New Consumer Regulations: Are Your Contracts Compliant?

On Friday 13 June 2014, new consumer regulations come into force in the UK, affecting businesses which sell goods or services to consumers (meaning individuals not buying in the course of business).

If you sell to consumers, you should be aware of these new regulations and carefully check that your contracts, terms & conditions, sales information and procedures, are compliant. If you require our assistance, please contact Ian Grimley.

Full Briefing

The Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 come into force on 13 June 2014, implementing the final parts of the EU’s Consumer Rights Directive.

They will affect contracts with consumers (meaning individuals not acting in the course of business) both on the trader’s premises and off-premises via doorstep selling (sales at the consumer’s home or place of work) or distance selling (sales via telephone/internet).

If you trade with consumers, you should check carefully whether your existing contracts, terms and sales procedures need updating before the implementation date.

The two key changes are to the information requirements and consumer cancellation rights:

Information Requirements

Under existing regulations, traders are already required to provide certain pre-contract information to consumers in both distance transactions (i.e. telephone/internet) and doorstep transactions (those concluded at the consumer’s home or workplace).

The new regulations extend these requirements by adding to the information which must be given to the consumer and by applying some of the requirements to trader’s who sell on-premises.

The purpose of the requirements is to make transactions easier to understand for the consumer. The main requirements are (not an exhaustive list):

• to describe the main characteristics of the goods or services;
• to set out the identity of the trader, including its geographical address and telephone number (this is distinct from the obligations on companies and website owners under other regulations);
• to give full details of the costs of the goods or services (or an estimate where a definite cost cannot yet be provided), as well as any additional charges and delivery costs;
• to explain the payment, delivery and performance arrangements;
• to provide details of the trader’s complaints handling policy, where applicable; and
• to provide details of any after-sales services or guarantees.

Traders in doorstep or distance transactions will be required to give the consumer a copy of the contract and are subject to additional requirements, such as providing details of:

• the right to cancel (see below for details of the new rights);
• the trader’s return policy; and
• details of any codes of conduct which apply to the trader or of any supervisory authority to which they are subject.

A cancellation form must be provided where the right to cancel exists. The regulations include a model cancellation form which can be used.

For on-premises and distance transactions, this information can be “made available to the consumer”, meaning that it must be reasonably easy to access it. In doorstep transactions it must be “given” to the consumer, meaning that the trader must actively provide the information (hand it over) as opposed to making it generally accessible.

In electronic transactions, traders must make certain information clear to the consumer directly before the ordering process is completed (this is normally done via an order summary webpage). It must also be made clear that, when placing an order – for example by pressing a button on a website – the consumer is entering into an obligation to pay. If the trader fails to do this, the consumer will not be bound by the contract. 

Cancellation Right

As under the current regulations, consumers will have the right to cancel a contract which is entered into via distance means or away from the trader’s premises. The cancellation period has been increased from 7 working days and 7 calendar days (respectively) under the previous regulations to 14 calendar days.

The cancellation period will normally run from the day after the date of delivery, provided the consumer has been informed of their right to cancel. If they are not informed, the cancellation period is extended until the information is given, up to a maximum period of 12 months and 14 days from delivery. Cancellation rights also exist for services.

If the consumer cancels, they will be responsible for returning the goods. The trader must make the refund, including the cost of standard delivery, without undue delay and no later than 14 days after the date of receipt of goods by the trader. Unless the trader has specified otherwise in its terms, it will also have to bear the cost of returning the goods.

There are various exceptions to the right to cancel which will continue to apply. For example, there is no right to cancel for passenger transport services, off-premises (but not distance) contracts for no more than £42, specialist or personalised goods, various food/drink goods, and sealed audio/video goods or computer software which have been unsealed.

Miscellaneous Changes

The new regulations will introduce a variety of other changes:

• Additional charges – the consumer’s express consent will be needed for additional charges. Default tick boxes on forms/websites will not qualify as express consent.
• 30 days delivery time – unless otherwise agreed, the default time for delivery of goods will be up to 30 days.
• After-sales support – telephone numbers for after-sale services/customer support must either be a geographic number, mobile number, a free number or – if another number is used – the charge may not be greater than the standard rate for a geographic number.
• Passage of risk – risk in the goods will pass to the consumer when they come into their physical possession or the possession of a person identified by the consumer.
• Enforcement – more robust enforcement measures have been introduced for traders who fail to comply with the regulations. Enforcement functions have now been transferred from the Office of Fair Trading to Trading Standards.

Conclusion

All traders should be aware of these changes and ensure that their terms and procedures are compliant but the new regulations are particularly relevant for distance and doorstep sellers, who will need to update not only their terms but also their ordering processes and correspondence.

You can review the regulations in full here.

If you would like further information and advice on updating your consumer terms, please contact Ian Grimley.