Businesses contracting with consumers should take note of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "Regulations") which were adopted by the UK on 13 December 2013.
The Regulations affect contracts between "consumers" and "traders" concluded from 13 June 2014, except certain types of contracts specifically excluded (for instance, contracts for gambling, contracts for banking or credit services, and contracts for package travel). They contain additional rules relating to "distance contracts" and "off-premises" contracts, which should be of particular note to online retailers and traders who conclude contracts away from business premises. The Regulations also introduce into UK law for the first time specific rules relating to the supply of "digital content".
The Regulations implement into UK law the majority of the EU Consumer Rights Directive 2011/83/EU (the "Directive"). The rules in the Directive relating to payment surcharges have already been adopted in the UK from 6 April 2013 through the Consumer Rights (Payment Surcharges) Regulations 2012.
Key Changes to UK law, introduced by the Regulations and which will apply to contracts concluded from 13 June 2014, include the following:
- The Regulations replace the Consumer Protection (Distance Selling) Regulations 2000 (the "DSR") and the Cancellation of Contracts made in a Consumer's Home or Place of Work etc Regulations 2008.
- The Regulations extend the period from when a consumer can voluntarily withdraw from a contract (the "cooling-off period") from 7 working days to 14 calendar days. The Regulations also amend the point at which the cooling-off period commences for contracts for the sale of goods, and the maximum duration to which the cooling-off period may be extended in lieu of the trader meeting its obligation to notify the consumer of their cancellation right.
- The Regulations amend the timeframes around the provision of refunds, and provide that consumers will generally be required to return goods (or otherwise evidence such return) in order to receive a refund.
- For online services contracts, the Regulations require the consumer to make an express request before the trader can commence services during the cooling-off period, and amend the rules around the consumer waiving his or her withdrawal right during such period. There are also provisions allowing traders to be paid on a pro-rated basis if services are provided, and subsequently cancelled, during the cooling-off period.
- Under the Regulations, the provision of digital content (e.g. a music download) is now treated as a new type of supply which is different to the supply of goods and/or services, and traders are required to comply with additional digital-specific information requirements (including, for instance, details of functionality).
- The Regulations introduce a requirement for express consent to any payments in addition to the remuneration agreed for the trader's main obligations. As such, traders are not entitled to rely on pre-ticked boxes, or similar, as a means for demonstrating a consumer's agreement to payment of an additional sum.
- Online auction sites are now clearly covered by the Regulations. The DSR is ambiguous about whether it applies to online auction sites. As such, operators of online auction platforms may have to re-evaluate certain of their practices.
The Directive's objective is to harmonise certain EU-wide consumer protection rules including those relating to transparency of information, express consent for payments, prohibiting excessive charges and cancellation rights for distance and off-premises contracts. With EU-wide harmony in mind, Member States were given limited flexibility on how to implement the Directive. Accordingly, the Regulations will be very similar to local rules in other EU Member States.
The Directive, and the implementing Regulations, are set against the wider backdrop of UK consumer legislation reform, and in particular the proposed introduction of a new Consumer Bill of Rights aimed at clarifying UK consumer law through simplification (for instance, a move away from implied terms to a system of statutory guarantees) and through consolidation of the various applicable pieces of legislation into a core Bill.