The Government has published new regulations aimed at consolidating the law on distance and doorstep selling, providing further protection for consumers and making it easier for them to know their rights. The ‘Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013’ (the “Regulations”) came into force on 13 June 2014. The regulations have been introduced to implement an EU directive on consumer rights and will replace the ‘Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008’ and the ‘Consumer Protection (Distance Selling) Regulations 2000’. This legislation will be revoked for contracts made on or after 13 June 2014. Separate legislation relating to whether goods are fit for purpose or of satisfactory quality will not be affected.
This change will be of particular importance to online retailers and traders. The Regulations will cover any contracts for the sale of goods and services made online or otherwise at a distance (such as over the phone or by email). They have also introduced a new specific category for the sale of digital content. The changes introduced by the Regulations, while mainly aimed at protecting consumers, do provide some increased protection for traders. The main changes are detailed below.
Perhaps the most important change made by the Regulations is to extend the cooling off period from seven (7) working days to fourteen (14) days after the contract for services is entered in to or from the date the goods are received by the consumer. Any items under a cancelled order must be returned within fourteen (14) days of receipt by the consumer. It is essential that traders ensure that their current terms and conditions, cancellation terms and other policies comply with this as if the consumer is not clearly informed there could be severe implications. The implications for initial non-compliance are that:
- the cooling off period will end fourteen (14) days from the date the information is provided, if information is provided within 12 months;
- the cooling off period will last for 12 months after the day on which it should have ended had the information been correctly supplied, if the information is provided more than 12 months later.
Any refunds must be made within fourteen (14) days of the return of the goods to the trader, thus adding the obligation that consumers must return goods before they become entitled to a refund, welcome news for traders. The Regulations also provide additional protection for the trader in that they may reduce the amount of any refund if the handling of the goods is beyond what is necessary to establish the “nature, characteristics and functioning of the goods”. So while removing a product from its packaging will still be acceptable, any obvious signs of wear and tear will not be.
The Regulations confirm that when digital content is supplied, details must be provided in advance of the content’s functionality (defined as region coding, restrictions incorporated for the purposes of digital rights management, and other technical restrictions).
The Regulations clarify the position in relation to the cooling off period when online services are provided. Traders may not begin the provision of online services before the cooling off period has ended UNLESS the consumer has made an express request (which must be in a durable medium if part of an off premises contract). The BIS guidance on the Regulations advise that a durable medium may include email, letters, text or a personal online account (if this has the capability to store information). It will no longer be sufficient for the trader to accept use of the services as acceptance of the services commencing.
However, should the consumer decide to cancel during the cooling off period, but has provided an express request for the services to commence, the trader will be entitled to payment for any services provided for the period ending when the trader is informed of the consumer’s decision. The same applies to digital content. The consumer will not be obliged to pay if it is not made clear to them that their express consent would remove the right to cancel so it is therefore essential that traders review their cancellation provisions carefully.
In contracts for the supply of goods, unless otherwise agreed between the parties, the goods should be delivered within 30 days. Risk for the goods will only pass to the consumer on delivery of the goods to the consumer. However, if the consumer organises carriage through a carrier not recognised by the trader, risk will pass once the goods are passed to the carrier.
Costs and Payment
Clear costs information should be provided to the consumer including an outline of potential future costs. This information should be provided to the consumer in a durable medium, as defined above. The Regulations require that any payments to be made by the consumer must be expressly consented to by them. It will no longer be acceptable to have pre-ticked boxes. This will be especially relevant for items such as insurance for the goods being purchased. The consumer cannot be held liable for costs that they have not actively consented to or were not aware of.
While it is not a requirement to provide a helpline to assist consumers, if one is provided the Regulations confirm that this must be charged at no more than a basic rate number.
The Regulations have brought in a number of changes that traders will need to consider and it is important that current procedures are reviewed to ensure compliance. The burden of proof will rest with the trader so it is very important that good notes and records are kept of transactions.