UK consumer law reform: online retailers, aggregators and suppliers, oh my

UK consumer law reform: online retailers, aggregators and suppliers, oh my

Published:

Author: Rachel Moore

In this article we look at how to apply the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations to contracts concluded through an aggregator.

For a summary of the regulations, please see our briefing 'Changes to consumer contract regulation - is your business ready?'

What is an aggregator?

An aggregator facilitates the conclusion of a contract between a consumer and a supplier of goods or services and includes business-to-consumer (B2C) market places.

The use of aggregators is increasingly common in the world of online sales. For example, many market place platforms and online booking websites for tickets or hotels operate using this model.

Crucially for the purposes of the regulations, although the consumer may place their order for goods or services by contacting the aggregator through its website or telephone sales line, the parties to the sales contract formed as a result of their order will be between the consumer and the supplier of the goods or services and not the consumer and the aggregator.

What is the issue?

The issue with this business model is who bears responsibility for compliance with the regulations - the aggregator which has direct contact with the consumer when they place an order and which facilitates the sales contract or the supplier which is a party to the sales contract and supplies the goods or services ordered by the consumer? This is particularly challenging as the aggregator often determines the customer sales journey and the supplier has little opportunity to influence the content or layout of web pages presented to consumers as part of that ordering process.

The simple answer is that, for the purposes of the regulations, the contracting party (i.e. the supplier) will be responsible both for its own compliance under the regulations and the compliance of its agents.

This means that the supplier of the goods or services will be fully responsible for complying with pre-contract information requirements. Aggregators are not specifically caught by the regulations even where a consumer places their order through the aggregator's website or telephone sales line and regardless of the fact that the consumer may have no direct contact with the supplier. In many cases, although the regulations include obligations to inform consumers about the identity of the contracting entity, the consumer may not even be fully aware that the supplier is the counterparty to the sales contract and not the aggregator.

Whilst on the face of it this may be a welcome relief for aggregators, it can cause significant problems for suppliers of goods and services. Suppliers will remain liable for the purposes of the regulations, but may not be in a position to influence the content of the aggregator's website or sales procedures, both of which will be instrumental for the supplier in demonstrating compliance with the regulations. The usual advice to manage risks through effective post-sales services is unlikely to provide much comfort to suppliers dealing with the more established aggregators as they usually offer first line consumer support or define refund policies.

The position under the regulations may also cause issues for aggregators as, although not be a party to the contract with the consumer, aggregators are likely to come under increasing pressure from suppliers to demonstrate compliance to help suppliers to manage the risk in operating an aggregator business model. In addition, aggregators are often the main point of contact for consumers if they want to discuss their contract. Therefore, aggregators will need to be prepared to answer queries on the regulations from consumers who are increasingly aware of their rights.

What should I do?

Businesses using aggregators should be aware that ultimate responsibility for compliance with the regulations rests with them and should ensure that they document their relationships with aggregators in robust contracts which require aggregators to comply with the regulations. Businesses should also regularly check the pre and post-sales procedures and documents used by their aggregators for compliance and raise any issues with the aggregator directly.

Although the regulations do not impose obligations on aggregators directly, it is likely that aggregators will be under increasing pressure from suppliers to demonstrate compliance. Aggregators should take note of the changes introduced by the regulations and review their pre and post-sales procedures and documents to ensure that they are compliant and able to deal with any queries raised by consumers.

Shoosmiths' consumer team can provide specialist advice on dealing with consumers for both aggregators and businesses contracting through aggregators, including offering 'Mystery Shopper' compliance audits.

If you have any questions or would like further information on how to manage the commercial and operational impact of the changes to UK consumer law on your business, please contact us.