Top 5 Changes For Online Sales

by DLA Piper

Italy finally implemented the new Consumer Rights Directive which introduces major changes in online contracts aimed at better protecting consumers, impacting also on the Internet liability regime for entities selling products to consumers.

The introduced changes are very complex and do not impact merely on distance contracts, but on any contract entered with consumers. Also, since they are based on an European directive, similar issues are going to be faced by sellers in any European country where they market their products, and this applies regardless of the place where the business is based since these regulations do not follow the so called “principle of establishment“.

Based on a review of the new regulations, in my view the top 5 changes are:

1. Increased transparency

The list of information that has to be provided to consumers before the sale has been considerably increased and for instance covers any type of cost connected to the transaction for the entire duration of the contract with the obligation to require consumers to expressly confirm for instance through a tick box their acknowledgement that the service requires the payment of a price to avoid the practice of the so called “hidden” free services. But it is also required an express reference to the provision of statutory consumers warranty which was subject of considerable disputes in Italy and to the fact of whether or not the withdrawal right is granted.

2. 14 days right of withdrawal

The term for the consumers’ right to change their mind at their mere discretion and to withdraw from the agreement previously entered into has been extended to 14 days from the receipt of the item (rather than from the conclusion of the contract) extended to 12 months if the seller does not inform the buyer of his right of withdrawal. The right of withdrawal can now be exercised electronically and even via the seller’s website through a dedicated form attached to the regulations which therefore introduces much lighter formalities than what prescribed in the past. Once the right of withdrawal is exercised though, the seller has only 14 days to refund the purchase price including the delivery price.

The right of withdrawal has been extended also to online auctions and for instance it might create troubles to eBay. On the contrary, exceptions have been introduced for instance in case of customised items and the provision of services related to leisure activities but with the peculiarity that such latter exception applies only “if the contract provides for a specific date or period of performance”. As a consequence the question is what happens if a consumer purchases a coupon for a week-end in Capri that can be used during a 6 months period.

3. Stringent delivery terms

Unless agreed otherwise, the delivery of purchased items shall occur within a maximum term of 30 days from the purchase which will represent a milestone change especially for online marketplaces where consumers purchase items at discounted prices and then find out that the delivery will occur in 2/3 months. Indeed, the issue will be whether consumers’ interest will be deemed adequately protected if the agreed delivery term is too long without justified reasons.

4. No surcharges for payment means

As already experienced in recent investigations, European regulations are heading towards a framework prohibiting surcharges and indeed the provisions implementing the Consumers Directive refer to those set forth in the Payment Services Directive prohibiting surcharges for usage of payment means.

5. No pre-ticked boxes for extra-services

The express consent from consumers will be necessary if additional costs are added to the purchase price for instance as part of sales of further services (e.g. the insurance policy associated to a plane ticket).

Finally, additional specific obligations are prescribed in relation to the sale of digital products and with reference to screens of limited size as occurs in the case of mobile commerce.

The regulations introduce considerable new obligations on companies selling products and services to consumers, but the good news is that the new regulations will come into force only on the 13th of June 2014. Therefore traders have time to make their Ts&Cs and procedures compliant.

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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