Subject to EU Ministers’ sign-off, consumer rights when making purchases online and off line are due for another shake-up courtesy of a new Consumer Rights Directive. As Brussels makes another bid to increase cross-border consumer shopping, extended cancellation rights are only part of it as Nick Johnson reports.
Topic: Intellectual property
Who: European Parliament, EU Council of Ministers
When: 23 June 2011
Law stated as at: 7 September 2011
As reported in our July 2011 update, the European Parliament has approved the Consumer Rights Directive. Subject to final sign-off by the EU Council of Ministers, this is expected to be published in the Official Journal later this year. Member states will be required to put in place implementing laws within 2 years, which must come into force no later than 6 months after that deadline.
This means the UK and other EU member states should have a new distance selling regime up and running by no later than Spring/Summer 2014.
Assuming the Council of Ministers rubber-stamps the Directive as expected, key changes include a move to a uniform consumer cancellation period across the whole of the EU (14 days) and a set time limit in which consumers have to return goods following exercise of their cancellation rights.
Note that a number of controversial measures proposed in earlier drafts were dropped, including:
- A duty on traders to honour orders from all EU countries unless not technically feasible. This could have had a significant adverse impact on new business launches in Europe, who would have had to ensure that fulfilment and legal/IP compliance arrangements were in place on an EU-wide basis from the word go, rather than launching in one territory and expanding over time.
- A duty on traders to bear the return freight costs for cancelled items worth more than €40. Under the version approved by the European Parliament, traders can make the consumer liable for the cost of returning goods, so long as there is clear prior disclosure of this obligation (together with an estimate of the costs, where normal post would not be applicable – eg for sofas and other large items).
Why this matters:
There are some important potential ramifications that go beyond the headline points about cancellation rights:
- Methods of payment. Where you charge consumers for using particular payment methods (eg credit cards) you will not be able to charge more than the actual cost to you of providing that payment route.
- More small-print? Increased disclosure obligations may mean more legal small print in ads and marketing communications, in circumstances where advertisements are seen as the only realistic way of providing the required pre-contractual information – or as a valuable back-stop in case other methods fail.
- Digital goods. In particular, note the new disclosure requirements for digital goods (downloaded music, films, software etc). Information about hardware/software compatibility and applicable digital rights management (DRM) protection will have to be provided up-front for all sales (whether at a distance or otherwise). EC guidance suggests this will include making clear any restrictions on the consumer's ability to make copies of the content.
- Pre-ticked boxes. Pre-ticked boxes for 'hidden extras' such as a premium delivery service or insurance are prohibited and will not be legally effective. Express prior consent will be required for any charged-for extras.
In a separate development, note that BCAP are consulting on a proposal to narrow the distance selling rules within The UK Code of Broadcast Advertising so that they only apply to business-to-consumer activity. Currently they also apply in a business-to-business context too. The consultation closes on 16 September 2011.