Are you a retailer selling goods and/or services to a consumer? Failure to comply with new consumer protection regulations could result in a criminal conviction and/or a fine.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 ('Regulations') came into force on 13 June 2014. The Regulations apply to almost all consumer contracts entered into after this date. They implement the EU Consumer Rights Directive, which is intended to harmonise consumer protection rules across the EU, and replace existing law on distance and doorstop selling.
More specifically, the Regulations cover consumer contracts formed: (i) on-premises (e.g. in store); (ii) off-premises (e.g. door to door sales); and (iii) at a distance (e.g. online or by telephone).
If you sell goods, services or digital content to a consumer, the Regulations will apply to you. As such, it is very important to familiarise yourself with the changes brought in and the impact on your business.
Pre-contract information – the information that must be provided to consumers before goods or services are purchased, which differs depending on the way in which the sale is made, has changed. In addition, where retailers are providing digital content (data produced and supplied in a digital form e.g. music and film downloads), they must now provide additional information (e.g. details of functionality, compatibility with hardware and software, and applicable technical protection measures);
- Cooling-off period – consumers now have 14 calendar days to cancel contracts made at a distance or off-premises. This is an increase from the previous 7 day period;
- Cancellation form – where the above 14 day period applies, a model cancellation form must be made available to consumer. Failure to do so could increase the cancellation period;
- Ancillary contracts – cancellation of the main contract will automatically result in termination of any ancillary contracts (e.g. an insurance contract for goods would be ancillary to a contract for the sale of those goods), even if the ancillary contract is with a third party;
- Delivery – delivery of goods must be made without undue delay and in any event within 30 days from the date the contract is entered into, unless agreed otherwise with the consumer;
- Helplines – consumer helplines must be charged at the basic rate, not a premium rate;
- Refunds - refunds for goods must cover the full price paid, including the cheapest delivery option offered;
- No additional payments – express consent is required by consumers where extra payments will be charged in addition to the agreed sale price. Pre-ticked boxes for additional payments (such as insurance or premium delivery services) are no longer permitted;
- Obligation to pay – for distance contracts conducted by electronic means, it must be clear that placing an order creates an obligation on the consumer to pay. If this involves a click of a button, a “Pay Now” button should be sufficient;
- Distance contracts – retailers must provide consumers with confirmation of contracts made at a distance on a durable medium (e.g. paper or email) no later than the delivery of goods or prior to the performance of services.
The Regulations do not apply to certain consumer contracts. For example, those relating to gambling, sale of houses, rental of residential accommodation, certain financial services, certain food and beverage supplies, automatic vending machines or automated commercial premises (e.g. photographs taken from an automated photo booth).
Non-compliance with the Regulations may result in the contract being unenforceable, or in serious cases, retailers may face criminal prosecution and fines. Businesses should act quickly to review and update their sales processes and online functionality, terms of business, and cancellation and refund policies.