Consumer Contracts Regulations 2013 in force from June 2014

22nd April 2014

While the Consumer Rights Bill is currently undergoing legislative scrutiny in the Commons, reform of UK consumer law continues apace with the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the Regulations) coming into force on 13 June 2014.  The rules place obligations on traders requiring inclusion of certain terms in consumer contracts and provision of particular pre-contract information; the rules also impose amended cancellation periods.

What contracts are affected?

The Regulations apply to all distance, off-premises and on-premises contracts made on or after the 13 June 2014 enforcement date.  Where applicable, the Regulations take effect alongside the Consumer Rights (Payment Surcharges) Regulations 2012 (the Surcharges Regulations 2012).  They replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 (albeit these latter provisions still apply to contracts made before 13 June 2014).

The Regulations only impact contracts between traders and consumers, so it is important to check the identity of the parties involved.  While the definition of ‘trader’ remains similar to before, ‘consumer’ is now defined as an individual/natural person, acting for purposes that are wholly or mainly personal – so beyond the remit of that individual’s business, trade craft or profession.  As the requirement is for an individual to be acting ‘wholly or mainly’ outside their trade, a consumer may still receive protection if there is a mixture of business and personal.

What are the key changes?

Pre-contract information

• Pre-contract information outlined in the Schedules to the Regulations must be provided.  The Regulations notably introduce an extended list of pre-contract information for distance and off-premises contracts, including that a model cancellation form has to be provided where the consumer has a right to cancel
• Where this information is not given in relation to off-premises contracts, the trader will commit a criminal offence and could be fined.  The duty also extends to on-premises contracts.

Cancellation and returns

• The Regulations give consumers an extended ‘cooling-off’ period for distance and off-premises contracts of up to 14 days after delivery (for goods) or conclusion of the contract (for services), as opposed to the previous seven calendar days
• The cancellation period is extended to 12 months if the trader has not provided appropriate pre-contract information.  It seems this 12-month period can be reduced to 14 days though, once the failure is corrected
• Goods should be delivered without undue delay.  This should be within 30 days at the very least, unless the consumer agrees otherwise
• The current rules regarding refunds are altered, including that customers must return goods or show evidence of return to obtain a refund. For distance and off-premises contracts, consumers can be required to return goods within 14 calendar days of cancelling the contract.

Payments

• Express consent has to be given by consumers where extra payments will be charged in addition to the price paid for goods/services.  Pre-ticked boxes, for instance, are not acceptable
• A consumer will not be liable to pay any costs they have not been told about before entering into the contract
• For distance and off-premises contracts, traders must make it clear where proceeding with an online transaction results in payment – such as by labelling an online ‘Payment’ button to instead read ‘Order with obligation to pay’
• Traders will now be restricted in the fees chargeable for use of certain payment methods (as provided for under the Surcharges Regulations).

‘Extras’

• Calls to consumer helplines must be charged at basic rate, rather than any premium rate
• ‘Digital content’, such as music or video downloads, are regarded essentially as a different type of transaction, so traders must fulfil additional requirements.

Are there any completely ‘new’ or ‘unknown’ requirements?

An interesting and new concept for UK consumer law is that of ‘digital content’.  Regulation 5 defines this as data “produced and supplied in digital form”.  For both on-premises and off-premises contracts, the pre-contract information now has to detail:

• the functionality of digital content – that is, the ways in which it can be used (such as to track consumer behaviour) and the presence of any technical restrictions
• any relevant compatibility information – providing the version number, operating system it can be used with and compatible hardware/software, and
• technical protection measures in place for digital content.

Where distance and off-premises contracts are concerned, the new rules affect the cancellation of contracts for supplying digital content.  Where the content is on a tangible media, it is to be regarded as a sales contract.  So, if the contract is cancelled, the rules require that the goods are returned within 14 calendar days.  The other return of goods stipulations also apply, except in certain circumstances for sealed audio recordings, video recordings and software if unsealed after delivery.  If the content is not on tangible media, the consumer has a right to cancel.  However, where the consumer consents to immediate delivery and acknowledges this will forfeit their rights, the cancellation right may be lost.

Are there any exemptions or exclusions?

The list of contracts to which the Regulations do not apply has been extended.  This now includes contracts for medical products and contracts costing the consumer no more than £42.  The Regulations do not apply to contracts to the extent they cover certain subject matter.  For example, this includes – in relation to renting accommodation for residential use – package travel, and supply of foodstuffs/beverages/other goods for household consumption, when supplied by a trader undertaking frequent and regular ‘rounds’ to homes.

The good news for traders is that, even if none of the Regulations’ exemptions seem suitable at first, they also only apply in part to certain contracts.  For example when supplying a magazine or newspaper (except under subscription), all the rules apply but there is no right to cancel when sold via a distance or off-premises contract.

How to make the changes

The Department for Business Innovation and Skills has published useful Implementing Guidance to help traders.  Organisations with standard consumer contracts, including terms and conditions for website transactions, should ensure all their documentation is compliant with the new provisions by June 2014.  Compliance will protect traders and consumers alike.

It is important to consider whether your business is subject to consumer protection legislation, or if any exemptions and exclusions apply.