Big shake-up in selling to consumers
21st March, 2014
Many companies have built their success on selling to consumers. For them, as for a range of other businesses, major changes are on the way later this year in the way that they sell their products and services.
Any company which sells goods, services or digital content to consumers needs to be aware of The Consumer Rights Directive, which comes into force in the UK on 13 June this year.
The Consumer Rights Directive aims to harmonise consumer rights across Europe.
The changes will apply to contracts entered into with consumers from 13 June 2014 onwards, subject to certain statutory exceptions for specific types of contract.
From 13 June, the new regulations will impose strict new requirements and obligations on businesses selling to consumers, including the following:
Pre-sale information
The information businesses need to provide varies depending on where and what they are selling. For example, when selling digital content, clear and precise information must be given about what systems or hardware it works with.
Cancellation (for distance and off-premises contracts)
• Cancellation Forms – a standard cancellation form must be provided to consumers.
• Cooling-off period – companies must provide no less than 14 days for consumers to change their mind. The cooling-off period is currently 7 days.
• Returns – where consumers are responsible for returning goods, they should do so within 14 days of cancellation. Companies are allowed to withhold refunds until actual return or until evidence of return is provided.
• Refunds – companies must process refunds within 14 days of cancellation or the receipt of returned goods or evidence of return. The current time limit is 30 days.
• Ancillary contracts – where a consumer cancels a contract, companies must automatically cancel all ancillary contracts such as credit agreements and warranties. It is also a company’s responsibility to notify any third parties.
Delivery and risk
• Unless agreed otherwise, companies should deliver goods without delay and in any event within 30 days.
• Risk passes to the consumer upon the delivery of goods to the consumer, unless the courier is chosen and arranged by the consumer, in which case risk passes when the item is delivered to the courier.
Additional payments
• Companies must receive a consumer’s active consent for all payments. Consent by default, such as a pre-ticked box, will no longer be permitted.
Post-sale telephone rates
• If companies offer a post-sale consumer helpline, a telephone number should be available that incurs a fee of no more than the basic rate.
Excessive payment surcharges – Reminder
• Companies must not impose payment surcharges which exceed their costs of using a particular payment method. This part of the Directive received early implementation by the UK, in April 2013.
In order to prepare for the changes, companies will need to review and potentially amend their documents and processes before the changes take place.
In particular, terms and conditions of sale are likely to need updating and business processes (including the online experience for customers) will need to be considered and reviewed to ensure compliance with the regulations.
Companies who sell to consumers but are not aware of these forthcoming changes would do well to take appropriate professional advice on what action they need to take.
We can offer a fixed price service to help you to be compliant on 13 June 2014.
As part of our services, we can:
- carry our an audit of your current processes and procedures and highlight areas that need to change; and
- make amendments to your contractual documentation (including T&Cs), to ensure compliance.
To discuss the changes in more detail, and find out more about our fixed price package, please contact Bill Goodwin in our commercial team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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