The Consumer Contracts Regulations came into force on 13th June 2014 and replace the Distance Selling Regulations 2000.
The new regulations implement the EU Consumer Rights Directive 2011 and make some significant changes. However, the best online companies are already following most of the requirements – because e-commerce is very competitive and high levels of customer service are expected. The new regulations really just codify these levels of service.
The main points are listed below:
1. Clear contact details
Retailers should preferably have a single page with their full trading name, company name, address and contact numbers all clearly displayed.
Where a retailer acts on behalf of another retailer the names and addresses of both should be clearly displayed.
All good retailers do this already. However, it is important to remember that this page should be simple to find. There is no point in having clear contact information if the page is buried away in the site structure. A lot of big e-commerce names prefer customers to contact them via dedicated online forms or email, rather than by phone. These retailers should not bury their phone numbers away on their sites.
2. No premium-rate customer contact numbers
The new regulations state that any customer contact number should be charged at no more than the standard rate. These are number specifically for customers who wish to contact the retailer about their order. These numbers should not be premium-rate or revenue sharing numbers – those starting with, 084, 0871, 0872, 0873, 0870 or 09.
However, these premium-rate or revenue sharing numbers can still be used for other numbers, such as technical support helplines. However, you must inform consumers of the additional cost (over the basic rate) of using these numbers.
3. Clear product descriptions and requirements
All products for sale should have a clear description, a retailer should also detail the product or service compatibility if required. For example, when you purchase headphones or another accessory from the Apple store, they clearly list the devices the product is compatible with. This is just good practice and encourages consumers to trust and buy from you. Importantly, it also helps to reduce returns – which are a considerable cost for retailers.
Also, if the product is a download – any digital rights management (DRM) restrictions should be clearly indicated. Likewise for other downloads or software any computer system requirements should also be clearly stated. Though the new regulations do not expect retailers to know or check the system compatibility of a device owned by an individual customer before selling an item to them.
4. Hide the VAT game
This is a particular bugbear and annoyance for us – websites that state a low headline price and then load the VAT or other applicable sales tax at the checkout stage – frequently once you have already entered your address and other details.
The low price is clearly an enticement to buy and the VAT is loaded mid-way through the transaction, either in the vain hope, you do not spot it or alternatively that you cannot be bothered to quit the transaction because you are nearer to completing it.
It is important to remember these regulations are specifically intended to protect consumers – not business customers, so we expect the “hide the VAT game” to continue for business transactions. Particularly as most businesses are VAT registered, and so claim it back anyway. Regardless, we view this as poor practice and deceptive. Irrespective of your customer base we would strongly recommend that VAT is clearly labelled and that any product price should be inclusive of VAT.
The only tricky point is the cost of shipping as the VAT element depends upon the shipping method used, but again this can be clearly displayed. If you look at Amazon they display the VAT inclusive price for a product and shipping and then provide a link to a separate box, which displays the product and delivery costs net of VAT, the VAT element and the total end figure. This works well and is both simple and clear.
5. Extended cooling off period
Under the Distance Selling Regulations, the customer had 7 working days to cancel the contract, this runs from the date of the contract – effectively when you press the ‘buy” button.
Under the new regulations this is extended to a minimum of 14 calendar days – importantly the 14 days only starts to run from the date the goods are actually received by the consumer.
Like the old regulations if the consumer is not provided with details of their cooling off rights in the terms & conditions the cooling off period can be extended to up to 12 months.
Again, like the previous regulations, this cooling off period does not include purchased items that are personalised, customised or intimate in nature. So for example engraved iPhones, jewellery, underwear etc. would be excluded.
This cooling off period will also apply to eBay merchants who are operating businesses on eBay. Though, given the need for positive feedback (and lack of PayPal protection for merchants), this will probably not alter operations for professional eBay sellers very much.
6. Digital goods and cooling off period
This is where the cooling off period concept falls apart slightly. For consumers who buy digital products, they must specifically opt-out of the cooling off period during the transaction, presumably through the use of a tick-box.
If the consumer does not opt-out the retailer can wait for the full 14 days before letting the customer have the download – we know what you are thinking – honestly, it is true. Quite why a consumer would want to wait 14 days for a download is quite beyond common sense and comprehension.
So back in the real world – customers will need to tick a box to opt-out. How often they will need to do this is uncertain. For example, doing it once in iTunes is not an issue, but doing every time you wish to purchase is probably a bit annoying – much like accepting cookies on every website.
If a retailer does not secure the consumer’s explicit consent to opt-out the consumer is entitled to cancel and keep the download. Given the high levels of fraud that could ensue, we would expect retailers to obtain explicit consent.
It is also important to remember that these regulations are for the protection of consumers, not business users. So anybody buying a business product or buying as a business customer would not be able to rely upon this consumer protection.
Under the new regulations, the retailer must pay the postage cost of returns, unless their terms and conditions state otherwise. However, the regulations also state that the retailer must inform the customer in advance that they (the customer) must bear the cost of any return. Also, for bulky goods, the retailer must provide an estimate of the cost of any return.
Many larger retailers already offer free returns as part of their service – to encourage purchases, particularly impulse purchases – this is particularly prevalent in online clothes shopping.
Shipping and returns have now become a key selling point, partly because it is very difficult to get right. So companies that do offer a good service use this as a key differentiator, for example, next.co.uk for clothing and ao.com for electrical goods.
The reality is that companies subsume the cost of delivery and possible returns into the cost of the actual product, and then promote free delivery and returns.
Given that notifying customers of the potential cost of returns before they buy may well put some customers off we expect the use of “free returns” to grow because of the new regulations.
The regulations also reduce the time a retailer must take to issue a refund from 30 to 14 days – the 14 days will run from the date of cancellation. However, the retailer is entitled to wait until they have proof that the consumer has made the return, before issuing a refund. The returned item showing in their courier’s system or proof of postage from the consumer should be sufficient.
However, the reality is that postal and courier services will be able to return an item within 14 days. The issue is any delay between the customer requesting a return and actually taking the goods to the post office or making them available for pick up.
Again the reality is that most good retailers already do this. Though some retailers with less efficient backend systems may well struggle with this.
For the latest e-commerce terms & conditions please see our Business Pack
The Business Pack includes several different versions, depending on whether your website sells physical goods, downloads or both.
The terms & conditions can also be purchased separately, please see the links within the Business Pack list. Please note, all the documents listed on the Business Pack page are included in the Pack.