From June 13 2014 e-commerce and distance selling business will need to change their terms of sale in accordance with updated Distance Selling Regulations. The way in which a business conveys information to customers and how it deals with cancellation rights is getting an overhaul, in line with Consumer Contracts (Information, Cancellation and Additional Payments Regulations 2013. Two existing guidelines covering these areas will now be merged.
Key changes breakdown:
- 14 day minimum statutory cooling off period (currently seven working days)
- Consumer 12 months cancellation period if a business fails to provide correct information (currently three months)
- Introduction of distance sales cancellation forms (consumers will still be able to cancel if using a different form)
- Default opt out additional payment boxes banned
- 30 day goods delivery obligation unless otherwise agreed
- Mandatory pre-contract information changes to be provided
- Premium rate help lines banned
Digital downloads will fall under separate product or forms of service with different rules and cancellation rights.
When consumers cancel retailers have an obligation to reimburse delivery costs as well as price of the item in question. If a customer pays a premium delivery charge, above the standard rate, businesses are only required to refund basic rate equivalents.
When returning a product the customer will have to foot the bill getting it back to the retailer – unless an agreement has been put in place prior or retailer terms and conditions fail to state the facts.
Provision of information
Retailers will be required to give more in depth information about cancellations and returns processes BEFORE any type of contract is agreed. This MUST be obvious and unambiguous.
Details need to be provided in either paper form, upon agreement from the customer, or via ‘durable mediums’. Email communications are permitted but simply posting policies on websites is prohibited.
Excess payment surcharges
European Consumer Rights Directives have been incorporated into new Distance Selling Regulations halting retailers from implementing excessive payment surcharges. Already part of UK law these will now be more transparent.
Surcharges above usual costs to businesses for financial services, such as credit card charges, will now be banned.
- Order confirmation
Customers will be required to click a button clearly labelled ‘order and pay’ (or similar snappy equivalent). Whatever exact language is chosen needs to be compliant with guidelines.
BIS state this applies even if payments are taken at later dates – a concern for sites operating free trials followed by paid services.
- Digital download cancellation
The right to cancel digital downloads won’t available once the download process has started. Explicit acknowledgement from customers will, however, need to be obtained BEFORE purchasing otherwise this won’t be upheld.
Current widespread practice is for websites to include a statement reflecting its terms and conditions somewhere on their pages. This will no longer be enough and it’s believed an online check box will be used by the majority when notifying customers they’re about to purchase.
Refunds and deductions
Consumers will be able to inspect their items by removing packaging without risk of refund deductions – a reasonable exercise if goods are well packaged.
Retailers will have the right to deduct levies if goods value has been reduced in any way.
Call centre charges
When calling help lines numbers will no longer be charged at a premium rates. Costs will be limited to geographic, free phone and mobile only.
If customers purchase bespoke, tailored or personalised items these regulations won’t apply. Investment items and goods with hygiene issues (such as pierced jewellery) will also be exempt.
Most online retail businesses will need to update their terms and conditions to reflect the changes, regardless of goods or services being sold.
Other points to consider
Distance Selling Regulations go beyond online retail also impacting professional service providers who remotely sign up new clients. New signees will need to give express request for services to start before any cancellation period ends – the right to cancel is only lost once the service has been completed or provided.
If a customer makes the express request for the service to start before the end of the cancellation period, and they wish to terminate the contract, they can still do so with a proportional amount of revenue levied based on the extent the service has been provided.
Where the price quoted is deemed excessive, customers will only be expected to pay market value or a proportional amount of the service provided. If traders don’t communicate the required information correctly no charges will be debited.
ALL contracts entered into after June 13 2014 will be subject to new regulations with the clock ticking for businesses to update their terms and conditions. If you haven’t done so already it’s time to get things sorted…