If you provide goods or services to consumer customers you will need to review your current terms of business and sales practices to ensure that you comply with new legislation coming into force on 13 June 2014. The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2014 will affect you if:
- You sell goods or services to consumers online
- You sell goods or services to consumers by telephone
- You sell goods or services to consumers in their own homes
- You sell goods or services to consumers from a shop or business premises, including a market stall
- You sell digital content to consumers via either a tangible medium (such as a CD or DVD) or intangible medium (downloads)
The new Regulations apply to both sole traders and to those trading through a business entity such as a limited company or partnership. You will still need to comply with the new Regulations even if you trade through an agent or sub-contractor or if you are a government department, local or public authority.
However, you will not be affected by the new Regulations if:
- You only sell to other businesses
- You sell goods or services to consumers but the type of goods or services that you sell are exempt under the Regulations (for example package travel services, financial services or consumables provided by roundsmen such as milkmen)
The new Regulations replace the Distance Selling Regulations (The Consumer Protection (Distance Selling) Regulations 2000) and the Doorstop Selling Regulations (The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008). The steps which must be taken to ensure compliance with the new Regulations will vary for each business but some of the issues that you may need to consider include:
- Information requirements – do you provide all of the information required under the new Regulations? Are you providing the information at the correct time and in an appropriate medium?
- Delivery – can you comply with the requirement to deliver goods within 30 days? If not, do you have a procedure in place to obtain your customer’s consent to delayed delivery? Do you need to renegotiate terms with your courier company?
- Cancellation rights – have you updated your terms of business to reflect the extended cooling off period of 14 calendar days under the new Regulations? Have you made the Model Cancellation Form available to your customers?
- Returns & refunds -have you reflected the new rules on returns and refunds in your terms of business? In particular, have you made it clear how goods must be returned and who must pay for the return, what time limits apply to returns and when you may make a deduction from a refund to reflect any diminished value of the goods returned? Do your terms make it clear that you will not pay any refund until goods are returned (or evidence of their return is provided)?
- Ancillary contracts – are you aware that any ancillary contracts you enter into (such as warranties or service contracts) will automatically terminate if the customer cancels the main contract? Have you discussed how you will handle this with any third party providers you may have arrangements with?
- Additional payments – are you aware that you must now obtain your customer’s express consent before taking any additional payments (no pre-ticked boxes allowed)
- Premium rate telephone lines – you must not make your customers call a premium rate line to discuss an order they have placed with you. Do you need to use a new contact number?
- No excessive payment surcharges – do you need to revise the methods of payment that you will accept in light of the ban on imposing additional charges if customers pay by certain means, such as credit or debit card?
- Pay now – if you trade online you must clearly mark any button or method to pay with wording such as “order with obligation to pay”. In its guidance, BIS has suggested using “pay now” buttons.
Failure to comply with the new Regulations can render your contracts unenforceable and, in some cases, will amount to a criminal offence.
If you would like further guidance on the steps that your business must take to comply with the new Regulations please contact Kitty Rosser on 01603 281141.
