Background

On 13 June 2014, the new Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (Regulations) come into force and will apply to all consumer contracts entered into on or after that date, subject to certain exceptions.

If you sell goods, services or digital content to a consumer, the Regulations will apply to you. They will equally apply and be of interest to you in your individual capacity as a consumer.

The Regulations implement the EU Consumer Rights Directive (2011/83/EU) and replace both the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 (more commonly known as the ‘Doorstep Selling Regulations’), although those earlier regulations will continue to apply to contracts made before 13 June 2014.

The Regulations will apply to on-premises (e.g. in-store), off-premises (e.g. door-to-door sales) and distance contracts (e.g. telephone or online sales) between traders and consumers.

For the purposes of the Regulations:

  • a consumer is an individual acting for purposes which are wholly or mainly outside his or her trade, business, craft or profession; and
  • a trader is a person acting for purposes relating to that person’s trade, business, craft or profession, whether acting personally or through another person acting in the trader’s name or on the trader’s behalf.

The Regulations set out:

  • the information which a trader must provide to a consumer prior to and following a sale;
  • how that information should be provided;
  • the right for consumers to cancel a distance or off-premises contract; 
  • delivery times and the passing of risk in respect of any sales contract;
  • a prohibition on any additional payments which appear as a default option; and
  • a prohibition on consumers having to pay more than the basic rate for post-contract customer helplines.

What is changing?

Pre-contract information

The Regulations provide a list of information which traders must provide to consumers before goods or services are purchased. The information requirements are now more extensive and differ depending on whether the sale is made on-premises, off-premises or via distance selling. The type of information that must be provided pre-contract includes, but is not limited to, the identity, address and telephone number of the trader, any additional delivery charges, arrangements for payment, delivery, performance and in the case of a sales contract, a reminder that the trader is under a legal duty to supply goods that conform with the contract.

New rules

In addition to goods and services, the Regulations introduce a new category of “digital content” with additional and specific requirements which apply to both paid-for and free content such as music or video downloads.

Cancellation and return

Cancellation rights will only apply to off-premises and distance contracts. The Regulations increase the statutory minimum “cooling off period” from seven working days to fourteen calendar days for distance and off-premises contracts for goods, services and digital content.

The cancellation period is extended to twelve months if the trader has not provided the appropriate pre-contract information (although the twelve month period will be reduced to fourteen days once the failure is corrected).

The Regulations also introduce changes to the rules regarding refunds, including the requirement that customers must generally return goods (or otherwise evidence such return) in order to obtain a refund.

Additional payments and charges

Express consent is required by consumers where extra payments will be charged in addition to the agreed sale price. The use of ‘pre-ticked’ boxes in relation to any such additional payments are no longer permitted.

For distance contracts concluded by electronic means where an online order results in payment, the consumer must be required to explicitly acknowledge that the order implies an obligation to pay. Traders must therefore ensure that an online payment button or similar function is labelled unambiguously in compliance with the Regulations - it is suggested that a “Pay Now” button will be sufficient. A failure to do so will result in the contract being unenforceable.

If a trader operates a telephone helpline allowing consumers to contact them in relation goods, services and/or digital content which the consumer has purchased, calls to such helpline must only be charged at the basic rate. Premium rate numbers are no longer permitted.

Confirmation of distance contracts

Where a distance contract has been entered into, a trader will be required to provide the consumer with confirmation of the contract on a “durable medium” (for example by paper or by email), no later than the time of the delivery of any goods or prior to performance of any service supplied under the contract.

Contracts outside the scope of the Regulations

The Regulations set out the types of contract to which the Regulations will not apply. These include contracts:

  • relating to gambling within the meaning of the Gambling Act 2005;
  • relating to services of a banking, credit, insurance, personal pension, investment or payment nature (unless offered as ancillary services to contracts which are covered); 
  • relating to supply of food and beverages supplied by a trader on frequent and regular rounds to a consumer’s home, residence or workplace;
  • concluded by means of automatic vending machines or automated commercial premises; and
  • under which goods are sold by way of execution or otherwise by authority of law.

What does this mean for businesses?

In order to ensure compliance with the Regulations, businesses which sell goods, services or digital content to consumers, whether in store, online, by telephone or other means will need to review their systems and processes and update their:

  • sales processes, including pre and post-contract information; 
  • terms of business and policies; and 
  • cancellation and refund policies.

Non-compliance may result in contracts being unenforceable, i.e. the consumer will not be bound by the contract or order and, in serious cases, traders may face criminal prosecution and fines.

For these reasons, it is vital that businesses subject to the Regulations examine the way in which they conduct business with consumers to ensure that they are compliant with the changes in UK consumer law. With all changes due to be introduced by than 13 June 2014, retailers must act quickly.

What’s next?

The Regulations form part of an extensive overhaul of consumer protection rules in the UK. In January 2014, a new draft Consumer Rights Bill was presented to parliament which, if adopted, will streamline and consolidate consumer law in the UK. The Consumer Rights Bill will deal with matters such as unfair terms in consumer contracts, the rights and remedies of consumers and will also introduce the first consumer laws that specifically deal with digital content.