Perfect harmony? The new Consumer Rights Directive
The European Parliament approved the Consumer Rights Directive on 23 June 2011. Member States will have two years in which to implement the Directive into local law. The rules will impact e-retailers with activities in EU member states with the increased burden and cost of compliance. So retailers should be aware of these future changes and factor this into their medium to long-term plans for cross-border sales.
The directive was intended to create a uniform set of consumer rights across the EU for distance sales and door-step sales and was originally designed as a full harmonisation measure.
The original proposal proved to be controversial as it reduced protection in some member states. As a result the proposal was scaled back and various provisions were dropped. Furthermore, member states are free to take stronger measures if they choose to. There will therefore be a minimum level of protection. It does, however, mean that traders who wish to trade across the EU will still have to review their online processes and terms and conditions for compliance with the different countries' consumer protection regimes.
Key areas to be aware of!
Increased cancellation rights for consumers:
Once the Directive is implemented, the consumer will have a period of 14 days from receipt of the goods or from conclusion of contracts for services in which to cancel a distance or doorstep contract. This is longer than the current period of seven working days in the United Kingdom (under the Consumer Protection (Distance Selling) Regulations 2000). The price for the goods or services will have to be reimbursed and the consumer will be obliged to return the goods within 14 days.
Much like the current regime, there are requirements to provide information to consumers. If a trader fails to inform the consumer about the cancellation rights, the period in which the consumer can cancel will be extended to one year.
Retailers should note that costs of sending the goods to the consumer are to be borne by the retailer, unless the consumer opts for shipping method which is more expensive than the one offered by the trader.
Retailers will be required to reimburse the cost of goods and services if the consumer cancels within the cancellation period for whatever reason. The retailer will be entitled to withhold reimbursement of the cost of goods until they receive the goods, or at least until they receive evidence that the consumer has sent back the goods.
As is the case under the current UK Distance Selling Regulations, provided that the consumer is informed of the return costs, retailers can require the consumer to bear the costs of returning the goods. Under the original draft form of the Directive, retailers were required to bear all the costs of returning goods where the purchase was above 40 Euros. Retailers lobbied against this arguing that it would increase the cost of the goods (particularly for long distance sales).
No excessive charges for methods of payment:
Retailers will not be able to charge a fee for a payment method which exceeds the cost to the trade of providing that payment method. This will prevent retailers from charging excessive fees for payments by credit card - an issue which has been highlighted by the Office of Fair Trading and consumer protection groups in the UK for some time.
No premium rate telephone numbers:
If a seller operates a customer service telephone number, it must be charged at the basic rate. Premium rate telephone calls are prohibited.
No default tick boxes:
Before a consumer enters into a contract, the retailer must inform the consumer of any extra fees over and above the cost of goods (such as insurance or premium delivery methods) and services and obtain the consumer's express consent before charging these. The retailer cannot rely on default options which require a consumer to reject them to avoid any additional fees. A retailer would not be permitted to use pre-populated tick boxes to charge for items.
What should retailers do in the short term?
Our advice would be that any retailers looking to sell into other member states should be aware that their terms and conditions and selling processes should be tailored to the legal requirements in that member state. Even when the new Directive is implemented across the EU, retailers will still need to consider compliance with local consumer protection laws in the countries that they target for sales.