Virgin Wines Online recently enjoyed the attentions of the Office of Fair Trading. It took an interest in some of the website’s terms of sale. For the changes VWO had to make as a result, and a reminder of regulations to bear in mind here.
Topic: Selling on-line
Who: Virgin Wine and the Office of Fair Trading
Where: The UK
When: June 2003
The Office of Fair Trading announced that following its approach to Virgin Wine On-line, VWO had made a number of revisions to its terms and conditions of sale. The OFT had originally approached VWO because of concerns that its terms for on-line wine sales fell foul of two different sets of regulations. These were the Consumer Protection (Distance Selling) Regulations 2000 ("Distance Selling Regulations") and the Unfair Terms in Consumer Contracts Regulations 1999 (Unfair Terms Regulations).
The Distance Selling Regulation apply wherever sales are effected to consumers in circumstances where there is no face to face contact between buyer and seller. They give consumers cancellation rights and also require that certain disclosures are made pre-contract by the seller.
The Unfair Terms Regulations render unenforceable any term in a supplier/consumer contract which is unfairly weighted towards the supplier and thus has a potential for creating consumer detriment.
It was the cancellation rights and delivery period that caused VWO problems under the Distance Selling Regulations. These require that delivery of any product or service is effected within 30 days unless there is prior agreement to the contrary between buyer and seller. The VWO terms allowed delivery to be delayed beyond the statutory 30 days without refund.
So far as cancellation rights were concerned, consumers were allowed to cancel their Virgin Wines order, but if they did, they were not entitled to a refund. Under the Distance Selling Regulations, the full sum paid must be refunded. Separately, cancelling customers were not allowed a full refund unless certain conditions were fulfilled, whilst the cancellation right under the Distance Selling Regulations has to be unconditional.
Thirdly, cancellation was only permissible under the VWO terms by telephone or e-mail whereas the Distance Selling Regulations allow consumers to cancel in other ways also.
All the relevant terms here had to be amended by VWO.
Under the Unfair Contract Terms regulations, a number of VWO's terms were regarded as non-compliant. These included provisions which excluded VWO's liability for defective or mis-described goods (now amended to accept liability where VWO is in breach). Another clause excluded or restricted liability for delay. This has now been amended so as to restrict VWO's responsibility only if the delay is beyond VWO's control.
Another term allowed VWO an unrestricted right to change the structure and benefits of the Virgin Wine Club. This has now been changed so that changes cannot affect orders already being processed when the change is effected. Another provision allowed VWO to cancel any club membership without notice. This has been changed to provide for 30 days notice. Another term excluded or restricted VWO's liability for death or injury arising out of the supply. Under UK law it is not possible to exclude or restrict liability for death or injury caused by negligence, so this provision has been changed to accept VWO's liability for foreseeable loss or damage.
Why this matters:
On-line traders are still largely unaware of the Distance Selling Regulations and only slowly coming to grips with the impact of the Unfair Terms Regulations, 4 years after these were introduced.
In this case, VWO were clearly able to negotiate with the OFT so as to avoid any penalty being suffered, but the publicity given by the OFT to the outcome of their negotiations is hardly attractive and distance sellers should be urgently reviewing their terms and condition to ensure compliance and fairness.
On this latter point, traders will find it helpful to subscribe to the OFT's quarterly bulletin on "Unfair Contract Terms". This reports on the increasing numbers of cases in which the OFT has engaged in discussions with traders and persuaded them to change terms and conditions. In each case the report helpfully shows the clause which fell foul of the regulations and the amendments which were made following discussions with the OFT.