Topic: Consumer protection
Who: HM Government
When: 13 December 2013
Law as stated at: 10 January 2014
The Government has laid the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 (“CCRs”) before Parliament. Marketinglaw reported on the key measures contained in the draft CCRs last month (http://bit.ly/1h39LoO), however some important changes have been made to the final version.
The most notable of these is that the CCRs will now implement all the outstanding parts of the Consumer Rights Directive (2011/83/EU).
Elements of the Consumer Rights Directive that were proposed to be implemented by the Draft Consumer Rights Bill (“Draft Bill”) and the Draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 (“Draft CPUT Regs”) are now included in the CCRs.
Application of CCRs
The CCRs apply to contracts made on premises, at a distance and off premises. They apply to service contracts and sales contracts. Sales contracts are contracts under which a trader transfers the ownership of goods to a consumer, and include contracts that have both goods and services as their object. Under the draft CCRs, sales contracts only covered contracts for goods.
The Department for Business, Innovations and Skills (“BIS”) has published implementing guidance on the CCRs. This includes some guidance on the types of issues to consider when assessing whether a contract that includes both goods and services is caught by the CCRs. For example a contract for the supply and fitting of a washing machine would be caught, whereas a contract for team building courses, where trader supplier pens and a folder to students would not be caught.
Government departments and public authorities are now also included in the definition of a trader.
• Amongst specific new requirements for distance contracts concluded by electronic means are obligations, in cases where the contract puts the consumer under an obligation to pay to:
– ensure that the consumer explicitly acknowledges that the order implies an obligation to pay;
– if placing an order entails activating a button or similar function, to ensure that the button or similar function is labelled in an easily legible manner only with the words “order with obligation to pay” or a corresponding unambiguous formulation;
• Timeframes for delivery of goods (originally included in the Draft Bill) – unless agreed otherwise, goods must be delivered within 30 days of the contract being made (Reg 42).
• Passage of risk (originally included in the Draft Bill) – goods are generally to remain at the risk of the trader until they come into the physical possession of either the consumer or a person identified by the consumer to take possession of the goods (Reg 43).
• Information to be provided before making on-premises, distance and off-premises contracts (originally included in the Draft Bill) – the relevant information to be provided to the consumer is contained in Schedules 1 and 2 of the CCRs and is to be treated as a term of the contract (Regs 9, 10 and 13). Where information is to be provided in a durable medium, BIS guidance states that this would include a letter, email, CD or text message. Information contained via an embedded link to a website (which may change) would not constitute a durable medium.
• Reasonable expectation – information that is required to be made available to a consumer by the CCRs will only be made available if the consumer can reasonably be expected to know how to access it. The concept of the “average consumer” included in the draft CCRs has been removed. The new test is subjective and would allow a court or relevant enforcer to take into account a consumer’s vulnerability.
• The trader has the burden of proof where there is a dispute relating to its compliance with the information requirements under Regs 10 to 16 (Reg 17(1)).
• “Cooling off period” – consumers may cancel distance and off-premises contracts at the end of 14 calendar days after the conclusion of the contract (if a service contract or contract for supply of digital content) or 14 calendar days after the day on which the consumer physically receives the goods (if a sales contact) (Reg 30). Regs 34 and 35 set out the new rules on the reimbursement of the consumer and return of goods in case of such cancellation, including that the trader must bear the direct cost of returning goods where it has failed to provide the consumer with certain information.
• Help-line charges over basic rate – where a trader operates a telephone line to allow consumers to contact it by telephone in relation to their contracts, the consumer must not be charged more than the basic rate for such call (“basic rate” is not defined) (Reg 41).
• For contracts for digital content, the trader needs to provide within a “reasonable time”, a copy of an off-premises contract or confirmation of it, and a confirmation of a distance contract. In the draft CCRs, the trader needed to provide these before provision of the digital contract began (e.g. download), but this was thought to prevent consumer receiving digital content quickly and efficiently.
Why this matters:
The CCRs will come into force on 13 June 2014 and all transactional online consumer businesses will need to change their business practices and relevant online contracts to ensure compliance. Failure to comply with the CCRs may mean that consumers are not bound by the relevant contract or are entitled to enhanced rights (such as additional time to cancel the contract). The relevant trader may also incur a fine and be subject to regulatory scrutiny, enforcement orders or injunctions.
The decision to implement all provisions of the Consumer Rights Directive (except those already covered by the Consumer Rights (Payment Surcharges) Regulations 2012) through the CCRs is a welcome change to the piecemeal approach originally taken by the Government. It also means that there is no longer pressure to implement the Draft Consumer Rights Bill and the Draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 before the deadline for implementation of the Consumer Rights Directive has passed.
BIS’s implementing guidance on the CCRs can be found here.