Reminder: New Online Commerce Rules Coming to the EU

by Wilson Sonsini Goodrich & Rosati
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On June 13, 2014, a series of new laws affecting businesses active in the online sale of goods and services (including content) to customers in the European Union will come into force. By that date, each EU member state must have enacted its own national legislation to implement the Directive on Consumer Rights (2011/83/EC), which was adopted by the European Commission in October 2011. For companies that have not yet brought the terms of their agreements that apply to customers in the EU into compliance, now is the time to do so.

Some of the key provisions of the Directive on Consumer Rights are the following:

  • Right to Return Goods. Under the directive, online consumers must have a minimum of 14 days from when they receive their purchases to return them for a full refund. Where a seller has not clearly informed the customer about the right to return, this period may extend to one year. In the case of online contracts for services, service providers may withhold a portion of the fees paid from the refund representing a pro-rated share of fees incurred during the 14-day period. Certain exceptions to the refund obligations will apply, such as when purchasing from online auctions (although professional sellers operating through these platforms still will be required to comply) or when purchasing digital content (in which case the right to a refund expires when the download actually has begun). By default, the retailer must bear all costs of the returns, although online retailers may pass this cost on to consumers if the latter are clearly informed of what the estimated costs of returns will be in advance of the purchase.
  • Prescribed Contracting Methods. The directive contains a number of new rules that prescribe how contracts can be formed online. Specific wording must be used at the final point of sale and the directive prohibits the use of pre-checked boxes when accepting terms of online purchases. Businesses will need to provide consumers with a model withdrawal form to use when cancelling contracts and post the form on their websites.
  • Disclosure Requirements. The directive specifies certain disclosures that retailers must make regarding their products and services. For instance, sellers of digital content must include hardware and software compatibility information and any technological protection measures (or DRM) that are included with the content.
  • Prohibition on Payment Surcharges. Under the directive, online retailers may no longer impose a surcharge for the use of a credit card or debit card (beyond the actual cost to the retailer to process these payments). Retailers also may not impose any fee for calling the retailer's listed telephone hotline, although the directive does not go so far as to require toll-free numbers for customer inquiries.

Penalties for failure to comply with the Directive on Consumer Rights will vary by member state, although the directive requires member states to impose "strict" penalties for non-compliance. These could include voiding of sales contracts and the imposition of injunction orders for first-time offenders, and repeat offenders may face severe regulatory fines for failure to adhere to the new requirements. Consumers also will have a private right of redress against online businesses that do not follow the new regulations. Member states have some ability to enact requirements that go beyond the rules laid down in the directive. The European Commission's press release on the directive contains additional information.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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