Consumer protection

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Following the coming into force of the 2011 Consumer Rights Directive, the UK has adopted new Regulations which will take effect throughout the UK on 13 June 2014. If you are a business contracting with consumers you must take note of the changes in order to comply with the new Regulations.

The Consumer Contracts (Information Cancellation and Additional Charges) Regulations 2013 (the “Regulations”)

One-stop Shop

The Regulations are a harmonising measure bringing together the various existing rules and regulations in respect of consumer rights, seeking to address areas which were either overlooked or did not provide 'adequate' consumer protection.

Following 13 June 2014, the Consumer Protection (Distance Selling) Regulations and the Cancellation of Contracts made in a Consumer's Home or Place of Work Regulations will be replaced by the Regulations.

The Payment Surcharges Regulations have already been in force since 6 April 2013 – prohibiting the imposition of excessive consumer surcharges on payments for goods.

By and large, in an age of social media and public review forums, compliance with the new Regulations will be positive for most businesses who seek to keep their consumers happy.

Who will they apply to?

For any contract made on or after 13 June 2014 the Regulations will apply to any business 'trader' which contracts with a 'consumer' and establishes the contract:

  • at their business premises;
  • off their business premises – i.e. a contract which is concluded in the physical presence of the trader and the consumer, but in a place which is not the business premises of the trader; or
  • at a distance – i.e. a contract concluded under an organised distance sales scheme without the simultaneous physical presence of the trader and the consumer.

Key distinctions

  • A 'trader' will be any person acting for purposes relating to that person's trade or business. This definition now includes sole traders, Government departments and public sector authorities.
  • A 'consumer' will be any individual (so not a corporate entity) acting for purposes principally outside that individual's trade or business.

There are a number of contracts to which the Regulations will not apply, or will only apply in part, such as rental of residential accommodation, gambling or day-to-day contracts that are completed immediately such as buying a cup of coffee or a newspaper.

Key changes

Delivery and risk transfer

  • Unless otherwise expressly agreed, any goods must be delivered to the consumer without undue delay and, in any event, within 30 days of the date of the contract.
  • Save for where the consumer has commissioned a courier, goods will remain at the trader's risk until they come into the physical possession of the consumer.

Cancellation Rights

If a consumer changes their mind, or for whatever reason wants to cancel a contract made at a distance or off-premises, they can do so at any time during the cancellation period without giving any reasons and without incurring any liability:

  • If the contract is a service contract, or a contract for the supply of digital content, the cancellation period ends 14 days after the date the contract was entered into;
  • if the contract is a sales contract, the cancellation period ends 14 days after the goods came into the physical possession of the consumer;
  • if the contract is a sales contract for multiple goods under one order, but delivered on different days, the cancellation period ends 14 days after the date the last of the goods came into the physical possession of the consumer;
  • if the contract is a sales contract under which goods consisting of multiple lots or pieces are delivered on different days, the cancellation period ends 14 days after the date on which the last lot/piece comes into physical possession of the consumer;
  • if the contract is a sales contract for regular delivery of goods over a defined period, the cancellation period ends 14 days after the date on which the first of the goods comes into the physical possession of the consumer.

Payments – no pre ticked options

Active consent of the consumer must be sought before any payments can be confirmed. Traders cannot include 'pre-ticked' boxes in their order forms – the consumer has to expressly agree to it.

If you don't identify all of the potential costs that the consumer may incur prior to them entering into the contract, they will not be liable for them – you must ensure that all payments are clearly identified and the consumer has the option to agree to them expressly.

Phone lines

Any telephone help line or contact line made available to the consumer following their purchase of goods/services cannot be charged at a premium rate – only at the basic rate.

Required Information

A key feature of the Regulations is the requirement of the trader to provide information to the consumer. Traders will already be familiar with certain information requirements from existing legislation, but the Regulations consolidate and clarify these.

Until certain information has been provided, the consumer cannot be bound by the contract. All such information must be provided in a durable medium – allowing the consumer to access the information for as long as they may reasonably need it.

The information requirements apply to on-premises, off-premises and distance contracts in varying degrees.

Information required for on premises contracts

Among other things:

  • the main characteristics of the goods or services;
  • identity of the trader, contact details and address;
  • the total price of the goods or services including taxes;
  • any additional delivery charges or other costs;
  • payment, delivery and performance arrangements;
  • details of complaint handling policy;
  • details of any after-sale services and commercial guarantees;
  • contract duration and/or conditions for terminating.

This may seem onerous but it is important to remember that these provisions aren't required for day-to-day contracts or any transactions which are performed immediately at the time the contract is entered into.

Information required for off-premises and distance contracts

Similar to the provisions of the Distance Selling Regulations, which will be superseded, the following information must be provided in a clear and prominent manner:

  • the main characteristics of the goods or services;
  • identity of the trader, contact details and address;
  • the total price of the goods or services including taxes;
  • any additional delivery charges or other costs;
  • payment, delivery and performance arrangements;
  • details of complaint handling policy;
  • details of any after-sale services and commercial guarantees;
  • contract duration and/or conditions for terminating;
  • consumer's obligation to pay for return of goods;
  • obligation to pay for services requested before expiration of any cancellation period;
  • the minimum duration of any continuous obligations;
  • details of applicable cancellation rights.

With distance contracts, the trader must also ensure that the consumer, when placing the order, explicitly acknowledges that the order implies an 'obligation to pay'.

Where a distance contract is to be concluded by telephone, the trader must disclose to the consumer at the beginning of the telephone call, its identity, the identity of the person on whose behalf the call is made (if appropriate) and the purpose of the call.

With all the above contracts the burden of proof is on the trader to show he has complied with these information provision obligations – the process must be clear and easily evidenced.

Reimbursements

Where a distance or off-premises contract is cancelled, all payments, other than those for delivery, must be reimbursed to the consumer in full. Payment for delivery must also be reimbursed, save for where the consumer has specifically requested a more expensive delivery method than is usual or the least expensive delivery option (in which case the trader is only required to reimburse the value of the latter).
All reimbursements should be paid within 14 days of the contract being cancelled, although this can be extended until the goods are returned (or evidence of return is provided).

Can the new rights be excluded?

As with existing consumer protection rights and remedies, most of the new Regulations are non-excludable. You should review your existing terms and conditions to ensure they do not conflict with the new rules imposed by the new Regulations.

Steps you should take

  • Consider whether your business falls within, or partially within, one of the exceptions – if not, the Regulations will apply.
  • Examine your terms and conditions and consider whether they are compliant with the new Regulations or whether you need to amend them – always bear in mind any online terms and conditions as well as face to face sales, whether made on or off your premises.
  • Ensure you have sufficient processes in place to maintain accurate records of the information you provide to consumers – the burden is on you to prove that you have complied with the requirements.
  • Ensure all charges are clearly identified.

More information

For more information please contact Ricky Sidhu. Ricky will be happy to discuss further with you and can provide a ‘health check’ on your documents and processes and ensure you are compliant with the new Regulations.