New consumer protection – Part 1

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“New Regulations”) come into force on 13 June 2014 and will apply to contracts with consumers made on or after that date. They replace the Consumer Protection (Distance Selling Regulations) 2000 (“Distance Selling Regulations”) and the Cancellation of Contracts made in a Consumers Homes or Place of Work Regulations 2008 (“Doorstep Selling Regulations”) and will implement most of the Consumer Rights Directive in the UK.

Under the New Regulations, distance sales remain as contracts where the seller and buyer are not in the same physical location. For example, selling goods or services to consumers through websites, telesales or mail order. It also includes making music, video or software available to consumers to download or stream on websites or via app stores. The New Regulations also apply to off-premises sales, meaning those where the buyer and seller are in the same physical sale but the location is not the business premises of the seller.

Whilst in some respects the New Regulations remain quite similar to the old legislation, advance preparation is required as they will change the way that many businesses will have to interact with consumers and will likely involve a change to policies and procedures and amendments to website terms and conditions.

In this first blog out of two, the focus is on the new provisions relating to cancellation of a distance contract by the consumer:

New cooling off period

The statutory minimum cancellation period for distance contracts is being extended from 7 working days to 14 calendar days and the trader must provide the consumer with a model cancellation form.

Cancellation process

In order to exercise his right to cancel, a consumer must either use the model form or make any other clear statement of his decision to cancel (this need not be in writing). The consumer must then return the goods within 14 calendar days of cancellation.

Under the New Regulations the consumer will bear the cost of returning goods unless (i) there is an agreement to the contrary, or (ii) the trader failed to inform the consumer that the consumer is obliged to meet such costs.

Retailers have an obligation to refund customers within 14 days of any order being cancelled, unless the contract was for the supply of goods in which case, the retailer can withhold the refund until the consumer returns the goods (or evidence of their return is provided) or to the extent of any reduction in value of the goods as a result of any unnecessary handling of the goods by the consumer.

A trader must not begin to supply a service under the New Regulations during the cooling off period unless the consumer has expressly requested that he do so. If the consumer has made such a request but subsequently cancels the contract during the cooling off period, he will have to pay the trader pro-rata for any service it supplied pre-cancellation. However if the trader failed to properly inform the consumer about the right to cancel or about the obligation to make a pro-rata payment, the consumer will not have to pay for any service provided.

If the consumer cancels the contract with the trader, any ancillary contracts (such as credit agreements, insurance, warranties and guarantees) will automatically also be cancelled and the trader will have to inform any other party to the ancillary contract.

Exemptions from the cooling off period still exist for example, goods which expire quickly such as foodstuffs and goods which have been personalised or altered for customers.

Failure to inform consumers of their right to cancel will result in this cancellation period being extended by up to 12 months, creating considerable periods of uncertainty for retailers over the return of goods if they do not provide the correct cancellation information to consumers..

Next time

In our next blog on this topic, we consider the other key provisions coming into force on 13 June.