August 22, 2012

Significant alterations to the rules around online commerce, which can be seen as a reaction to the explosion of online retail, are coming soon, and all retailers need to prepare to adapt the current systems and processes within their business. The Consumer Rights Directive (2011/83/EU) (CRD) was agreed at EU level on 25 October 2011, and the subsequent UK legislation must be made by 13 December 2013 and will come into force by 13 June 2014. This will involve changes to (including repeal of) some current legislation, including the Consumer Protection (Distance Selling) Regulations (2000).  The aim of the CRD is to consolidate the various disparate and overlapping rules, increase and clarify protection for consumers, and also to harmonise the EU regulations to make it easier to trade across the EU – creating a level playing field for retailers. On 20 August 2012, the UK Government opened a consultation on the CRD, asking for input on the various matters; responses are due by 1 November 2012. Notwithstanding the consultation, and the pending UK legislation, the new EU rules under the CRD that must be brought into effect cover the following issues:

• Detailed Information: Information (as specified in the CRD) must be given before a consumer buys any goods or services, such as: the main characteristics of the goods/services, the retailer’s identity and address, price (inclusive of taxes), payment and delivery details and the consumer’s right to withdraw.  If a retailer does not tell consumers about the consumer’s right to cancel the contract, the right is extended for up to 1 year.

• Cancellation: The period during which a consumer can cancel a contract entered at a distance increases to 14 calendar days from the current 7 working days for distance sales.  The consumer must inform the retailer of their decision to withdraw (the CRD provides (non-compulsory) model cancellation forms) and return the item within 14 days of providing notice.

• Returns: Consumers will be required to return goods (not just, as now, make them available for collection) within 14 days of cancellation of a contract.  Retailers must cover the cost of the return, unless it is expressly stated otherwise.

• Refunds: A new protection for businesses is that the requirement to provide a refund within 14 days (previously 30 days for distance sales) will apply only if their goods have been returned to them or if they have received evidence that the consumer has sent the goods back.

• Delivery times: Goods will have to be delivered to consumers within 30 days (unless otherwise agreed).

• Digital products: The CRD clarifies information, cancellation rights and the obligations on buyers and sellers relating to digital products, e.g. retailers will have to provide information about digital compatibility, and cancellation rights will not apply once the customer has started a digital download or unsealed software or video content.

• Express consent for any payments additional to the main price: E.g. websites will be prohibited from having pre-ticked boxes that customers have to un-tick to avoid payment of added extras.

• Prohibiting excessive surcharges: Charges (beyond what it costs the trader) for using particular methods of payment like credit cards are prohibited.

• Telephone helplines: Retailers will not be allowed to charge more than the basic rate for lines, such as customer service.

Following the consultation and subsequent implementation of the CRD into UK law, the requirements on retailers should be clear and consolidated. UK retailers should get ready to make these changes, as they will inevitably affect the practical arrangements currently in place. For more information, contact David Deakin, Consultant or Antonia Anness, Solicitor