts to strengthen existing relationships.
In addition to deliberately participating in “relationship marketing”, marketing strategies built around humanizing your company and its staff (i.e. public support in the community through volunteering and corporate donations to community events) are an excellent way to build customer loyalty.
By placing an emphasis on building strong customer relationships and high customer loyalty, it is likely that your consumers will be less willing to consider partaking in unethical consumer behavior and/or considering alternatives that are indirect competition with your business. Common examples of unethical consumer behaviour include, but are not limited to:
Appreciating that some consumers will act unethically (i.e. theft, slander, etc.) in order to take advantage of a company’s customer service standards, Consumer Affairs advises businesses to install security devices and security personnel throughout the publicly accessible areas of your business in order to ward off consumers who may consider engaging in crimes of opportunity.
