What’s new?

On 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the “Regulations”) will come in to force. The Regulations affect all consumer-facing businesses, requiring them to review how they deal with customers both before and after the point of contract.

The Regulations will apply to all consumer contracts made on or after the 13 June 2014 and will replace:

  • The Consumer Protection (Distance Selling) Regulations 2000; and
  • The Cancellations of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 (also known as the ‘Doorstep Selling Regulations’).

What are the key changes?

The changes will affect retailers in different ways depending on how the retailer contracts with consumers.

Changes affecting all Consumer Contracts

  • The consumer’s express prior consent must be obtained before taking any additional payments (ie goods or service ‘tagged on’ to a purchase by means of a pre-ticked box will no longer be permitted).
  • Retailers must deliver any goods purchased within 30 calendar days, unless the consumer agrees otherwise.
  • Retailers can no longer operate a premium rate telephone helpline for consumers to contact them about an existing contract.
  • Retailers must not impose excessive payment surcharges when a consumer pays by certain means (such as credit or debit cards) and businesses will only be able to pass on the actual cost for the payment method (e.g. the actual processing fee).
  • A new concept of digital content is introduced into UK law which, broadly, relates to data produced and supplied in digital form (e.g. digital music or movies supplied through downloads and streaming). The recognition makes it clear that retailers of digital content are also bound by the Regulations.

Changes only affecting On-Premises (ie in the store) Contracts

  • The rules introduce a new list of pre-contract information that the retailer must make available to a consumer. Many of the information provisions are already required by existing legislation and will be familiar to retailers. The information requirements include, in particular:
  1. The main characteristics of the good or services;
  2. Identity of the retailer; and
  3. Total price.
  • The Regulations do not specify how this information has to be made available, but in practice it is likely that this will be achieved by a variety of means, such as notices or price lists on display, or other point of sale materials.
  • Note that the pre-contract information is not required in relation to ‘day-to-day’ transactions where the consumer is familiar with the goods or services (buying a cup of coffee, the weekly groceries or the daily paper would all constitute day-to-day transactions). The Regulations are designed to catch purchases which are not day-to-day, such as white goods, furniture, fitted kitchens, etc. Further, there is no requirement to provide this pre-contract information where it is already apparent from the context. For instance, a book retailer would not need to give a description of a dictionary if the customer can pick it up to examine it; the front cover makes clear what it is.

Changes affecting only Distance and Off-Premises Contracts

The rules:

  • Extend the list of pre-contract information the retailer must give to a consumer. This information must be given on paper, or some other form of durable medium such as a CD or DVD, text message or email.
  • Give consumers the right to cancel contracts for the supply of digital content (such as a music track) up to 14 days after the contract has been entered into.
  • Extend the statutory cancellation period (often referred to as the cooling off period) from 7 to 14 calendar days.
  • Make it a requirement that the retailer provide a model cancellation form where the consumer has a right to cancel a contract.
  • Extend the cancellation period to, broadly, one year if the retailer fails to provide certain pre-contract information.
  • Require on-line retailers to make clear, through for instance a labelled ‘pay now’ button, where there is an obligation to pay.
  • Require a consumer to return goods within 14 days of cancelling a contract, and allow a retailer to withhold a refund until goods are returned.

What does this mean for your Business?

If you sell to consumers in the UK you will (unless you come within limited exceptions) need to review and update your:

  • Sales path and the information you give to your customers prior to a sale;
  • Sale confirmation process;
  • Returns, refunds and cancellation policies; and
  • Terms and conditions of sale.

If you sell to customers online, you will also need to:

  • Make sure you comply with special pre-contractual information provisions; and
  • Ensure you clearly inform customers of the point at which proceeding with the process will trigger a payment obligation.

The Regulations are being implemented as part of the EU Consumer Rights Directive which imposes the same, or similar, requirements in all EU countries. So, if you also sell to consumers within the EU you will be subject to similar rules, albeit under a different jurisdictional piece of law (France, for example, adopted their version of the ‘consumer regulations’ in February 2014).

What’s on the horizon?

The Consumer Contract Regulations are just one of several major law reforms to hit the UK consumer scene. Next in the pipeline is the Consumer Rights Bill which was presented before the House of Commons in January. The bill will be considered by the Commons again this summer, before continuing its parliamentary passage to the House of Lords where it will be further reviewed. It looks set to overhaul and consolidate much of our current consumer legislation and act as the centrepiece of UK consumer law.