New e-commerce laws: consumer confidence versus over-regulation

From June 2014, new consumer contracts laws are set to have far-reaching implications for businesses selling online. We explain what you need to do and how we can help.

It seems consumer confidence is finally starting to return. One factor supporting this notion is the increasing number of people making online purchases.  Recent studies show an incredible £91 billion was spent online in the UK in 2013 [1].

Consumer spending is expected to remain the key driver of the economic recovery in 2014 and 2015 [2].  To maintain consumer confidence in this vital area the Government is introducing a range of measures aimed at protecting the consumer and simplifying the burden of compliance.


Consumer Contracts Regulations

Before 13 June 2014, any business making online sales to consumers will need to take action to review its terms and conditions of sale.

On that date, the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013 will come into force.  From that date all contracts made on premises, off premises or at a distance (including online) will be subject to the new regulations.

Among a number of important changes, the current Distance Selling Regulations – rules that protect a consumer’s rights when they buy products from a distance – will be repealed and replaced.

As part of the Consumer Contracts Regulations, there are new default rules on delivery of goods, passage of risk, cancellation, returns and pre-contract information requirements for goods, services and digital content.


Delivery of goods:

  • Delivery of goods will be required within 30 days, unless otherwise agreed.
     
  • There is an implied term that the business must deliver the goods to the consumer, unless otherwise agreed.
     
  • Goods will remain at the business' risk until they come into the physical possession of the consumer.
     
  • The right to cancel a distance sale of goods is extended from 7 working days to 14 calendar days from receipt of goods by the customer.  In the case of services it is now 14 calendar days from the date of the contract.
     
  • Businesses are not required to provide a refund under a contract for the sale of goods until the goods are returned.  However, once returned refunds must be given within 14 days.


Pre-contract information:

Pre-contract information will include requirements to provide a copy of a contract or confirmation for off-premises and distance contracts (merely making available a copy or confirmation will not be enough), information about the right to cancel in a distance contract, and how the obligation to pay must be presented in an online distance contract.

Businesses will need to disclose the main characteristics of goods or services, the business’ identity and contact details, and the total price of the goods or services inclusive of taxes and delivery charges (where applicable).  Businesses will need to seek consumers’ express acknowledgement of the obligation to pay before they can be bound by the contract.  For online distance selling contracts the requirement is a button labelled ‘order with obligation to pay’ (or similar).

Consumers will have a 12 month period to cancel if the business fails to provide relevant information on the right to cancel.  This significantly extends the current period of 3 months in distance sales.

The business must bear the direct cost of the consumer returning goods where the business failed to provide the consumer with this information.  Otherwise, it is at the consumer’s cost to return goods.


Digital content:

For contracts for digital content, the business needs to provide, within a "reasonable time", a copy of an off-premises contract (or confirmation of it within a reasonable time) and confirmation of a distance contract.

Information will be considered ‘made available’ to a consumer only if the consumer can reasonably be expected to know how to access it.

Digital content must comply with certain standards which broadly reflect the standard for goods, such as satisfactory quality, fitness for purpose, and compliance with description.

Unlike with goods, there is no right to reject digital content (because there is no simple way to return the digital content) - a consumer has a right to a refund only if the business is in breach of the obligation to provide the digital content.


Note that these changes apply to business-to-consumer contracts.  They will not apply to consumer-to-consumer contracts or consumer-to-business contracts.


Thrings' website compliance review

Thrings would like to offer you a compliance review of your website, including e-commerce functions.

We offer this service for a fixed fee, depending on the nature and scope of your website, and we would cover these areas:

  • Terms and conditions of use
  • Terms and conditions of supply of goods or services
  • Distance selling - Consumer Contracts Regulations
  • Unfair terms in consumer contracts
  • Privacy, data protection and electronic communications
  • Formation of online contracts
  • Disclosure and information requirements


We would then prepare a report against around 80 factors and issues, including recommendations for any required changes.

For more information, please contact Andy Braithwaite or Brett Lambe.


[1] According to the IMRG Capgemini e-Retail Sales Index

[2] According to the National Institute of Social and Economic Research

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