New trading laws aim to simplify things for consumers and businesses, says Matthew Gough
Consumer law is currently based on four EU Directives – Unfair Contract Terms, Sale for Consumer Goods and associated guarantees, Distance Selling and Doorstep Selling. These directives have been adopted inconsistently which is unsatisfactory for both consumers and businesses.
However, a new Consumer Rights Directive was adopted in October 2011 by the EU which aims to simplify elements into one set of rules. For all involved the directive should mean greater consistency in consumer law across the whole of the European Union.
Member states will have two years from that date to implement the measures into national law, so English law will have to change before the end of 2013.
The new Consumer Rights Directive covers contracts for sales of goods and services from business to consumer. Generally all contracts will be covered including purchases made in a shop and those contracts made at a distance or away from business premises.
The directive aims to ensure that consumers will have clear information on price, additional charges and fees before they sign a contract. It will also aim to strengthen consumer protection against late/non delivery, as well as setting out EU-wide consumer rights on issues from cooling-off periods, returns, refunds, repairs and guarantees and unfair contract terms.
The directive targets e-commerce as part of a wide-ranging overhaul of existing consumer rights online. There is a requirement in the directive for clear information about consumer rights to be displayed at point of sale.
The directive does not, however, cover any financial services as the Distance Marketing Directive already covers these.
The key provisions
The most notable changes for businesses to prepare for are are:
- Cooling-off periods. For distance sales, such as internet sales, there will be a 14 calendar day cooling-off period. Previously laws provided for only seven days. The directive also introduces an EU-wide model form for withdrawing from a sales contract.
- Pre-contractual information. The directive obliges a trader to provide consumers with clear information on the main characteristics of the product, geographical address and identity of the trader. The price, inclusive of taxes and all additional freight, delivery or postal charges also needs to be clear.
- Rules on delivery. There will be a maximum of 30 calendar days for the trader to deliver the goods to the consumer from signing the contract or placing the order. The trader bears the risk and cost of deterioration or loss of the goods until the moment the consumer receives the goods. For late or non-delivery, the consumer will have a right to a refund as soon as possible and no later than seven days from the date of delivery.
- Repairs, replacement, guarantees. To provide consumers with more certainty, there will be a standard set of remedies available to all consumers who have bought a faulty product. Repair or replacement in the first place followed by the reduction of the price or the reimbursement of money. This is presently an issue for international businesses as there are different national laws across the 27 jurisdictions in this area.
- Online sales. Under the directive, customers who make their purchases online will have the right to refuse to pay for the transaction if they weren’t appropriately informed of the prices before the purchase.
- Tick Boxes. Ban on “pre-ticked” boxes on websites. Consumers will no longer be required to “untick” boxes to avoid extra services when shopping online. The European Commission cited the example of buying an airline ticket on a website which may also offer extras such as travel insurance or car rental.
- Pressure Selling. Protection against pressure selling – all direct sales transactions negotiated away from business premises are now covered, not just doorstep sales.
Even more changes are to be made to UK Consumer Law
To comply with the directive, a new single ‘Consumer Bill of Rights’ will replace 12 existing laws and regulations relating to consumer protection in the UK, which the Government said is “complex and confusing” and bad for both consumers and business.
The Bill intends to repeal and replace a number of pieces of legislation, including the Consumer Protection (Distance Selling) Regulations 2000 and the Unfair Terms in Consumer Contracts Regulations 1999. It also intends to repeal or substantially amend the consumer law aspects of the Misrepresentation Act 1967, the Sale of Goods Act 1979, the Sale and Supply of Goods and Services Act 1994, the Supply of Goods (Implied Terms) Act 1973, and the Unfair Contract Terms Act 1977. The Government will leave intact those parts that apply to business to business transactions.
The Department for Business Innovation and Skills intends to consult on the Bill during the early part 2012.
These are revolutionary changes, and whilst they are primarily designed to protect the consumer, they will also provide international businesses with greater certainty. A key issue for businesses operating in the consumer field in Europe is the myriad of 27 different laws, which can create a barrier to cross-border trade. With the new Directive businesses should enjoy far greater clarity in their consumer operations, but will need to be aware of each consumer’s stronger position.
The approved Directive can be found at http://register.consilium.europa.eu/pdf/en/11/pe00/pe00026.en11.pdf
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