Strict sanctions for failing to comply with latest distance selling regulations

If you sell online, then you’ll want to make sure you comply with new rules introduced by the latest consumer regulations. Businesses need to be aware of their impact, so they can update terms and procedures accordingly, and remain compliant, otherwise they face uncertainty, and potentially strict sanctions.

In this article we look at some of the key developments relating to cancellation, information and charges which are likely to have an impact on most businesses who sell online. It is important to bear in mind that these are just a handful of examples to illustrate how the law is changing in this area. In practice, your terms of business ought to be reviewed regularly along with other important documentation such as your privacy policy, so you can be confident of meeting your obligations. The consequences of failing to do so can be severe.

Ecommerce and distance selling

Distance selling occurs where a consumer buys something from you without you both having been in the same place, such as purchases by telephone and through a website. The new rules replace earlier distance selling legislation, but many of the requirements are still present, albeit with increased protection in favour of the consumer.

For example, before you are entitled to enforce a contract against a consumer, you will need to provide them with information about your identity, the main characteristics of what they are buying, your location and contact details, delivery or subscription charges and arrangements for payment, your complaint handling policy, guarantees and after-sales services, details of the functionality, technical protection measures or compatibility issues which apply to digital content, and an explanation of the customer’s rights to cancel.

Cancellation rights have long been available to consumers who buy goods and services online, and the latest changes bolster those rights even further. Before concluding a sale you should inform buyers that, except in limited circumstances, they are free to cancel their purchase within 14 days, without giving a reason and without incurring any further costs. Where you are selling goods, that 14 day period generally starts from the date on which the customer has physically received all of the goods. However, if you fail to provide certain information, the cancellation period can continue to run for over 12 months.

In the event of cancellation, you will need to promptly reimburse buyers the costs of both purchase and delivery of any goods you supply. There are some exceptions which allow you to set off some of the costs, but they are limited, and don’t apply if you fail to provide adequate information in advance in which case you will also bear the cost of returning goods. If you are distance selling services, you should not begin to supply those services until the cancellation period has ended, unless expressly asked to do so. Under any circumstances where a consumer might lose the right to cancel, it is crucial that you let them know early on, otherwise you will find yourself out of pocket.

Next steps

This is just a brief overview of some key changes, and there are other important factors to consider.  For example, it is common practice to offer extra services in exchange for a small uplift in price. If your online sales process includes something extra unless a consumer un-ticks, rather than expressly ticking a box to ask for it, you will need to reimburse them.

Although this article has focused on ecommerce, similar rules apply when selling offline, and in some cases simply failing to provide information about cancellation rights can constitute a criminal offence.

There are also circumstances when certain rights don’t apply, such as where price is subject to fluctuations in a financial market, and in some cases for perishable or bespoke goods, accommodation and transport. So, it’s important to seek expert advice to make sure you are both compliant, and also taking advantage of specific exclusions which may apply.

The regulations discussed above are already in force as of June 2014. Get in touch to discuss the way you do business, so we can help you avoid legal action, cancellations, and unhappy customers.