New Consumer Contracts Regulations 2013 - is your website compliant?

May 21, 2014

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

For contracts made on or after 13 June 2014, the Regulations replace the Distance Selling Regulations of 2000 and make some significant changes in the law in relation to online sales (referred to as “distance contracts”).

The Regulations apply to contracts for the supply of goods, services and digital content between traders and “consumers” (B2C). A “consumer” means “an individual acting for purposes which are wholly or mainly outside that individual's trade, business, craft or profession.”

Summary of key obligations and changes

Information:

  • The Regulations extend the list of pre-contract information that a trader must give to a consumer and there are certain changes to the form in which the information needs to be provided.
  • Before the consumer commits to the contract the trader must provide certain information in a clear and comprehensible manner about the trader, the goods, the price, any other applicable charges, the terms of the contract, and the cancellation right.
  • The trader must also confirm this information on a “durable medium”, unless it was already provided on a “durable medium” before the contract was made. This confirmation must be provided within a reasonable time but by no later than delivery of the goods, or commencement of provision of services.
  • The Regulations make it clear that a “durable medium” can include email and text messages as well as paper. However, a website link is not a durable medium as the content can change.

Money:

  • Traders must seek the consumer's express agreement before taking any additional charge for supplementary goods and services (e.g. such as gift wrap, warranty support, insurance, express delivery etc.). This agreement can be given by ticking an un-ticked box; pre-ticked boxes are no longer permitted.
  • Online traders must make it clear when clicking to proceed with a transaction will trigger a payment (for example, using a button that says "pay now", or “order with obligation to pay” or similar unambiguous formulation indicating that placing the order entails an obligation to pay).
  • Traders must not make the consumer use a premium rate telephone line to contact the trader about an existing contract. So traders may need to have a separate number for post-sales enquiries where the pre-sales enquiry line is a premium number.
  • Traders must not impose excessive payment surcharges when consumers pay by certain means, such as credit or debit cards. (This change was in fact made under separate Regulations and has been in force since April 2013.)

Delivery:

  • The trader must, unless the consumer agrees otherwise, deliver the goods purchased within 30 calendar days.

Cancellation and returns:

  • The statutory cancellation period (also known as the cooling-off period) is extended from seven working days to 14 calendar days, so the consumer now has more time to change his/her mind. For supply of goods, the period starts after the day on which the goods are delivered. For supply of services, the period starts after the day on which the consumer enters the contract. You can offer more favourable cancellation terms if you wish, but not less favourable.
  • The cancellation period is extended to, broadly, one year if the trader fails to provide the required pre-contract information (see above) but reverts to 14 days once the error is rectified and information provided.
  • Where a consumer has a right to cancel, the Regulations require the trader to provide the consumer (e.g. by giving a link) with a model cancellation form in a prescribed form. Although the trader must provide the form, the consumer does not have to use it and can cancel the contract in another way (which doesn’t even have to be in writing).
  • The consumer must return the goods within 14 calendar days of cancelling the contract.
  • The trader must make it clear in the pre-contract information that the consumer must pay for the cost of returning goods if they cancel, unless the trader is willing to cover that cost.
  • The cancellation right does not apply to some types of contracts, such as for supply of bespoke or customised goods, goods sealed for health or hygiene reasons once unsealed, and sealed audio, video or software once unsealed.

Refunds:

  • The trader must reimburse the total price paid for the goods or service, including the outbound delivery charge (but the trader does not have to reimburse the additional cost of any premium delivery option beyond the standard delivery service offered by the trader). 
  • The trader must process the refund within 14 days of cancellation of the service contract or receipt of the goods (or of evidence of the consumer returning them).
  • The trader can withhold the refund until the goods are returned (or evidence of their return is provided).
  • The trader can also reduce the amount to be refunded where goods show signs of unreasonable use so that the value of the goods is diminished.

Digital content:

  • The Regulations introduce new rules on the cancellation of contracts for the supply of digital content not on a tangible medium. “Digital content” is broadly defined and covers software downloads as well as downloads and streaming of online games, music, films, apps and in-app purchases across all platforms. This is the first time consumer legislation has dealt specifically with digital content.
  • The trader cannot make the digital content available before expiry of the cooling off period unless the consumer has given his/her explicit acknowledgement before the download starts, expressly waiving his/her right to cancel. The consumer will then lose his/her right to cancel as soon as the download starts.
  • The trader must provide consumers with information about the functionality of the digital content, details of compatibility with hardware and software and information on any technical restrictions.
  • The trader must provide the consumer with a copy of the contract on a durable medium, which must be done within a reasonable time after the contract is concluded.

Other points:

  • Any ancillary contract (such as a product insurance or maintenance contract for the goods) provided by the trader or a third party with whom the trader has an arrangement will be automatically terminated on cancellation of the main contract. Where the ancillary contract is with a third party, it is for the trader to inform the third party of the cancellation.
  • Some distance contracts (such as certain contracts for land and financial services) are excluded from the scope of the new Regulations since they are regulated by other regulations.

Next steps
The Regulations introduce a number of important changes which impact online retailers. Failure to comply with the Regulations could lead to breach of contract claims, complaints, regulatory scrutiny, wasted time and costs and negative publicity.

It is, therefore, important for traders to review their website, processes, policies, and terms and conditions to ensure compliance with the new Regulations by 13 June 2014 when the new Regulations take effect.


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