The Directive is due to be implemented in the UK on 13 December 2013, and will be enforced from 13 June 2014. It is intended to harmonise many consumer rights currently found in various pieces of legislation. However it also amends and adds to existing consumer rights with which you will be familiar. This article summarises some of the changes which we think will be most significant to brand advertisers and retailers.
The Consumer Contracts (Information Cancellation and Additional Payments) Regulations 2013 (“CCR 2013”)replaces the Regulations generally known as the Distance Selling Regulations and the Doorstep Regulations
The CCR 2013 applies to sales made on premises, off premises and at a distance. This includes on-line sales. They apply to the sale of goods, services and also to digital content. They cover three main areas of consumer rights:
- Information that traders should supply to consumers
- Cancellation rights and responsibilities for distance and off-premises sales
- Measures to prevent hidden costs
Whether a contract is made on premises, off premises or at a distance, certain information must be given to consumers to make the contract enforceable. The information is set out in schedules. Schedule 2 applies to distance sales. There is a long list of 24 possibilities for information which must be given to the consumer before and after concluding an online sale. If it is not given, then the consumer is not bound by the contract or order. We recommend a review of schedule 2 to ensure that you have all the necessary information. Examples of these requirements are that consumers must:
- be supplied with a copy and confirmation of the signed contract
- be clearly made aware of the right to withdraw / cancel the contract
- have explained all delivery arrangements
- have explained the duration of the contract
- give express consent for all additional charges
Distance contracts concluded by electronic means:
The Regulations also require traders to give a clear explanation of the process so for example, Traders must ensure the consumer when placing an order explicitly acknowledges that the order implies an obligation to pay. (Regulation 14.3) If there is a button or similar function to place an order, traders must ensure that it is labelled in an easy legible manner with the words “order with obligation to pay” or corresponding unambiguous formulation indicating that placing an order entails an obligation to pay (Regulation 14.4).
Right to cancel
The Regulations streamline existing rights to cancel. There were different periods under the Distance Selling Regulations and the Doorstep Regulations. The Regulations now say that after the contract is completed, a consumer has a right to cancel a distance or off premises contract without giving a specific reason for up to 14 days after the sale is completed. There are specific methods to calculate when the sale is completed but the guideline is 14 days after the sale. The consumer must be given notification of their right to cancel. This means that your terms and conditions must include the model explanation of rights and the cancellation form which you can find in Schedule 3 to the Regulations.
This right of cancellation does not affect the consumer’s right to withdraw from a contract before the contract is formed without giving any reason and does not affect the consumer’s right to challenge or withdraw from the contract if for example, the goods are defective.
The information in Schedule 3 must be delivered in “a durable medium”. This is specifically defined for the purposes of on-line sales.
Effect of cancellation
The trader must reimburse all payment (except for non-standard delivery) without undue delay and no later than 14 days after withdrawal or cancellation or return of goods.
Failure to comply with the Regulations not only results in an invalid contract but can also expose the trader to potential criminal prosecution for breach of the Regulations.
Consumer Protection from Unfair Trading (Amendments) Regulations 2013 (“CPUTR”)
These Regulations amend the consumer protection from Misleading Marketing Regulations 2008. The existing Regulations prohibit traders from engaging in misleading or aggressive prohibited practices. They also include a black-list of claims that if made, are illegal. The amendment is also implemented on 13 December and can be enforced from 13 June 2014. In addition to the existing rights to prosecute by Trading Standards and the OFT and enforcement by the ASA, the amendment also gives the consumer a right to redress. The consumer can bring a civil action against the trader who engages in misleading or aggressive prohibited practices and the remedies include:
1) The Right to unwind
If the goods or services have not been fully consumed, and the consumer rejects them within 90 days, the consumer will be entitled to “unwind” the contract or payment and receive a full refund of the price paid.
2) The Right to a discount
Alternatively, consumers may decide to keep the remaining goods or services and claim a discount on the price paid. The right to a discount will continue to be available even when the right to unwind has been lost. The level of discount will be set according to statutory bands.
3) Right to damages
The consumer will be entitled to damages if they have incurred financial loss which the consumer would not have incurred if the prohibited practice had not taken place. The consumer will also be entitled to additional damages for alarm, distress, physical discomfort and inconvenience where the prohibited practice resulted in consumer entering a contract for provision of pleasure, relaxation or piece of mind.
If traders are challenged, they must show that they have taken all reasonable precautions to avoid committing the offense.
What happens if I don’t comply?
In addition to consumers directly seeking damages and/or exercising their rights to cancel as set out above, failure to comply with Consumer Protection Regulations or the Consumer Contracts Regulations may result in regulatory intervention and prosecution, resulting in adverse publicity and loss of consumer confidence, as well as fines.
What should you do now?
Review your sales policy, terms and conditions and website with the above guidance in mind, and ensure that it is not in breach of the law. If you find your content is not compliant with the new regulations, ensure that it is updated.
Remember, YOU ARE RESPONSIBLE FOR THE CONTENT ON YOUR WEBSITE.
If you have questions you can speak directly to our compliance officer here.
Do you believe that an affiliate is acting unethically? Complete the Unethical Advertising Claims form and MoreNiche will investigate.