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Consumer law is changing – 5 key pointers for online businesses

May 15, 2014

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, confusingly, come into force on 13th June 2014.

There’s just under one month to go. What are they all about? Are you ready?

Maybe you’ve heard that consumer law is changing, maybe you haven’t. Maybe you’re concerned how it might affect your online business, maybe you’re not.

Maybe you know all about it, have already amended your terms of business and briefed your customer care team about the changes, in which case good work (and read on if you fancy some revision!).

The changes come into force on, and apply to all contracts entered into with consumers on or after, 13th June 2014. If you don’t comply, not only could you face disgruntled customers and risk damaging your reputation, but Trading Standards and the Competition and Markets Authority have the powers to force compliance, in relation to both past and future orders.

Trading Standards have issued full guidance for all types of businesses caught by the new regulations.

If you run an online business, selling goods or services (including downloads and software) to consumers, here are the key changes for your business:

Package holidays: one of many exceptions to the new regulations

Package holidays: one of many exceptions to the new regulations

A LITTLE WORD OF WARNING….

We’ve put together some key changes, specific to e-commerce businesses, however there’s a whole host of exceptions which may or may not apply to you and the impact of the new regulations will be different for each business. We’d suggest seeking advice on how the changes could affect your business and performing an audit of your website, order process and your terms of business.
 

1. The length of the “cooling off period” is changing.

Consumers used to have a period of 7 working days following receipt of the goods or services in which they could give you notice they wished to cancel the contract and receive a refund. The new regulations extend this to 14 calendar days.

The idea behind the cooling-off period is that the consumer has the opportunity to examine or test the goods and services in the same way that they could in a shop. Because they have made their purchase online, they have been deprived of this opportunity, so the cooling off period is in place to compensate for that.

NOTE: If you supply services, or a mixture of goods and services, in principle you should not supply the services until this period has expired. However, there is a scenario where the consumer can waive their rights to the cancellation period (and there is a similar situation relating specifically to digital content set out below).

This occurs if, and only if:

  1. the service is to be FULLY performed during the cancellation period;

  2. the consumer EXPRESSLY requests to receive the services before the end of the cancellation period;

  3. the consumer ACKNOWLEDGES THAT THEY WILL LOSE THEIR RIGHT to cancel once the services have been fully performed.

After the consumer has submitted notice of their wish to cancel, they will have 14 calendar days to return the goods to you. You could withhold the refund until after you’ve received the goods, but once you have them you must provide a full refund* within 14 calendar days of the date you received them. You must also refund delivery charges (although if they paid for a premium delivery service, you only need to refund the value of the standard delivery service). The consumer should bear the cost of returning the goods to you, unless your terms say that you will collect the goods, in which case you must do so at your own cost.

List*You must not impose any fee on the consumer for the refund, e.g. a ‘handling’ fee. However, if the goods have been excessively handled or damaged by the consumer, you may be able to reduce the amount you refund and return only the true value of the returned goods.
 

2. The list of information you must provide to the consumer is long.

AND the time frames above will be extended if you don’t comply with this one…

The new Regulations set out a long list of information which must be supplied to the consumer at certain stages of the order process and on the conclusion of their contract. This includes details of their right to cancel, confirmation of full delivery of ‘additional’ costs BEFORE they conclude the contract and a requirement for you to provide a template cancellation form for them to use (helpfully one has been put together for you and is annexed to the Regulations at Schedule 3).

To save you reading the legislation in full, click here for our list of the information online providers of goods and services must provide to consumers, and when you must provide it.
 

3. Your website may need a few tweaks.

– At the stage when the consumer commits to make a purchase, the fact that a payment will need to be made must be perfectly clear. The consumer must acknowledge that by clicking the button, they will be obliged to make payment. Therefore, ‘Confirm’, ‘Proceed’ or even ‘Buy’ may no longer be sufficient. The regulations ask for the wording to be “order with an obligation to pay”.  Let’s be honest, that’s not very commercial of the draftsmen! Luckily, they also permit a ‘corresponding unambiguous formulation’, so perhaps something like ‘PAY NOW’ or ‘Click to Pay’ may suit.

– Your website must clearly and legibly indicate whether any delivery restrictions apply, any further costs which may apply to the purchase and what payment methods you will accept. This must be provided at the beginning of the order process AT THE LATEST.

– Pre-ticked boxes for any additional payments or services are not permitted. The customer must voluntarily select the box and be able to continue with their order irrespective of their choice.
 

4. Digital content is caught too.

The new regulations have specific provisions in relation to the supply of ‘digital content not on a tangible medium’. Quite simply, downloads are covered by the new regulations.

You must not begin supplying the digital content before the end of the cancellation period (I know, no one would wait 14 days for their iTunes track)…. UNLESS the following has happened before you supply the content:

– The consumer gives their express consent to receive the content sooner

AND

– The consumer has acknowledged that, as a result, they lose their right under the regulations to cancel the contract

AND

– You must confirm the fact you have received both their consent and acknowledgement above (perhaps in an order confirmation email).
 

5. You may need to change your processes.

– Once the consumer has placed their order with you, unless you have agreed otherwise, you must deliver the goods or services without undue delay and within 30 days at most.

– You must ensure that, if a customer wishes to contact you about the product they have purchased, they must be able to use a basic rate telephone number to do so.

– If the consumer cancels their contract with you, any ancillary contracts they entered into are automatically terminated (even if that contract is with a third party). It will be your responsibility to cancel the ancillary contract. For example, if the consumer purchases a washing machine, and also signs up to a maintenance and repairs contract with your affiliate, if they return the machine then that maintenance contract will be cancelled.

If this all seems a bit too much, fear not: help is at hand!

If this all seems a bit too much, fear not: help is at hand!


Need a hand?

If you would like to discuss how the new regulations might impact on your business, please contact our commercial team for a free, no obligations chat.

You may also be interested in a website audit; we would run through how your business operates, review the ins and outs of your site and provide you with a list of suggested actions – whether that’s making changes to your terms and conditions, tweaking the wording on your website or changing your internal practices. We can offer full website audits from as little as £200 plus VAT.

Call our commercial team on 0207 234 0200 or email contract@waterfront.law