The Department for Business, Innovation and Skills have released a consultation seeking views on the implementation of the Consumer Rights Directive (2011/83/EU) (CRD) into UK law. The CRD will mean a material shift in how UK retailers must do business, especially those that operate or wish to operate at a distance (i.e. online, by phone, mail order).
The CRD was agreed by EU Member States in October 2011. It will apply to all contracts for sales of goods and services by traders to consumers (subject to limited exceptions), whether the transactions are within the UK or across the EU.
The main goal of the CRD is to achieve transparency for business and consumers so that they can "get it right first time." The intention is to create a fair balance of responsibilities between business and consumers when contracts are cancelled or deliveries are made.
The hope is that informed consumers will lead to enhanced consumer confidence which will build competitive markets and lead to growth.
The CRD will result in a single regulatory regime across all 27 Member States. It does not apply to all areas of consumer rights but in those areas that it does relate to, the rules will be simplified and harmonised across the EU.
These are some of the mandatory changes that the CRD will bring:
- Harmonised distance and off-premises rules.
- Enhanced information requirements (e.g. indication of cost of returning items not normally returnable by post).
- No refund until goods returned by consumer (or evidence goods having been sent back provided).
- Consumers buying at a distance will be required to return goods within 14 days of cancellation.
- No refund of extra cost of express delivery which has been requested by the consumer.
- Refunds to be effected within 14 days of cancellation (unless goods not returned, or proof of return not provided, by then).
- Cancellation period increases from 7 to 14 calendar days – for distance and off-premises sales.
- Distance sellers using electronic means must flag any obligation to pay clearly, with an 'order with obligation to pay' button or similar.
- Distance and off-premises sellers must provide a link to a model cancellation form which consumer may – but is not obliged to – use.
- If consumer not informed of right to cancel, the right is extended for up to 1 year.
- Right to cancel for distance or off-premises services applies if service has started within the cancellation period – customer will pay for proportion performed – (as long as customer has consented to early commencement).
- All payments must be expressly agreed to by consumer.
- Customer help lines must be charged at basic rates.
- No excessive surcharges for use of payment cards or other means of payment.
- Cancellation rights do not apply once digital downloads are started or where sealed software and video content are subsequently unsealed.
There are certain provisions in the CRD which require maximum harmonisation by Member States which means the level of consumer protection provided in implementation must be no more and no less than the CRD. This prevents disjointed and uneven consumer protection legislation across EU Member States.
There are a limited number of areas which allow for some flexibility in implementation and it is those areas on which the government is seeking views. The government has provided proposals on its implementation of these areas of the Directive and would like comments and views on these proposals including their impact assessment (i.e. costs and benefits) as well as comments on potential ambiguities in the CRD and areas where clarification would be beneficial.
Here is a summary of the main proposals:
Application of CRD provisions to exempted sectors
- Extension of information and cancellation rights for healthcare and social services sold off premises and at a distance.
- Extension of: (i) express consent provision (for additional payments); (ii) basic rate call provision (for customer help lines); and (iii) delivery and passing of risk provisions, to healthcare and social services and package travel and timeshare contracts (however effected, i.e. in store, distance, off-premises).
Day-to-day transactions on trader premises
- Exempt day-to-day transactions concluded on the trader's premises from information requirements.
- Do not apply supplemental information obligations (beyond those in CRD) to on-premises contracts.
- For off-premises contracts only apply pre-contractual information requirements and cancellation rights to contracts exceeding 50 Euros in value.
Emergency repairs in the home
- Reduce the pre-contractual information requirements for solicited emergency repairs in the home (where charge is less than 200 Euros).
Detailed rules around cancellation of ancillary contracts
- Amend existing rules relating to automatic cancellation of credit agreements in distance and off-premises contract as appropriate, and apply to all ancillary contracts.
- Enforce most of the CRD provisions through Part 8 of the Enterprise Act 2002 and through a specific injunctive regime, enforceable by Trading Standards and OFT.
The government is also seeking views on their proposal of 'copying out' the CRD to ensure consistency and on the clarity of definitions, as well as on the introduction of a private right of redress for consumers where traders fail to comply with the CRD requirements following exercise of right of withdrawal.
The government is seeking views from individuals and organisations by Consultation Response Form by 01 November 2012.
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.