In a bid to increase consumer awareness of their rights and to provide greater protection, new regulations come into force in the UK as of 13 June 2014 implementing certain elements of the EU Directive on Consumer Rights (adopted in October 2011).
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "Regulations") will replace and amalgamate existing distance selling and doorstep selling regulations, and will introduce stronger rights and protections for consumers and additional requirements in relation to on-premises selling.
The Regulations will apply to businesses selling goods, services or digital content to consumers in the UK.
Compliant businesses will already be familiar with existing obligations and requirements in relation to the provision of information and cancellation rights. However, there are a number of new requirements and changes, including a number of provisions which also apply to on-premises contracts with consumers.
Therefore, businesses need to ensure that their legal compliance programme, including any related consumer terms and conditions are in line with the revised requirements.
The Regulations apply to online and other distance retailers (e.g. mail order, door step selling etc.) and in part to on-premises retailers (e.g. high street shops).
1. So what are the key changes imposed by the Regulations?
New pre-contract information requirements - The Regulations set out full details of certain pre-contract information that must be provided to consumers. For example, characteristics of the goods and services, the identity and contact details of the business offering the goods or services, delivery arrangements and charges, and cancellation and complaints procedures.
"Pay now" button – in respect of online sales, businesses will also be required to include a "Pay now" button when a consumer is required to make a payment online. References to terms such as "Submit now" or "Order now" will not suffice.
No "hidden costs" – pre-ticked boxes for additional payments must not be used and consumers will not be liable for costs which they have not been notified of prior to entering into a contract with the business.
Helpline charges – if businesses provide a customer helpline, then the cost of that helpline must not exceed the cost of a basic telephone call.
Cancellation rights - consumers will be given more time to change their mind about distance selling and off-premises purchases. They will now have the right to a 14 day cooling off period (an increase on the previous 7 days).
Cancellation information – cancellation information should be provided to consumers in the model form of cancellation wording as provided for in the Regulations.
Refunds - businesses must provide refunds within 14 days of cancellation. However, online, off-premises and other distance traders will now have the right to withhold refunds until the consumer has returned the goods and they will also be able to reduce the amount of the refund if the goods show evidence of use by consumers which amounts to more than checking the goods were as expected.
Ancillary contracts - ancillary contracts, such as, a warranty or insurance cover on a product will be automatically cancelled when a consumer cancels the primary contract with a trader.
Delivery - delivery of goods must be within 30 days of entering into the contract and without undue delay, unless the consumer and the trader agree otherwise.
2. How do the Regulations impact your legal compliance programme?
The Regulations have been in the pipeline for some time now, which means that many businesses will already be working towards or may even have completed their legal compliance programmes to identify any changes that need to be made to their commercial practices as a result of the introduction of the Regulations.
However, it is important to note that the Regulations provide for different pre-contractual information, consents and cancellation periods dependent upon whether the consumer is contracting for goods, services or digital content. There are also certain sectors which are exempt from the Regulations and certain contracts which are only partially covered.
This means that a 'one size fits all' approach is unlikely to work for businesses that offer more than one type of contract covered under the Regulations. For example, consumers purchasing digital content must give their express consent and acknowledge that they will lose their right to cancel by completing the ordering process, for the content to be provided before the end of the 14 cancellation period.
3. What are the risks of non-compliance?
Failure to comply may result in consumers having a remedy for breach of contract, enforcement action by Trading Standards and even criminal prosecution for failing to provide appropriate cancellation information.
Therefore, if you haven't already done so, it is essential that you act now. Consider the following:
- Are your commercial practices compliant with the changes?
- Do you make the right information available to consumers?
- Do you communicate this information to consumers in a durable medium?
If you or your business requires any further information in relation to this update please don’t hesitate to contact Sonal Patel or David Lewis.
Sign up to our email digest