From 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 come into force replacing the previous law on distance selling and doorstep selling.
There are also new information provisions for distance sales. The new rules will apply to contracts between business and consumers made after the introduction of the Regulations. As a result, businesses which sell to consumers, whether in store, online, by telephone or by any other means will need to review and update their sales processes, terms of business and cancellation and refund policies to ensure compliance.
A “consumer” for the purposes of the Regulations, is an individual acting for purposes which are wholly or mainly outside of his or her trade, business, craft or profession.
Why the change?
The Regulations implement most of the provisions of the EU Consumer Rights Directive (Directive 2011/83/EU). The aim of the Directive is to harmonise consumer protection rules in the EU and subject to certain limited exceptions (for example, gambling contracts and contracts for banking or credit services), the Directive applies to all consumer contracts for goods and services whether made “on-premises” (e.g. in store), distance sales (e.g. online) or “off-premises” sales (e.g. door to door sales).
The Regulations form part of a wider overhaul of consumer law in the UK. Last year, the Payment Surcharges Regulations introduced a ban on excessive payment surcharges into UK law; this was also a requirement of the Directive. Another potential source of change is the proposed Consumer Rights Bill, presented to Parliament on 23 January 2014. If introduced, the Bill would streamline and consolidate consumer rights in the UK and deal with matters such as unfair terms in consumer contracts and the statutory rights and remedies of consumers.
What is changing?
New information requirements
- The Regulations provide a list of information which traders must provide consumers with before goods or services are purchased. The information requirements are now more extensive and differ depending on whether the sale is made on-premises, off premises or at a distance.
- For example, for most on-premises sales, a copy of the trader’s complaint handling policy (where applicable) and details of relevant after-sales services or guarantees must be made available.
- The information required to be provided for online sales is now particularly detailed and includes clearly identifying where the trader is acting on behalf of another trader and the provision of contact details for both.
- If a right to cancel exists, the consumer must be given a copy of the model cancellation form set out in the Regulations. A failure to comply may result in the cancellation period being extended and may even result in prosecution.
- For online sales, at the point of order the consumer must be required to explicitly acknowledge that the order implies an obligation to pay. Therefore the wording of the payment function must comply with the Regulations. A failure to do so makes the contract unenforceable.
- In addition to goods and services, there is now a new category of “digital content” with its own specific requirements which apply to both paid for and free content such as music and film downloads. These requirements include providing purchasers of
digital content with information about the functionality of the content and details of the compatibility of the content with hardware and software.
- Digital content cannot be made available during the cancellation period unless the consumer has given express consent and acknowledged a waiver of his right to cancel.
- A failure to obtain such consent and express waiver means the consumer does not have to pay for the download.
Cancellation Rights for distance and off-premises contracts
- Length of cooling off period - The cooling off period during which consumers can cancel orders for digital content, goods or services will now be 14 calendar days. Currently, the cancellation period is 7 working days for distance sale contracts and 7 calendar days for doorstep sales contracts.
- For contracts for the sale of goods, the cooling off period ends 14 calendar days after the day on which the goods are delivered. If the goods are delivered in several instalments then it will be 14 days from receipt of the last instalment.
- For contracts for the sale of digital content (which is not on disk or another tangible medium), the cooling off period ends 14 calendar days after the day on which the contract is entered into.
- For contracts for the sale of services, the cooling off period ends 14 calendar days after the day on which the contract is entered into unless the consumer has expressly requested that the services commence before then and has waived his cancellation right.
- Standard cancellation form – The Regulations contain a model cancellation form which can be used to notify consumers of their right to cancel before they enter into distance or off-premises contracts, but a trader can use its own wording if it chooses provided such wording is clear.
Refund obligations for online and off-premises contracts
- Where a consumer has exercised his statutory right to cancel, the trader must reimburse the price paid together with the cost of standard delivery charges. If a consumer choses a more expensive less common method of delivery then the trader need only refund the cost of standard delivery.
- Refunds must be made within the time limits specified in the Regulations.
- For contracts for the sale of goods when the consumer is responsible for returning unwanted goods, the deadline for refunds ends 14 days following receipt of the returned goods by the trader or, if earlier, the date on which the consumer provides evidence of having sent back the goods.
- For contracts for goods where the trader has offered to collect the unwanted goods, or contracts for services and digital content, the deadline for refunds ends 14 days from receipt by the trader of notification that the consumer wishes to cancel provided this notice was given within the cooling off period.
- The Regulations protect consumers from unsolicited sales and additional charges which have not been agreed in advance.
- In such cases, the consumer is not required to pay for the unsolicited supply of products. Similarly, the consumer is not required to pay additional charges unless he gave express consent to such charges before the contract was concluded.
- Where a trader offers consumers a helpline for queries concerning goods, services and/or digital content which the consumer has purchased, calls to such helpline by the consumer must only be charged for at the basic rate.
What does this mean for businesses?
Businesses will need to review their sales processes and contract terms to ensure that the new requirements are adopted and that their returns policies are compliant. A failure to comply may result in contracts being unenforceable and, in the worst case scenario, the trader may face a criminal conviction and fine.
If you require a review of your sales terms and procedures or require further advice on how the Regulations will impact your business, please contact Nicola Broadhurst on 01483 734228.
This information is necessarily brief and is not intended to be an exhaustive statement of the law. It is essential that professional advice is sought before any decision is taken.
© Stevens & Bolton LLP February 2014