The Business > Doing business > The new Consumer Contracts Regulations
The new Consumer Contracts Regulations

 

August 2014

Rating system:

Reading time (1-10 minutes): 7

Sophistication level (1 (idiot) – 10 (expert)): 5

Entertainment value (1 (turgid) – 10 (side-splitting)):2

 

Background

The new Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (Regulations) came into force on 13 June 2014. The Regulations replace the ‘Distance Selling’ Regulations of 2000 and the ‘Doorstep Selling Regulations’ of 2008.

If you sell goods, services or digital content to a consumer, the Regulations will apply to you. (And of course they will apply to you if you are a consumer.)

The Regulations will apply to on-premises (e.g. in-store), off-premises (e.g. door-to-door sales) and distance contracts (e.g. telephone or online sales) between traders and consumers.

What’s new?

  • Pre-contract information

There is a more extensive list of information which you must provide to consumers, which differs depending on whether the sale is made on-premises, off-premises or via distance selling.

  • Digital content

In addition to goods and services, the Regulations introduce a new category of “digital content” with additional and specific requirements which apply to both paid-for and free content such as music or video downloads.

  • Cancellation and return

Cancellation rights will only apply to off-premises and distance contracts. The Regulations increase the statutory minimum “cooling off period” from seven working days to fourteen calendar days for distance and off-premises contracts for goods, services and digital content.

The cancellation period is extended to twelve months if you have not provided the appropriate pre-contract information (although the twelve month period will be reduced to fourteen days once the failure is corrected).

The Regulations also introduce changes to the rules regarding refunds, including the requirement that customers must generally return goods (or otherwise evidence such return) in order to obtain a refund.

  • Additional payments and charges

Express consent is required by consumers where extra payments will be charged in addition to the agreed sale price. The use of ‘pre-ticked’ boxes in relation to any such additional payments is no longer permitted.

For distance contracts concluded by electronic means where an online order results in payment, the consumer must be required to explicitly acknowledge that the order implies an obligation to pay. You must therefore ensure that an online payment button or similar function is labelled unambiguously in compliance with the Regulations. If you don’t the contract will be unenforceable. A “Pay Now” button should be sufficient.

If you operate a telephone helpline allowing consumers to contact you in relation goods, services and/or digital content which they have purchased, calls to such helpline must only be charged at the basic rate. Premium rate numbers are no longer permitted.

  • Confirmation of distance contracts

Where a distance contract has been entered into, you must provide the consumer with confirmation of the contract on a “durable medium” (for example by paper or by email), no later than the time of the delivery of any goods or prior to performance of any service supplied under the contract.

What should you do?

If you sell goods, services or digital content to consumers, whether in store, online, by telephone or other means, you should review your systems and processes and update your:

-sales processes, including pre and post-contract information;

-terms of business and policies; and

-cancellation and refund policies.

Non-compliance may result in contracts being unenforceable, i.e. the consumer will not be bound by the contract or order and, in serious cases, you may face criminal prosecution and fines.

Also, BIS have published some useful guidance notes.

These include some helpful FAQs.

NB the Regulations don’t apply at all to certain sector-specific contracts (such as  contracts for gambling, financial services, rental of residential accommodation, package travel and food and beverages delivered by roundsmen).

 

I’m more a corporate and business-to-business deals lawyer, me, but if you want more detailed information, or templates which you could use which are compliant with the new Regulations just let me know.

 
 
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Andrew James