Consumer law changed significantly on 13 June 2014. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 will reform the rules on distance selling as well as doorstep selling. They will also make key changes to most other consumer contracts. Lyndsay Gough explains the new Regulations and what they mean for businesses selling goods and services to consumers.
Reform of UK consumer law
The new Regulations implement most of the provisions of the EU Consumer Rights Directive (Directive 2011/83/EU), which aims to harmonise consumer protection rules throughout all Member States.
These new Regulations are quite separate from the Consumer Rights Bill, which is currently going through Parliament. The Bill is intended to reform and consolidate much of consumer law in the UK.
Do the new Regulations apply to me?
The new Regulations apply to all contracts for the sale of goods or services entered into between a trader and a consumer from 13 June 2014. A consumer is an individual who is acting for purposes wholly or mainly outside his trade, business, craft or profession.
There are, however, certain types of contracts (such as those relating to gambling, financial services, package holidays and property) which are not within the remit of the new Regulations. The new Regulations also do not apply to business-to-business contracts.
How do the new Regulations affect retailers?
The new Regulations affect most retailers. However, in deciding which elements are relevant to a particular retailer, it is necessary to look at where the trader enters into a contract with the consumer for the sale of goods or services.
Contracts made on-premises (such as in a store, where both parties are present)
Here, the trader is required to provide certain pre-contract information to a consumer (further detail on this is set out below). There are, however, some types of contract that are excluded from this requirement (such as ‘day to day’ transactions or where the contract is performed immediately). This means that many consumer contracts made on the high street will fall outside this information requirement.
Contracts made at a distance (such as online or telephone sales, where the parties are not in the same place)
The new Regulations replace the rules formerly set out in the so-called ‘Distance Selling Regulations’ (the Consumer Protection (Distance Selling) Regulations 2000).
Contracts made off-premises (such as at the consumer’s home, when both parties are present away from the trader’s premises)
The new Regulations replace the rules formerly set out in the so-called ‘Doorstep Selling Regulations’ (the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc Regulations 2008).
What are the key changes introduced by the new Regulations?
Increase of the statutory minimum ‘cooling off’ period
This is increased to 14 calendar days for distance and off-premises contracts, allowing a consumer to change his/her mind and cancel the contract without having to give any reasons (although certain goods and services are excluded, such as items which have been personalised or which deteriorate rapidly). The 14 days for cancellation starts on the day after the goods have been received, or after the service contract is made. The previous rules gave 7 working days in distance contracts and 7 calendar days in doorstep contracts. Consumers buying goods on-premises do not have a statutory right to cancel unless the goods are faulty, although most store retailers offer more generous concessions.
A model cancellation form
In order to comply with the obligation to notify the consumer of the right to cancel the contract, the trader should consider providing a cancellation form in a prescribed format to enable a consumer to exercise this right. If the consumer is not given notice of the right to cancel, the cancellation period is extended to over 12 months. Consumers should return items within 14 days of cancellation, and traders must refund within 14 days of cancellation of the service contract or receipt of the goods.
New information requirements
The new Regulations give a list of information which traders must provide to consumers in a ‘durable medium’ before the contract is made. A ‘durable medium’ includes a letter, email or text. The details of this information depend on the trading operation, with different requirements for on-premises contracts, distance contracts and off-premises contracts. Although such information was previously required for online sales, the list of requirements is now more detailed. Failure to comply with the information requirements will amount to a breach of contract.
Timing of online payments should be made clear
For online sales, the consumer must explicitly acknowledge an obligation to pay, for example by pressing a button that says ‘pay now’ to trigger payment. Traders will need the consumer’s active consent for all payments, and pre-ticked boxes for additional payments (such as for insurance, warranty support or express delivery) will no longer be permitted.
Delivery of the goods within 30 days
Unless the consumer agrees otherwise, the trader must deliver goods without undue delay and within 30 days. Risk in the goods generally passes from the trader to the consumer when the goods are delivered.
No premium rate charges for helplines
Where traders offer telephone helplines for consumers to contact about purchases, the number should be available at no more than the basic rate. Premium rate numbers (with the prefix 09), revenue sharing numbers (e.g. with prefixes 084, 0871, 0872 or 0873) and numbers with the prefix 0870 will not comply.
The new Regulations introduced ‘digital content’ as a new category of services, with different cancellation rights. The term covers, for example, software downloads and downloads and streaming of online games.
The Department for Business Innovation and Skills’ guidance notes to the new Regulations are available here.
What are the penalties for non-compliance?
It is a criminal offence, punishable by a fine, to fail to inform consumers of their right to cancel contracts made off-premises. Individuals (such as directors and managers of a company) may also be punished. Failure to inform may lead to the loss of the trader’s right to certain payments. Enforcement authorities, including Trading Standards, may investigate complaints. Applications may be made to court for an injunction against a trader acting in breach of the new Regulations.
The new Regulations make some significant changes, not least to the consumer cooling-off period. Given the wider remit of the new Regulations, and the increased information requirements, any business which sells goods or services to customers should review its practices. All traders, whether selling from trade premises, at a distance or off-premises, are urged to carry out a review of their current terms and conditions to make sure that they are complying with this new consumer law.
If you would like further information on the new Regulations and how they affect your business, contact Lyndsay Gough.
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.