On 23 June 2011, the European Parliament approved the proposed Consumer Rights Directive (CRD), which now only needs formal approval from the European Council to become law. The proposed Directive contains significant new protections for consumers including clearer pricing rules, common rules on delivery and transfer of risk, and a 14 day right of withdrawal.

BACKGROUND

The proposed Consumer Rights Directive was originally envisaged by the European Commission as consolidating the four existing consumer rights Directives. However, due to concerns from some Member States over the erosion of national consumer protections, unfair contract terms and consumer guarantees were removed from the ambit of the CRD. The CRD updates and merges the Distance Selling Directive (97/7/EC) and the Doorstep Selling Directive (85/577/EC) into a set of common rules.

Healthcare and social services, gambling, financial services, and real estate will be exempted from the scope of the CRD. Passenger transport is covered only insofar as hidden costs and fees are prohibited (e.g., by ruling out “pre-ticked boxes”) and websites must be designed in such a way as to inform a consumer unambiguously when and what he must pay for his tickets.

KEY POINTS

The Right of Withdrawal

The CRD will stipulate a 14 day EU-wide withdrawal period for distance and off-premises sales. The trader will be required to refund the consumer within 14 days of the withdrawal.

The new rules also extend the consumer’s right of withdrawal to home party sales and online auctions. However, auction purchases may be returned only if they were bought from a professional seller, not from a private individual.

Exemptions From the Right of Withdrawal

There are several exemptions from the cancellation right. These include, for example, magazines (with the exception of subscription contracts), car rentals, airline tickets and hotel bookings, perishable goods, and bespoke goods.

Digital goods, such as music, films or software programs, will also be exempted from the right of withdrawal. The sale will be regarded as irreversible from the moment downloading begins. Additionally, when cancelling a service, the consumer will be required to pay for work already done by the service provider. Urgent repairs, such as a burst water pipe, are also exempted from the right of withdrawal.

Delivery

Under the new rules, goods ordered at a distance must be delivered to the buyer within 30 days, otherwise the consumer will have the right to cancel the purchase. The trader is responsible for any damage or loss of the goods during delivery.

Informed Choices

It should be clear to consumers from whom they are buying, exactly what they are buying and how much it will cost when shopping online or ordering from a catalogue. The identity and address of the seller must always be clear. The new information rights are also designed to put an end to hidden charges, such as those associated with the “pre-ticked boxes”. However, “day-to-day transactions” where the goods are delivered “immediately” will be exempted from the information rules.

COMMENT

The Commission’s ambitious proposal to bring the four existing consumer rights Directives under a single umbrella Directive based on maximum harmonisation encountered stiff opposition from Member States. The exclusion of unfair contract terms and consumer guarantees from the proposal thus leaves intact the United Kingdom’s approach to the right to reject and the United Kingdom’s six (as opposed to two) year limitation period. The proposed CRD must now be approved by the Council.