Consumer Rights Directive Update: Online Retailers are You Ready for the 13 June Deadline?

    View Authors June 2014

    On 13 June the UK is changing consumer laws yet again1. While the changes affect all retailers, they will have particular impact on those who trade online. The changes are evolutionary rather than revolutionary, but they could cause significant difficulties (and increased costs) for businesses that have not updated their systems to comply by the deadline. We have highlighted below some of the more challenging changes that will apply to online goods retailers.

    Cancellation period increased up to 14 days2 – The minimum nofault cancellation period that online retailers must give to customers increases from 7 working days to 14 calendar days.

    “Pay Now” button now required – You might think it would be obvious, but traders must ensure that they obtain the consumer’s explicit acknowledgement that their order implies an obligation to pay. The Regulations also require that any ordering button must be labelled ‘‘order with obligation to pay’’ or a corresponding unambiguous formulation. Guidance suggests that “Pay Now” should be sufficient.

    No more pre-ticked boxes for additional payments – Traders must obtain the consumer’s express prior consent for any additional payments. Pre-ticked boxes or any other mechanism that includes a “default” additional payment (e.g. automatically adding “optional” insurance) will be banned.

    No “premium rate” helplines – Phone lines that can be used by customers to make inquiries/complaints after a sale must be charged at no more than the ‘basic rate’. The government’s guidance says this means not only no 09 numbers but also no 0845 or 0870 numbers even though these are commonly used by businesses as “local rate” numbers. This rule will apply even to general inquiry lines if these may also be used by consumers for post-contract queries.

    More information to be provided to the consumer – The Regulations contain an even longer list of the information that you must provide to the consumer on or before delivery, including details of cancellation rights and returns. A recent case has made it clear that you cannot do this by simply including a link to your website terms in your confirmation email. Instead, it must be provided in a “durable medium” such as within your customer confirmation email or in your delivery documents. Get this wrong and the consumer’s cancellation right could increase to 12 months, you may have to pay the consumer’s costs of returning the goods (in addition to refunding original delivery charges) and find yourself unable to reduce refunds if the consumer has used your product before returning it.

    Mandatory cancellation form – In its infinite wisdom, the Government has decided that retailers cannot be trusted to draft their own cancellation forms. The Regulations therefore include a specified cancellation form that must be provided to consumers. The good news is that you only have to make this available to consumers online, you do not have to send them a hard copy with each delivery.

    No obligation to refund premium delivery charges – The existing regulations require you to refund the consumer all delivery charges if the consumer cancelled. The new Regulations at least allow you to keep any additional charges you charge for premium/express delivery. However, you will need to make sure that your terms allow for this and that they also set out whether or not you require the consumer to pay for the cost of returning cancelled items. If not this will be another cost that the online retailer will have to pick up.

    This note just provides a synopsis of some of the main changes that will affect online retailers of goods. For more information about the Regulations and their impact on other retailers, including suppliers of services please contact your usual Squire Patton Boggs contact.

    1. Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, though all EU member countries are required to implement similar rules by 13 June.
    2. There are exceptions to the cancellation rights for things such as personalised goods, rapidly deteriorating goods, tickets for leisure services etc.