Distance Selling Regulations
It's safe to say that for many retailers the introduction of the Distance Selling Regulations in 2000 was challenging - suddenly customers who you had never met had stronger rights than the ones who came into your shop on a regular basis, and there were substantial compliance costs which impacted the bottom line.
The "durable medium" dilemma
The DSRs also contained concepts which were alien to 'real world' shopping - providing certain important information (e.g. cancellation rights) in writing or another "durable medium available and accessible to the consumer", for example.
"Durable medium" was not defined under the DSRs or the original EU Directive and there has always been a varying degree of disagreement as to what it means. Some would say providing information on a webpage is durable enough, others disagree, because websites can change or disappear.
A number of retailers, in the face of guidance from the OFT that it did not consider a website to be a durable medium, enabled their websites with prominent "Print this" or "Download as pdf" functionality. The theory behind this was that a consumer could be sent a link and then could take an action to cement its durability - print or download. All a bit of an unsatisfactory fudge, if we're honest, but everyone considered it ticked the three most important boxes: durability, availability and accessibility.
Content Services case
The judgment from the European Court of Justice in the Austrian Content Services case last week is a welcome bit of guidance for online retailers on the durable medium dilemma. In the case an online software retailer was entering into contracts with customers and providing only a hyperlink to the terms and conditions at sign up and in confirmation email (the terms and conditions included Distance Selling information as well as a waiver by the customer of cancellation rights for downloaded software). A customer could not sign up without a positive tick box that agreed to the terms and conditions. And because the customer has waived the right to cancel, he or she is then sent an invoice for €96.
Content Services Limited was the subject of enforcement action from the Austrian Bundesarbeiterkammer on the basis that it infringed a number of local and EU laws and the Higher Regional Court in Vienna requested a preliminary ruling from the ECJ on (essentially) this question:
Is the requirement that a consumer must receive confirmation of information in a durable medium available and accessible to him (unless given to him prior to conclusion of contract in writing or such other durable medium) satisfied where the information is made available by means of a hyperlink on the traders website which is contained in a line of text that a consumer must mark as read by ticking a box in order to be able to enter into the contractual relationship?
"Giving" and "receiving"
The ECJ placed a heavy burden on the words "receiving" (i.e. the consumer must receive certain information) and "giving" (i.e. unless the consumer has already been given it). Unfortunately, none of the documents relevant for the interpretation of the Directive gave any hints as to what was meant by "giving" and "receiving", so the court felt they needed to be considered in their "usual meaning in everyday language" but "while also taking into account the context in which they occur and the purposes of the rules of which they are part". The ECJ therefore concluded that:
"In a process of transmission of information, it is not necessary for the recipient of the information to take any particular action. By contrast, where a link is sent to a customer, he must act in order to acquaint himself with the information and he must, in any event, click on that link."
The ECJ identifies that the reason Article 5(1) of the Directive exists is to seek to communicate necessary information about the performance of the contract and the exercise of consumer rights (including cancellation). In highlighting this the ECJ was mindful of the Italian Government's submission which highlighted that this is about protecting consumers, who are the weaker parties in contracts concluded at a distance. It also highlights that elsewhere in the Directive there is often an obligation for a consumer to be "provided" with something - but here it very clearly says receive, unless already given. Therefore "the term expresses the idea that, regarding the confirmation of information to consumers, passive conduct ... is not enough".
Indeed, the ECJ go on to say that the Directive's purpose is "to afford consumers extensive protection [and] ... to avoid a situation where the use of a means of distance communication leads to a reduction in information provided to the consumer". Therefore a hyperlink, said the ECJ, is neither giving nor receiving.
The "durable medium" answer: like paper
The ECJ then considered the nature of a "durable medium" in short order. Looking as a whole at the phrase "writing or an other durable medium" the ECJ concluded that these are two functionally equivalent approaches. So the media must have the same durability as something in writing. It took on board submission by the Austrian, Belgian and Greek Governments that "in the context of new technologies, a substitute for paper form may be regarded as capable of meeting the requirements of the protection of the consumer so long as it fulfils the same functions as paper form".
The ECJ continued:
"It follows that a durable medium ... must ensure that the consumer, in a similar way to paper form, is in possession of the information referred to in that provision to enable him to exercise his rights where necessary. Where a medium allows the consumer to store the information which has been addressed to him personally, ensures that its content is not altered and that the information is accessible for an adequate period, and gives consumers the possibility to reproduce it unchanged, that medium must be regarded as 'durable' ."
The ECJ made the point that there was nothing on the generic Content Services website which allowed a consumer to "store information which is personally addressed to him".
Unequivocally the ECJ ruled that Article 5(1) of the Directive must be interpreted as meaning that:
"making information ... accessible only via a hyperlink on a website of the undertaking concerned does not meet the requirements of that provision, since the information is neither 'given' by that undertaking nor 'received' by the consumer, within the meaning of that provision, and a website such as that at issue in the main proceedings cannot be regarded as a 'durable medium' within the meaning of Article 5(1)."
Many retailers could now be in breach of the Distance Selling Regulations and should undertake a due diligence of their terms and conditions and all communications with customers during the purchase process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.