4 March 2014

Do you sell to consumers? Are you prepared for the new consumer regulations on distance sales?

Do you sell to consumers? Are you prepared for the new consumer regulations on distance sales?

If you sell to an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession (a consumer), you should be more than familiar with The Consumer Protection (Distance Selling) Regulations 2000 (“Distance Selling Regulations”) when selling products to consumers online, by phone, post or other means where you are not selling face to face.

However, from 13 June 2014 new regulations will come into effect, replacing the Distance Selling Regulations, in the form of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“the Regulations”). These are to give effect to the new EU Consumer Rights Directive and has been implemented with the aim of ensuring that consumers are better informed and protected when buying.

Key Changes

The Regulations will amend certain provisions of the Distance Selling Regulations, but will also bring in entirely new provisions. Some of the headline new provisions are detailed below:

No to 0870

Where your business has an after-sales helpline that charges the caller, this number can only be a basic rate phone number. Therefore, if you have an after sales telephone number beginning 0843, 0844, 0845, 0870, 0871 or 0872, 0873, 090, 091, 098 you will be in breach of the Regulations if you continue to operate this number after 13th June.

Sorry you were out

Risk relating to goods is expressly stated under the Regulations as only passing to the consumer on the physical possession of the goods. This means that leaving goods outside a consumer’s house whilst they are at work, or in a designated “safe place” will mean risk in the goods still lies with you under the Regulations, even if your terms and conditions say otherwise.

Let’s get digital

The Regulations also cater for digital sales, for items such as music or video game downloads. A seller will have the option to withhold the item for a period equating to the cancellation period (see below) or supply it on the customer’s express consent that in doing so, their right to cancel under the Regulations is lost.

If you do not agree do not tick the box

Express consent must be sought when attempting to charge additional payments to the consumer. For example, when selling insurance on top of an item, an automatically opted-in box will not count as express consent and the consumer will be able to recover such payment, if the supplier is found to be in breach of this provision.

Key amendments to the current Distance Selling Regulations are as follows:

More time to cancel and even longer if you get it wrong..

The current right for a consumer to cancel a distance formed contract within 7 working days will now be extended to 14 days. Furthermore, where the seller has failed to provide adequate information about this right to the consumer, this period of right to cancel is extended from 3 months to 12 months.

Month deadline

There is now a definitive cap on delivery times. Goods must now be delivered without undue delay and in any event, within 30 days after the day on which the contract is entered into (a consumer can agree a delivery time of over 30 days currently under the Distance Selling Regulations).

More information please…

Information that is to be provided to the consumer before entering into a contract has been amended and updated, with further obligations such as bringing the consumer’s attention unequivocally to the fact that an obligation to pay for the goods will arise if the consumer proceeds any further.

Whilst all of the above terms add further administrative burdens on traders, the Regulations at least provide some respite to sellers in the form of returns and delivery costs. Under the Regulations, there is no longer an obligation on the seller to refund the consumer before the goods are returned to them (under the Distance Selling Regulations, the seller is obliged to refund on a cancellation notice). Further, the seller has a right to make deductions based on the diminution of the goods between delivering the goods to the consumer and having them returned, and a consumer can only recover delivery costs up to the cost of the cheapest method of delivery. Therefore, if a consumer bought goods from you and paid for express delivery, you need only refund the basic delivery cost.

Audit your terms – take action now!

It is of fundamental importance that if you sell to consumers, you take action now to ensure that you are compliant with the Regulations, which are coming into effect in less than 4 months time. You should, at the very minimum, be looking at the following areas of your business and reviewing your sales documents, processes and customer service including that:

  • adequate information is provided to consumers before entering into a contract with your business;
  • you are currently issuing all required communications within required timescales to comply with the Regulations;
  • your online or telephone sales process is compliant with the Regulations;
  • your associated helplines/after sales support (if applicable) uses a free phone basic rate phone number;
  • you are capturing information relevant to each sale (the burden of proof under the Regulations is moving from the consumer to the business to evidence compliance with the Regulations); and
  • your internal procedures relating to refunds and cancellations are adhering to the Regulations.

How we can help

Harrison Clark Rickerbys Commercial team are experts in providing advice and drafting amendments, new sets of commercial terms and associated documents. Our team will ensure that your full suite of documents, telesales policies and terms and conditions are compliant with the Regulations. This will avoid a potential breach of contract claim through failing to comply with the Regulations, along with any associated complaints and negative publicity that may arise as a result.

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About the Author
Robert Capper, Partner, Head of Commercial Team and Sectors
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