New EU Consumer Contracts Legislation Comes Into Force on 13 June 2014: E-Commerce Businesses Should Review Terms and Conditions of Sale Now

by McDermott Will & Emery
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The new Directive No 2011/83/EU sets out a European framework for the minimum standards with which e-commerce businesses active in the EEA must comply when trading with consumers. The new laws apply to most distance selling and off-premises contracts between businesses and consumers entered into on, or after, 13 June 2014. Any businesses targeting consumers in the EEA will be affected. The majority of the new consumer rights cannot be excluded from contracts; any contractual terms that waive or restrict these new rights will not be binding on the consumer.

The national implementing laws closely mirror the provisions set out in the Directive, as the Directive provides that Member States must not legislate provisions in their national law that diverge from those set out in the Directive, unless otherwise provided for in the Directive. Implementation may, however, vary to some extent across Member States, and businesses should therefore seek legal advice as to the potential, specific effects of national law. In those Member States that fail to implement the Directive into their national laws, the provisions of the Directive will directly apply.

The following are the main changes that e-commerce businesses need to be aware of:

  • Consumer Cancellation Period: The cancellation period will be 14 calendar days in respect of both goods and services. For goods, this period starts on the day after the goods were received by the consumer and applies only to non-defective goods. For services, this period starts on the day the contract between the service provider and the consumer was entered into. If a consumer would like services to be performed during the cancellation period, businesses must require consumers to make an express request.
  • Exemptions to Cancellation Rights: There are certain exemptions to the cancellation rights including contracts for bespoke and customised goods, goods sealed for health or hygiene reasons that have been unsealed and goods that deteriorate rapidly.
  • Consumer Cancellation Deadline and Information: If consumers are not informed of their right to a 14 calendar day withdrawal period before contracting, the period will be extended to one year and 14 calendar days. If the required information is provided after contracting, the deadline for withdrawal will expire 14 calendar days after the day the information was provided to the consumer.
  • Refund Timing: Businesses must refund all payments made by the consumer (including, if applicable, the costs of delivery) without undue delay and no later than 14 calendar days from the day the business receives either the unwanted goods or proof of return, whichever is earlier. In respect of goods, unless businesses have offered to collect the goods themselves, they may withhold the refund until they have received the unwanted goods or proof of return, whichever is earlier. In relation to services, consumers must be refunded within 14 calendar days from the day the business is notified of the cancellation. The consumer is liable to pay an amount proportionate to the services already provided up until the time they notified the business that they wish to cancel. In Italy, however, the refund timing is 14 calendar days from the day on which the business is informed of the consumer’s decision to withdraw from the contract.
  • Refund Charges: Businesses are required only to refund the cost of the least expensive type of outbound standard delivery, even if express delivery was used. Businesses can avoid covering the inbound cost of returning the goods by informing the consumer that they will be responsible for these costs.
  • Delivery Deadline: Goods should be delivered without undue delay and within 30 calendar days of the contract being entered into.
  • Price Transparency: All payments require the consumer’s active and explicit consent. This means businesses have to label an order button with “order with obligation to pay” or a similar, unambiguous phrase; pre-ticked boxes and other default options for additional goods or services to be paid for by the consumer will not be lawful. This rule also applies where payment is deferred for a period, e.g., until after a free trial period has expired.
  • Consumer Helplines: All consumer helplines for assistance with purchases must be charged at no more than a basic rate. This means they must cost no more than making a standard phone call to a landline or mobile number; premium rate numbers are not permitted.
  • Pre-Contractual Information: Information in relation to the main characteristics of the purchase, the total price (including delivery and any other charges) and how to cancel the order must be displayed clearly and prominently and made available before the consumer purchases any goods or services.
  • Record of Contract: Confirmation of the contract must be supplied to the consumer via a durable medium, such as e-mail, text, letter, in a personal account or on a CD or DVD. Sending an e-mail to an e-mail address provided by the consumer would fulfil this requirement.

The rules set out above are fully harmonised throughout the EEA. Member States are not allowed to maintain or introduce national laws that provide for less or more stringent levels of consumer protection. E-commerce businesses may, however, offer more favourable terms to consumers, as long as the consumer is provided with full information about these before making a purchase.

In light of these changes, businesses should health-check their current processes, policies, terms and documentation and implement any changes before the 13 June 2014 deadline. For more information, please contact your usual MWE lawyer or an author.

Kavita Mehta, a trainee solicitor at McDermott Will & Emery’s London office, also contributed to the article.

 

 

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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