The Consumer Protection (Distance Selling) Regulations 2000 (“CPDSR”) become law in the UK on Tuesday 31 October 2000.
Topic: Distance selling
Background:
The CPDSR are intended to implement the 1997 EU Distance Selling Directive. The Directive applied only in a B2C context and focused principally on two areas: firstly sales effected when seller and buyer do not meet face to face and secondly unsolicited direct marketing by post or email. In respect of distance sales (the most obvious examples of which are mail order, telesales and on-line sales) the Directive imposed on sellers duties to provide prescribed information and a cancellation right. On direct marketing, the Directive foreshadowed a statutory opt out for snail mailings, while for unsolicited e mail it gave member states a choice. They could either forbid it unless consumers had indicated in advance that they wished to receive it (opt-in) or allow it unless consumers made it clear they did not wish to receive it (opt-out).
What will change:
The CPDSR do not apply to distance selling of financial services or to contracts concluded via vending machines or public payphones. They also don’t extend to contracts for the sale of land or the regular delivery of newspapers, milk etc. Nor do they apply to contracts for the provision of accommodation, transport, catering or leisure services where the supplier undertakes to provide these on a specific date or within a specific period. Otherwise they apply to distance contracts with consumers (any natural person who is acting for purposes outside his business) for the sale of goods or services.
The CPDSR specify nine fields of information including a description of the main characteristics of the goods or services, their full cost including all taxes and delivery charges, the cost of using the means of distance communication where it is other than the basic rate (how will WAP sellers know the particular tariff being paid by each person accessing a site?) and the period for which the offer or the price remains valid (even it seems where it is not a special offer). These must all be supplied in a clear and comprehensible manner appropriate to the means of distance communication used and with due regard to the principles of good faith, in good time before the contract is concluded.
Also slipped in are two rules with potentially far-reaching implications. First is a requirement that in a telesales context the identity of the supplier and the purpose of the call must be made clear at the beginning of the conversation. Secondly there is a general rule that unless the parties agree otherwise the seller shall provide the products ordered within 30 days beginning with the day after the day the consumer sends his order to the supplier. What’s more, if it turns out that delivery cannot be effected within that period, the seller is now obliged to inform the consumer of this and reimburse any sums paid within 60 days after the original order was placed. The only way out of this and to be able to supply substitute goods or services of equivalent price/quality is to provide for this in the contract. The contract must also make it clear that if any substitute products are rejected by way of exercising the new cancellation right, the supplier will meet the full return costs.
Six of these fields plus other information such as, crucially, instructions regarding the cancellation right, ("the Information") must also be provided in writing "or other durable medium" (indicated by the DTI to be likely to include email when an order is placed on-line but not confirmed in the Regulations themselves) at the very latest by the time goods are delivered and, in the case of services, whilst the services are being supplied.
The cancellation right is exercisable until the expiry of seven working days after the day following the delivery of goods or the conclusion of a contract for services. If the Information is not supplied and confirmed on time, however, but up to three months late, the seven working days do not start to run until after the Information is supplied/confirmed.
There are various detailed rules covering exactly how the cancellation right must be exercised including possibly the first UK regulation specifically stating that a right can be exercised by "electronic mail."
There are also a number of cases where there is no cancellation right at all. These include contracts for the supply of services where the consumer has been told, in writing or some other durable medium and before the service contract is concluded, that he will not be able to cancel the contract once the supply of the contracted services has begun. Also non-cancellable are contracts for the supply of (1) audio or video recordings or computer software if they are unsealed by the consumer (2) newspapers, periodicals or magazines (3) goods made to the consumer’s specifications or clearly personalised (does this include cars made with optional extras ordered by the consumer?)and (4) gaming betting or lottery services (a pay-to-enter promotional prize competition meeting the skill requirements is none of these. It may well involve a "distance" contract for the supply of services by way of the chance of winning a prize. Does this mean that participants will have a cancellation right unless told clearly before they enter that they will not have that right once the services start to be performed? And when does the service start to be performed in this context? If it is when the draw or judging takes place, this gives the promoter little protection against pre-draw cancellation and demands for the return of the entry fee!) .
So assuming the cancellation right has been exercised, does the consumer have to return, at their own expense, any goods supplied? The answer is "no," unless the sale contract states that the consumer must return any goods supplied if the cancellation right is exercised. If that is stated and the consumer fails to do so, then normally the supplier may arrange to recover the goods and charge the consumer the direct recovery cost. We say "normally" because this will not apply in two cases. First if the clause obliging the consumer to return the goods at their own cost is in context unfair and unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 (maybe this would apply to a clause making the buyer drive their new VW back to Wolfsburg). Secondly if the consumer has a separate legal right to reject the goods, for instance under the Sale of Goods legislation assuming the goods are defective.
Reimbursement of purchase price has to be effected within 30 days after cancellation and there are various provisions dealing with the fate of the rejected goods, obliging the consumer to restore them to the supplier if he calls to collect them and to take reasonable care of them in the meantime.
The CPDSR make it clear that so long as the distance contract has a close connection with an EU state, the CPDSR cannot be contracted out of, notwithstanding any term in a sale contract which tries to escape the regulations by purporting to apply the law of a state outside the EU. So if the buyer is UK resident, a US seller will not be able to avoid the CPDSR by providing that the law of the state of Delaware applies.
The enforcement provisions must be a source of relief for marketers. There is no clear statement, for example, that failure to inform of the cancellation right will render the relevant distance contract void. Trading standards are empowered, however, to apply to the courts for injunctions securing compliance with the new rules, provided 14 days notice is given to the Office of Fair Trading or the OFT consents within that period.
So far as the second area of focus of the Directive is concerned, namely unsolicited commercial snail and e mail, there is absolutely nothing in the Regulations. A separate Newsfeed article deals with this extraordinary development under "Data privacy."
Timetable: The CPDSR will be fully in force on 31 October 2000. There are no transitional provisions. What happens next: Marketers and sellers should be urgently reviewing all their practices and standard terms to ensure compliance on Halloween.
