New consumer dispute laws – is your business ready?
10th September, 2015
New laws are coming into effect from 1st October 2015 and 9th January 2016 that will have implications for businesses dealing with consumers.
What is happening?
All businesses dealing with consumers (with a few exceptions) must comply with the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 (“The Regulations”) from the 1st of October 2015.
The Regulations are intended to encourage the use of ADR to resolve disputes between businesses and consumers across the EU.
The Regulations make it an offence for any business selling goods or services to consumers to not inform consumers, whose complaints they do not resolve, of the availability of an Alternative Dispute Resolution (ADR) service that covers such transactions, and that the ADR service is accessible online and approved by Trading Standards.
Businesses will also need to state whether they will participate in an ADR procedure, although it is not mandatory for them to do so.
Businesses that only sell to other businesses are not affected by the new laws.
What are the detailed requirements of the Regulations?
Some businesses are already obliged to participate in ADR schemes and processes. This is normally through membership of a trade association or where they operate in an industry where participation is mandatory (examples include financial services, energy or telecoms).
Where there is such an obligation to participate in ADR schemes there is a new requirement that such a business must provide the name and website of a certified ADR entity on the business website and its sales contracts or terms and conditions.
If a business does not operate in a regulated industry such as those mentioned above and where an internal complaints procedure has not resolved a consumer complaint, the Regulations now require the business to:
- inform the consumer that the business is unable to settle the dispute;
- provide the consumer with the name and address of a certified ADR service, should the consumer wish to use it; and
- inform the consumer whether the business is required or prepared to engage in an ADR process with the ADR service of which the business has provided information (the business can decide whether or not it does wish to engage in the ADR process.)
This communication must be made in what the regulations term a “durable medium” (normally paper or email).
These requirements must be in place by the time the new laws come into force on 1st October 2015.
What other regulations are coming in?
In addition to the ADR regulations, new EU regulations are imposing other obligations on all retailers that have an online retail presence.
Regulation (EU) No 524/2013 will require all online retailers to add a hyperlink from their website (located alongside the business contact details) to a website being built by the European Commission (due to be functional on the 9th January 2016).
This website will aim to ease the difficulty of cross-border disputes that can arise from online trading within the EU. The website will have details of Online Dispute Resolution (ODR) services available for the consumer, and point them to (hopefully) efficient, cheap and effective services to resolve any disputes.
What do businesses need to do?
By October 1st 2015, businesses selling to consumers need to update their websites, terms and conditions of business and complaints handling procedures so as to comply with the Regulations.
In addition, businesses involved with online sales need to add a hyperlink from their website to the European Commission’s ODR website by 9th January 2016.
What happens if I ignore the Regulations?
If a business fails to comply with the new information requirements, it could be liable to Trading Standards civil enforcement action. This could result in an order from the court requiring the business to comply with the requirements of the Regulations, an unlimited fine and up to two years in prison.
How can I find out more?
If you have any questions what your business need to do to comply with these new regulations or on any other issue raised by this update, please get in touch.
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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