E-commerce law update: New Regulations and guidance issued on digital downloads; compliance deadline: 14 June 2014
Who needs to read this update?
The UK’s new Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 (Regulations) apply to all businesses that sell products and services to consumers in the UK and implement aspects of the EU’s Consumer Rights Directive, which applies to all EU-based consumers.
This update focuses only on the rules for selling digital downloads. For more information on the wider impact of the Regulations, see this earlier update.
What do the Regulations say about digital downloads?
The Regulations require sellers to give consumers certain pre-contractual information and allow a 14 day “cooling off period” to cancel goods and services purchased online and get a refund (this has been extended from 7 working days).
There are distinct rules and exceptions for selling digital content that will apply to most digital download services (i.e. those that directly provide digital content faster than the default 14 day cooling off period). When the government published an initial draft of the Regulations in August 2013, two aspects of the rules raised questions for digital download providers in particular:
1. Under Regulation 37, sellers must obtain customers’ express consent and acknowledgement that they will lose the right to cancel before providing digital content within the 14 day period. If this is not done, the consumer retains cancellation rights and can keep the content free of charge.
Question: What form must the “express content” and “acknowledgement” take?
2. The draft Regulations required certain mandatory pre-contract information (including details of cancellation rights) to be given to customers in a “durable medium” (i.e. on paper or by email) before providing a digital download.
Question: How can providers comply with this timeframe and still provide downloads instantaneously whilst preserving user experience?
What is the position now?
A revised version of the Regulations was adopted in December 2013 and the UK Department for Business, Innovation and Skills (BIS) issued guidance at the same time which provides a little more clarity on these questions as follows:
- consumers will not have the right to cancel a digital download purchase once the download has begun provided that (i) this has been made clear to the customer and (ii) the customer has given their “explicit acknowledgement”; and
- the Regulations have been amended so that mandatory pre-contract information must be provided in a “durable medium” within a reasonable time following conclusion of the contract (rather than necessarily before the download begins).
How does this impact my compliance program?
Businesses must comply with the new UK Regulations by 14 June 2014 or risk sanctions by consumer protection authorities. Other EU countries are following a similar timeframe, but some (like Germany) are already enforcing equivalent legislation.
Despite a slight discrepancy between the terminology used by BIS in its guidance and that used in the Regulations, the guidance appears to indicate that UK regulators will take a relatively pragmatic approach for digital downloads and treat the cancellation right as being lost as soon as download begins provided the seller has implemented the right mix of transparency and consent.
Most businesses selling digital content online to UK and EU-based customers will now need to review and update user journeys, email confirmations and notices to ensure compliance before the 14th June deadline. As explained in this earlier update, explicit consent or acknowledgement need not mean tick-boxes, provided the user is required to take appropriate action alongside sufficiently clear information.