Consumer rights strengthened – the new Consumer Contract Regulations

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the "Regulations") come into force today (13 June 2014). The Regulations will have a substantial impact for retailers who sell goods and services to consumers as the Regulations cover consumer contracts formed: (i) on-premises; (ii) off-premises; or (iii) at a distance (including via the internet).

Failure to comply with the Regulations could lead to a criminal conviction and/or a fine and have significant reputational implications.

Retailers’ obligations

The Regulations increase consumer protection by placing certain obligations on retailers. Among these obligations, retailers must ensure that:

• certain information is provided to the consumer before the contract is made. The information required will depend on the way in which the sale is made;
• the period in which consumers can cancel the contract is increased from 7 to 14 calendar days after delivery (for goods) or after conclusion of contract (for services), for distance and off-premises contracts. Failure to provide this information will extend a consumer’s cancellation period to 12 months;
• a model cancellation form is made available (in contracts where a consumer can cancel);
• cancellation of the main contract will automatically trigger termination of any ancillary contracts, such as an insurance contract for the goods, even if the ancillary contract is with a third party. Once the consumer cancels, it is the responsibility of the retailer to inform the third party;
• delivery of goods is made without undue delay and within 30 days of the date on which the contract is entered into, unless agreed otherwise with the consumer;
• refunds for goods cover the full price paid, including the cheapest delivery option offered. This amount can be reduced if the goods have been soiled;
• it is clear that placing an order creates an obligation on the consumer to pay. For example, if this involves the click of a button, the button must state "order with obligation to pay" or equivalent;
• pre-ticked boxes for supplementary goods and services (such as insurance, premium delivery services etc.) are not used. Additional services must be actively selected by the consumer; and
• where a telephone contact number is provided, the charge for calls to that number are no more than the basic rate.

Digital content

The Regulations introduce the concept of digital content (data produced and supplied online). The supply of digital content (e.g. a music download) is distinguished from the supply of goods and/or services, and retailers are required to comply with additional, digital-specific information requirements (for example, providing details of functionality and applicable technical protection measures). The Regulations contain rules on the cancellation of the supply of digital content.

Exclusions

Certain consumer contracts are excluded, or partially excluded, from the scope of the Regulations. These include contracts relating to: gambling; the sale of houses; rental of residential accommodation; package holidays; certain financial services; and perishable goods.

Background

The Regulations replace The Consumer Protection (Distance Selling) Regulations 2000 and The Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008, although these regulations will continue to apply to contracts concluded before 13 June 2014.

The Regulations reflect the UK’s implementation of the Consumer Rights Directive (2011/83/EU) which aims to harmonise consumer protection rules across all EU member states.