Changes to consumer contracts regulation - is your business ready?

Changes to consumer contracts regulation - is your business ready?


Author: George Roberts

Retailers need to ensure that they are prepared for the significant changes that will apply to contracts entered into with consumers from 13 June 2014.

On 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "Regulations") will come into force. They are part of the extensive reform of consumer law currently being undertaken at an EU and UK level.

The Regulations introduce wide-ranging changes to consumer contract law, including changes to information which needs to be provided to a consumer, amendments relating to "cooling-off" periods, delivery times and the use of premium rate telephone lines.

Whilst the changes to pre-contract information provisions are not extensive, the other changes are likely to require some businesses to undertake operational changes in the way they interact with their customers.

Which types of contract are affected?

The Regulations will apply to contracts between traders and consumers made on or after 13 June. They cover on-premises contracts (broadly, contracts made in person at the trader's business premises), distance contracts (including online and telephone sales) and off-premises contracts (such as doorstep sales) to varying degrees.

Certain contracts are excluded or partially excluded from the scope of the Regulations, including those relating to package travel, some financial services and perishable goods.

What has changed?

The key changes are as follows:

  • "Cooling-off" periods - consumers will now generally be able to cancel distance or off-premises contracts without having to give any reason within 14 calendar days (the period used to be 7 days). Consumers will, on the other hand, have to return goods within 14 calendar days of cancelling the contract.
  • Online payment buttons - online retailers will be required to make it clear where taking a step in the online purchase process brings about an obligation to pay for the consumer. Website buttons must be clearly labelled "order with obligation to pay" or using equivalent wording.
  • Pre-Ticked Boxes - consumers must give express consent before a trader can take any additional payments from them. This now means that traders will not be able to use pre-ticked boxes to tie consumers in to additional payments.
  • Delivery periods - traders must deliver goods within 30 calendar days unless the terms and conditions specify a different delivery period.
  • Premium rate telephone lines - traders will not be allowed to charge consumers more than the basic rate to telephone them in relation to existing contracts.
  • Pre-contract information - the information that retailers must provide to consumers before they enter into a contract has been extended. The consumer's cancellation period will generally be increased by a year where this information is not provided correctly. Distance and off-premises sellers must also provide a model cancellation form where the consumer has a right to cancel (although the consumer will not be obliged to use this form to cancel).
  • Refunds - distance and off-premises retailers will now be allowed to withhold paying refunds, generally, until goods are returned by the consumer. They will also be allowed to reduce refunds where the value of the returned goods has diminished due to excessive handling by the consumer.

What happens if retailers get it wrong?

Many of the new provisions brought into place by the Regulations will automatically form part of consumer contracts regardless of the wording of the actual terms and conditions. Failure to keep up to date with the changes could lead to breach of contract claims being brought by consumers or contracts being rendered unenforceable.

Non-compliance with the Regulations could also lead to enforcement action being taken by Trading Standards or even criminal prosecutions, potentially resulting in prohibitive action being taken or fines being imposed.

What do retailers need to do?

It is therefore very important that retailers are aware of the forthcoming changes, to avoid the risk of these negative consequences and to take advantage of those limited areas where the Regulations improve the retailer's position.

It may be that in many cases traders are already compliant with the consumer-friendly aspects of the Regulations, but retailers should review their terms and conditions and processes for all of their sales channels to make sure that they are in line with the fine detail of the forthcoming changes.

If you would like any support or further information on the changes, please contact us.