What is the potential impact of not complying with consumer legislation? While one of the biggest effects of non-compliance is to position a business in the marketplace as having little concern for consumer rights, creating reputational risk, it should not be forgotten these rules are actively enforced as well.
The Consumer Protection (Distance Selling) Regulations 2000 were put in place more than 10 years ago to encourage consumers to have faith in purchases made online, as well as those via other forms of distance sales such as catalogues and telephone. These are based on the principle that where a product has been bought in a shop, the consumer has had the opportunity to see it, try it out and know exactly what they are taking home that day. When it comes to distance sales, the same cannot be said. For example, viewing goods online may not provide a true picture of a product or its dimensions - it's not possible to touch it and the product has to be ordered and then delivered at a later date.
When and where do the Consumer Protection Regulations apply?
The Regulations kick in right at the beginning of the transaction, requiring the supplier to let its customers know exactly who and where it is, what it's selling and for how much. These information requirements might seem troublesome, but they are easy to provide and give consumers the same peace of mind they would experience when shopping in store.
Equally, providing this information is important in its own right, as failure to do so constitutes a breach of the Regulations. Where a breach occurs, consumers are given an extended period to cancel their contract.
Under the Regulations consumers are entitled to return goods if they are not what they want, or they do not meet their expectations for any reason. This can be done by cancelling the contract with the supplier in return for a full refund - including the price of postage and packing. There is a limited period for consumers to take this action - within seven days from the day after when the goods were received - and this is where those information requirements come in again. If the requisite information has not been provided at or before the time of delivery, the cancellation period grows in length and can extend up to a maximum of three months.
The only obligation the consumer has when cancelling is to inform the supplier and to take reasonable care of the goods while they are in his or her care. There is no obligation to return the goods, unless this has been specified in the terms and conditions of purchase, and so the consumer is simply required to keep them for collection. And they are at liberty to remove and dispose of any packaging in order to get a good look at the goods they have purchased.
Consumers are also entitled to know when they can expect to receive their ordered goods. Suppliers must comply with any dates given, or the customer has the right to cancel. If no dates are specified, then the goods must be supplied within a 30 day period.
Meeting the Regulations in practice
Across the industry as a whole, most retailers perfectly honour the obligation to return goods in these circumstances. But still, more than 10 years since the Regulations were established, many do not.
There are frequent examples of retailers using terms that require goods to be returned unopened, or simply refusing to refund delivery charges. For instance, the Office of Fair Trading (OFT) has taken action against an online computer retailer that failed to honour its delivery commitments after customers had paid extra for "same day delivery" or "express delivery". To compound the issue, when the goods were not delivered and customers tried to cancel orders, these requests were often ignored and refunds not provided. The OFT has since obtained a court order requiring the retailer to refund three named customers and also refund those customers that are still out of pocket. If it fails to do so, the retailer could face fines and may risk imprisonment.
But the OFT's action against online retailers does not stop there. While transportation is an area currently exempt from much of the Regulations, the OFT is keeping a close eye on it. It has also responded to a super-complaint from consumer rights organisation Which? concerning debit and credit card surcharges on payments. In this case it has made recommendations to the Government that payment surcharges on debit cards should be outlawed.
While any significant change may take some time to agree, the OFT will take action in the interim under the Consumer Protection from Unfair Trading Regulations to ensure these charges are transparent and obvious to consumers, focusing initially on the transport sector. This action will involve working with retailers that have demonstrated a willingness to comply and ensure the best possible standard is reached, taking enforcement action against those that are unwilling to act voluntarily.
A tighter regulatory framework for online activities
In the area of distance sales, the OFT is not the only organisation policing retailers' online activities. Earlier this year, the Advertising Standards Association (ASA) extended its remit to cover website and other online space, including social media, controlled by businesses - for example, a business' own website. Although this may not always seem like advertising, it still affects consumers' perception and understanding of brands and so will be regulated by the ASA or the various pieces of consumer protection legislation.
What does this all mean? Our retail experts suggest some action points to ensure compliance with the Regulations.