Nearly three years on, the measure first vaunted to revolutionise consumer rights across the EU has finally been signed off by EU Ministers. Scheduled for implementation in Autumn 2013, the measure’s main focus is on distance selling, but should businesses be quaking? Mark Smith reports the key changes in store.
Topic: Consumer Protection
Who: European Parliament
When: 23 June 2011
Law stated as at: 6 July 2011
The European Parliament has approved a new Consumer Rights Directive which strengthens the protection provided to consumers shopping online by granting them benefits such as a 14-day cooling off period post delivery of a purchase and compelling traders to provide access to precise information regarding total price, goods ordered and trader's contact details.
In particular, the directive regulates off-premises and distance contracts, protecting consumers who wish to purchase goods within the European Union in an aim to boost consumer confidence and cross border sales. As per the European Parliament, only 7% of Internet users have placed cross-border orders within the EU despite the growing online trade business. The patchwork fragmentation of Member States' rules and concerns about late and non-delivery are some of the reasons cited by the Parliament for consumer reluctance.
The directive, first proposed in 2008 was finally passed after two and a half years of tough negotiations in an overwhelming majority with 615 votes in favour. Andreas Schwab (EEP, DE), the European Parliament's chief negotiator said:
"The new directive is thus a good example of how more Europe brings more benefits to consumers and traders alike. We have reached a well-balanced deal which meets both calls from consumers and business interests."
Member states now have 2 years to implement the new Consumer Rights Directive and incorporate it within national laws.
Key Provisions of the Directive:
Some of the key provisions of the new legislation are as follows:
14 day withdrawal period
Under the new rules, barring certain exceptions consumers will have a period of 14 calendar days to cancel/change their minds with regards to distance and off-premises purchases. For goods, such a period begins from the day the purchase is delivered and for services the consumer has 14 days from the day he/she contracts for the services. If the consumer does change their mind, sellers must refund the price paid by consumers within 14 days of the withdrawal.
Further, if a seller fails to inform a consumer about the right to withdraw, the period for withdrawal will automatically extend to an additional 12 months.
Exceptions to the withdrawal period
The exceptions for the right to withdraw largely mirror existing exceptions such as in the case of car rentals, airline tickets and hotel bookings, magazines (with the exception of subscription contracts), goods which deteriorate or expire rapidly.
Amongst the new exceptions included were digital goods (i.e. music, films, software programmes) where the sale is considered irreversible once the download has begun and the supply of sealed goods which are not suitable for return once unsealed due to hygiene or health reasons.
Buyers must be provided with precise information
Sellers must provide consumers with precise information regarding the nature of the goods or services being purchased, the identity and address of the seller, the total price, arrangements for payment and delivery etc. Said information must be provided in a durable medium allowing consumers to store and access information for future reference. Further, sellers may not rely on default options i.e. "pre-ticked boxes" reducing the possibility of hidden charges such as a premium delivery service or insurance. If the seller does not obtain the consumer's express consent in advance then the consumer may be entitled to reimbursement for hidden charges.
Reduction of red tape for small and medium sized businesses
However, the above requirements will not apply to "day-to-day transactions" which are performed immediately, thereby cutting down any red tape requirements for small businesses such as the local grocer or workman doing home repairs. Further, the right of withdrawal would not apply to the supply of service in the case of "urgent repairs or maintenance".
To address consumer concerns regarding this issue, under the new directive, if the delivery date is not specified, seller must deliver goods as soon as possible and all goods must be delivered within 30 days otherwise consumers have the right to cancel purchase. Also, the trader is responsible for any damage or loss to goods during delivery and responsibility only passes to the consumer on receipt of goods.
Charges on payment method and customer service help lines
As per the directive, sellers are prohibiting from charging a marked up fee for payment methods such as credit or debt cards. In addition, when operating customer service telephone lines, the seller must charge consumers at a normal/basic rate rather than at a premium.
Why this matters:
Although EU member states have up to two years to implement the new rules, from UK's perspective, the new directive will not radically alter the protection currently provided to consumers shopping online. Under the Consumer Protection (Distance Selling) Regulations 2000/2334, online sellers must provide consumers with much of the same information prior to purchase.
Similarly the timelines for delivery and allocation of risk have remained the same under the new directive. The main change is an increase in the cancellation period for UK consumers from 7 working days to 14 calendar days. What the directive does do for the UK is to consolidate and clarify much of the consumer law governing online shopping. However, it is best for traders and consumers alike to wait and see how the new regulations are drafted.