Who: European Commission
When: 13 June 2014
Law as stated at: 7 July 2014
The European Commission’s Directorate-General for Justice has issued a guidance document to facilitate the effective application of the Consumer Rights Directive (“CRD”), which came into force on 13 June 2014. The CRD has largely been implemented in the UK in the form of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“CCRs”).
The guidance confirms the scope of the application of the CRD and also provides some useful examples of how the CRD, and so potentially the CCRs, should be interpreted. The following aspects of the guidance may be of particular interest to advertisers and traders seeking to comply with the recent changes:
Application of the CRD
• The guidance confirms that the CRD applies only to goods and services that are paid for (including by vouchers, gift cards and loyalty points with a monetary value). According to the guidance, it also seems to apply to service contracts that include a free trial period and are automatically converted into paid contracts at the end of the trial period.
• Contrary to the definition of sales and service contracts, the CRD does not mention “payment” for contracts for the supply of public utilities and digital content. The guidance therefore concludes that the CRD applies to contracts for the supply of public utilities and online content even if they do not involve payment (i.e. it would apply to a contract for a free download of a game from an app store). However, since the CRD only applies to “contracts” it should not apply to online digital content provided by means of broadcasting of information on the internet without the express conclusion of a contract.
• For distance and off-premises contracts, if a product provided under a contract of indeterminate duration or under a subscription is charged at a fixed rate, the pre-contractual information provided to the consumer must include both the total cost per billing period and the total monthly costs. The guidance gives the example of Internet or pay-TV subscriptions, which are typically charged at a fixed rate per month/bi-monthly/quarterly irrespective of usage. In such instances, the monthly cost and, if the billing period is different, the costs per billing period would have to be provided to the consumer who wishes to conclude a subscription online or off-premises.
• Article 8(4) provides that where contracts are concluded through a means of distance communication which allows limited time or space to display information (e.g. a mobile phone), certain mandatory information must be made available (e.g identity of trader, total price and right of withdrawal) and additional required information should be made available “in an appropriate way”. The guidance clarifies that this may be via hyperlink.
• Providers of digital content are subject to specific information requirements on the functionality and interoperability of digital content. The guidance provides a non-exhaustive list of the main parameters for functionality and interoperability, which may be used as a checklist when deciding what information is to be provided about a specific product to consumers.
• The guidance, at Annex I, also includes optional model icons for the display of consumer information about digital products to help businesses comply with the necessary pre-contractual information requirements. Business may choose to adopt these in order to provide uniform and comparable information about digital products purchased online.
The right of withdrawal
• Article 9 of the CRD gives the consumer 14 days to withdraw from a distance or off-premises contract without giving any reason. The 14 days means 14 calendar days starting from the day the contract is concluded (for service contracts) or the goods are delivered (for sales contracts). Public holidays, Sundays and Saturdays are included in the 14 days. However, if the withdrawal ends on one of these days, it should be extended to the next working day. Note that although traders should accept the consumer’s right to withdraw from the contract during the extended withdrawal period, they have no express obligation to inform the consumer that an extension is possible.
• If there are several deliveries being made under a single order, the withdrawal period begins the day after the delivery of the last of the goods. This rule is justified by the consumer’s interest in receiving all parts of a single order before deciding whether to withdraw from the contract – e.g. a main good and accessories (such as a camera and a lens), or clothing which were ordered together and intended to be worn together (such as a jacket and trousers).
• For services and digital content, the guidance clarifies that a consumer’s request, consent and acknowledgement to (a) the immediate provision of services / digital content within the cancellation period, and (b) the fact that they will lose their right to withdraw once the services have been fully performed / once provision of the digital content begins, can be obtained in a single go. This is helpful for businesses looking to streamline their processes.
Other practical matters
• Traders are required to clearly label buttons used to place orders on a website to ensure that the consumer explicitly acknowledges that the order implies an obligation to pay. The CRD provides the example of “order with obligation to pay”; the guidance clarifies that “buy now”, “pay now” or “confirm purchase” would convey the required message. On the contrary, phrases such as “register”, “confirm” or “order now” are less likely to meet this requirement.
• Once a contract is concluded, traders must provide the consumer with confirmation of the contract, on a durable medium within a reasonable time after the conclusion of the distance contract, and at the latest at the time of delivery of the goods or before the performance of the services begins. While mere provision of information on a website does not generally constitute “durable medium”, the guidance clarifies that a customer’s private account on the trader’s website where the trader uploads the information addressed to the consumer and cannot remove and change it unilaterally could be considered durable medium for the purposes of the CRD. If such an account is the trader’s only way of providing contract information, however, its continued accessibility to the consumer should be ensured for an adequate period (including after the consumer’s contract with the trader is terminated). This may mean that traders have to make such account pages available to consumer for longer than they generally would.
Why this matters:
The Directorate-General’s guidance gives “views and suggestions” for implementing the CRD, however it is not legally binding and is stated not to be a formal interpretation of the law. As such, it is not clear what weight the guidance will be given. Nevertheless, the working examples given by the Directorate-General provide some practical guidance on the steps that traders can take to comply with the CRD.
The guidance is stated to be a “living document” and will be supplemented and updated online from time to time.