On 13 June 2014, The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 came into force, implementing the EU Consumer Rights Directive (the “CRD”) in the UK. The Regulations will apply to consumer contracts made on or after 13 June 2014. Please note this is distinct to the Consumer Rights Bill, which is due to be implemented in the summer of 2015 and is discussed briefly below. The CRD replaces the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.
The implementation of the CRD aims to further harmonise practice and legislation across the EU so that consumers can rely on the same rights, no matter where they shop. There are now simpler, more predictable rules for traders, providing a smoother pathway to cross-border business. Foreign traders may also be affected if their business is directed to UK consumers.
Which contracts are affected?
The changes affect all contracts made between businesses (“traders”) and consumers. All forms of contract are captured, however formed, wherever and whenever consumers shop in Europe, whether online or on the high street. The changes will particularly impact those which contract with consumers by means of digital or distance communication, i.e. distance or off-premises contracts. The Regulations apply to dual purpose contracts where the contract relates to supplies for business and non-business purposes. Businesses can also be liable where acting through agents and subcontractors. There are some “exemptions”, including financial services, gambling, contracts relating to immoveable property, construction and accommodation, package travel and timeshares, telecommunications, healthcare, personalised goods and goods liable to rapidly deteriorate. However, this is not an exhaustive list and not of all of these is exempt from the Regulations in their entirety.
What has changed?
Pre-contract information: all traders must provide consumers with specified pre-contractual information, as provided for by the Regulations prior to the contract (e.g. delivery and card surcharges and donations). For distance and off-premises contracts, this must be provided in a durable form, within a reasonable period of time and no later than the delivery of goods or the provision of services.
Online Payments: for online or similar distance selling, the trader must label the payment button to clearly indicate that this means there is an obligation to pay the trader. Prices must be apparent and terms and conditions must be fair, transparent and provide the required rights to consumers.
Cancellations, Refunds and Returns: the “cooling off period” or “cancellation right” for distance contracts has been extended from 7 to 14 calendar days where the correct information has been provided at the right time and to 12 months where it has not. In relation to goods, this timeframe commences when the consumer receives the goods; and for services it commences upon conclusion of the contract. If the consumer exercises its cancellation right, the trader must reimburse the consumer, including delivery charges (unless the consumer has used a more expensive method to return the goods than used by the trader at delivery). Refunds for goods must in be made within 14 calendar days of the trader receiving the goods, or being informed of the consumer's decision to cancel in the case of services. However, some goods and services are excluded from the cancellation right, for example: personalised goods, sealed goods and accommodation or travel for specific dates.
Delivery and risk: Unless agreed otherwise, a requirement to deliver goods purchased within 30 calendar days without undue delay. Goods remain at the trader's risk until they pass into the possession of the consumer.
Other: A trader will need express prior consent for additional charges; pre-ticked boxes will not suffice. There will also be charging limitations for consumer to trader help-lines.
We advise all businesses to review their sales contracts, and in particular their cancellation and returns policies to ensure that they are compliant with the Regulations as of 13 June 2014. Failure to comply could result in contracts being unenforceable and business leaders could face a criminal conviction and fine.
Consumer Rights Bill
Consumer protection laws in the UK are also undergoing an internal review. The Consumer Rights Bill, introduced to the House of Commons on 23 January 2014, aims to codify consumer law and introduce new statutory rights and remedies for consumers, consolidating consumer legislation and addresses unfair terms in consumer contracts. As currently drafted the Bill includes:
- new definitions (gas and electricity will be ‘goods’);
- ‘tiered remedies’ providing a finite opportunity for businesses to correct a fault;
- price reductions for slow services; and
- stronger requirements for clear and transparent contracts.
Businesses must ensure they are compliant with the new rules and should be prepared and kept up to date regarding the Consumer Rights Bill.