Significant Changes to UK Consumer Law

by K&L Gates LLP
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The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the “Regulations”) come into force on 13 June 2014 and form the final stage of the UK’s implementation of the European Union Directive on Consumer Rights (2011/83/EU). The Regulations apply to all traders selling goods, services and digital content to consumers, whether from trading premises, online or off-premises (including doorstep selling), and will replace the Distance Selling Regulations and the Doorstep Selling Regulations.

The Regulations set out the information that traders must give to consumers upon entering into a contract, the consumer’s cancellation rights for distance (such as online) and off-premises (such as doorstep) contracts, and clear rules on the passing of risk in goods in distance sales. The aspects of the Regulations that will be of particular interest will be the increase of the “cooling off” period from 7 days to 14 days and the introduction of a new category of “digital content”, in relation to which traders may need to amend their ordering process. Online retailers should also take account of the information that must be provided, particularly as to the point when consumers will incur an obligation to pay.

Certain business activities are excluded from the Regulations, including the provision of gambling services, certain personal financial services, rental of residential accommodation, package holidays and telecommunications services.

Cancellation Rights

Many of the Regulations restate existing law, but some aspects are new. Consumers have always had a right to cancel distance and doorstep contracts within a cooling-off period, but this period has now been extended from 7 days to 14 days. Where previously there were uncertainties as to how this cancellation right should be administered in practice, the Regulations now provide a clear mechanism. There is a standard cancellation form set out in a schedule to the Regulations that all distance and off-premises traders must provide to consumers. When a consumer exercises their cancellation rights in a goods contract, they must return the items within 14 days of the date of cancellation. Traders must make a refund within 14 days of the cancellation date or of receipt of the goods, although traders can now withhold refunds until the goods have been returned, and even reduce the amount refunded if goods are returned which show evidence of use beyond the handling necessary for the consumer to check that goods are as described.

The cancellation right does not apply to certain products, including goods which have been personalised for a particular consumer or which are likely to deteriorate or expire (such as foodstuffs), certain services such as leisure activities, vehicle rental, transport of goods or accommodation which are to be performed on a specific date, goods which cannot be returned for hygiene reasons once unsealed (such as swimwear) and unsealed audio or visual recordings or software.

If a trader fails to provide the pre-contract information required by the Regulations, the cooling-off period will be extended from 14 days until 14 days from the date the information is provided, or if the information is not provided, for up to 12 months after the date that the information should have been provided.

The cancellation right does not apply to contracts for the provision of passenger transport services.

Digital content

An entirely new category of “digital content” is introduced by the Regulations, which addresses the fact that so much software and entertainment content, from e-books to music, films and games, is now delivered by download. Suppliers of downloaded digital content will now be required to provide information as to which systems and hardware the digital content will work with before consumers commit to a purchase. There is also an important interaction between the cancellation right and the new category of digital content. Under the Regulations, download of digital content may not be provided until after the end of the 14-day cooling-off period, unless a trader has obtained from the consumer at the time of purchase the consumer’s express consent to immediate download of the digital content and the consumer’s acknowledgement that he or she will have no right to cancel the contract.

Online selling and the obligation to pay

Online traders are required under the Regulations to clearly label the button consumers must press in order to place an order in an easily legible manner to indicate that placing the order entails an obligation to pay the trader. The Regulations suggest that the words “order with obligation to pay” are used, although traders are free to use a “corresponding unambiguous formulation” if this proves too cumbersome.

Delivery and risk

All contracts for goods (whether on premises, distance or off-premises) are subject to the new rules in the Regulations on the time for delivery of goods and the passing of risk in the goods to the consumer.

Unless the parties have agreed a specific delivery time or period, goods must be delivered without undue delay and in any case within 30 days of the date the contract is entered into. The Regulations provide that risk in goods passes from the trader to the consumer in most cases at the point when the goods are delivered.

Additional charges

Traders may not pre-tick boxes on websites which will lead to additional payments, as the Regulations provide that any additional charges require consumers’ express consent before the contract becomes binding. Consumers will not be liable for charges about which they have not been informed before entering into a contract.

Premium rate helplines may also no longer be used. If a trader offers a telephone helpline for consumers to contact them about their purchases, the trader must provide a number that consumers can call for no more than the basic rate.

What should traders do?

  • Check websites to ensure that all required information is provided pre-contract, including checking that any buttons to place an order and incur a payment are appropriately labelled.
  • Ensure that sales and supply terms and conditions comply with the Regulations, in particular in relation to cancellation periods.
  • For sellers of digital content, a mechanism for collecting the appropriate acknowledgements and consents from consumers to waive the cancellation period should be included in the ordering process.
  • Confirmation emails or delivery notes may need to be redesigned to include a cancellation form as set out in the Regulations.
  • Returns of goods may be more likely as consumers now have a longer cooling off period in which to inspect the goods and to change their mind.  Traders may therefore wish to take the opportunity to review their returns and refunds procedures and arrangements, devoting more staff to this role if necessary.

 

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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