13 June 2014

Dealing with Individual Consumers - Are you ready for the new rules?


Kenneth Mullen
Partner | UK

All UK businesses dealing with consumers, take note. From 13 June 2014, all consumer contracts need to comply with new rules on sales of goods, services or digital content. The new Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (‘Regulations’) aim to ensure that individual consumers are better informed and protected by imposing strict obligations on retailers.

The Regulations replace rules previously contained in the Distance Selling Regulations (‘DSRs’) and make a number of changes to previous regulations, such as extending the required cooling off period for distance sales; expanding consumer rights to a wider range of contracts (such as digital downloads) and providing new requirements around returns and refunds.

So what is changing?

The Regulations cover a wide range of online and offline contracts between traders and individual consumers for goods, services and digital content, subject to a few exceptions.

If your organisation offers or sells goods or services to UK consumers, the key points to note are:

  • Pre-contractual information: you will need to provide certain required information as set out in the Regulations to consumers in a clear manner before a contract is concluded, so it is time to check that you are providing this at the right time and in the right way. This is particularly important with ‘off-premises’ contracts (for more than £42) concluded away from a place of business, where failure to comply is a criminal offence. In all cases, failure to provide required information will mean that a consumer may be under no obligation to pay you.
  • Cooling-Off: For distance or off-premises contracts, the consumer has a right to cancel the contract without reason within a 14 day ‘cooling-off’ period (an extension of the previous 7 days provided under the DSRs). Details about this cancellation right (incorporating a ‘model’ cancellation form) must be included in the pre-contractual information you provide although the consumer’s right may be lost, for example, when purchased digital content is downloaded. Other exemptions that were in the DSRs still apply, such as contracts for personalised goods, perishable items or newspapers. Failure to provide the necessary pre-contractual information will extend the cooling off period from 14 days to approximately 12 months.
  • Digital content: if you are a seller of digital content (for example, music downloads), new requirements mean that you must now provide additional information to individual consumers, including details of the compatibility of your products with various devices onto which they may look to download material.
  • Explicit Obligation to Pay: for online contracts you must now make it absolutely clear to consumers at what stage they are entering into a contract with an obligation to pay. If running an e-commerce platform, any online button that is used to complete the customer order should explicitly state ‘obligation to pay’ or use similar unambiguous language.
  • Additional Services: you must now seek express consent for any additional payments which may be added onto the agreed price. Use of pre-ticked boxes for supplementary services that the consumer has to pay for (e.g. express delivery, extended warranties or insurance) is now banned. The new Regulations mean that if the consumer has not been told about the additional costs, they will not have to pay them.
  • Returns & Refunds: the Regulations also amend previous rules on returns. Unless you agree otherwise with the consumer, you must deliver any goods without undue delay and in any event within 30 days from the date the contract was entered into. For off-premises or distance contracts there is a 14-day prescribed timescale for refunds being paid (measured from the date of cancellation or, if applicable, date of goods being returned)

As was the case with the DSRs, certain sectors and types of contract (such as banking/financial services, package travel and property sale and rental) are excluded from the Regulations or the information requirements are waived (such as in the case of medicines prescribed by a healthcare professional or for passenger transport). Off premises contract of less than £42 are also exempt from the information and cooling-off requirements under the Regulations.


What do you need to do?

Where you run any UK retail or consumer-facing business, you should take immediate steps to check that your customer contracts and sales documents are up to date and comply with the new requirements. The Regulations amend much of the previous DSRs so, in particular, where selling off-premises or by distance (e.g. mail order or e-commerce) or where you provide digital content you should ensure that your website and customer terms are reviewed without delay.

We’re here and happy to help
 

For further information, please contact Kenneth Mullen. 

Category: Article