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E-Commerce Law Update: UK government publishes new draft consumer regulations

Phil Lee
17/09/2013

Locations

United Kingdom, United States

In August 2013, the UK government published two new sets of draft consumer regulations to tighten up consumer rights and implement parts of the European Consumer Rights Directive.

In August 2013, the UK government published two new sets of draft consumer regulations to tighten up consumer rights and implement parts of the European Consumer Rights Directive.

The new rules will require most e-commerce businesses selling to UK and European customers to review and change long-standing business practices. They will also give consumers who have been subject to misleading or aggressive marketing new direct rights to sue for compensation.

What are the key changes

1. New information and cancellation rules for consumer contracts

Crucial changes in the new UK (and European) rules for consumer e-commerce include:

Digital downloads: For digital content to be provided faster than 14 days after a transaction, consumers must give express consent and acknowledge that they will lose their right to cancel. See further below on how this impacts compliance.

"Hidden" costs: Consumers must also give express consent to any additional payments over and above the cost of the main product/service (e.g. an extended warranty or ongoing support service). Pre-ticked boxes will not be allowed.

Extended (14 day) cancellation period: This has been extended from 7 working days. Consumers can cancel for any reason and get a full refund. The period rises to 12 months if the seller does not comply with the information requirements.

New information requirements: One of several new rules on information given to customers means that wording used to conclude an order online must clearly indicate a legal obligation to pay, otherwise the consumer will not be bound. A button that says "Place Order", for example, is unlikely to comply.

2. Misleading and aggressive practices

In the UK, draft amendments to consumer protection legislation will strengthen the rights of consumers affected by misleading or aggressive business practices. New measures include:

A private right for consumers to bring their own lawsuit against the companies responsible (currently, only public authorities can enforce the existing rules).

Set remedies for consumers who have been targeted by these practices, namely:

  • a right to unwind the contract and get a full refund if they reject the goods/services within 90 days;
  • a right to a discount (fixed by law) if the consumer decides to keep the goods/services; and
  • a right to claim additional damages (e.g. for related financial losses, stress and inconvenience).

What happens next?

The UK government has already consulted on these new rules but is open to further comments by 11 October 2013. The new consumer contracts regulations must come into force by early December 2013 and will start applying to contracts by at least June 2014. There is no official deadline to implement the separate rules on misleading and aggressive practices, but it is likely that these will follow a similar timeframe to the consumer contracts rules.

How will this impact my compliance program?

Most e-commerce businesses should now be reviewing their order processes and user journeys to ensure compliance with the new consumer contracts rules.

Where digital downloads come into play, it will be important to take special care to ensure that user journeys enable the required "express consents" to be correctly obtained and all mandatory information to be confirmed by a permitted method at the right point in the process. Otherwise, customers will generally be entitled to a full refund, even if they have enjoyed the benefit of the downloaded product.

This need not mean multiple tick boxes, which can adversely affect user experience and conversion rates. Whilst the regulatory guidance has not fully addressed this point, there are practical methods businesses can employ to confirm mandatory information and obtain consent to start a digital download so that cancellation rights fall away. These can include clicking a button embedded in a post-transaction email alongside sufficiently transparent information.

If you would like more information or advice on how the proposed changes will affect your business, please contact David Lewis or Phil Lee.

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