Welcome to the Consumer Contracts
Regulations Training Number 1
Regulations Training Number 1
Welcome to this training on the Consumer Contracts Regulations 2013 that came into effect on 13th of June 2014. If you’re selling online to consumers, you need to know this. You can either watch the video or view the transcription below.
Main Changes
Now the main changes are the right to cancel, information requirements and additional charges. And we will be covering those in the 3 videos. There are potentially disastrous consequences if you don’t comply.
Suzanne Dibble Introduction
My name is Suzanne Dibble, and I am a multi-award winning business law expert, I used to work at the largest law firm in the world and I’ve been runner up twice in 2 national awards for Solicitor of the Year. Know more about me, and read more about my experience to understand how I can help you.
Cooling Off Period
The cooling off period has been extended from 7 days to 14 days. If you don’t make this clear in your terms and conditions, then your customer can return goods for up to 12 months after the order and obviously, if you have fast moving product lines, or stock issues, that’s going to be detrimental to your business. So you must, must, must make this clear in your terms of business.
Form of Cancellation
You can provide the customer with the Form of Cancellation, and that’s what I recommend you do, and they can actually use that to cancel the contract. However, if the customer makes a clear statement that they want to cancel, this need not be in writing. So if they phoned you up to tell you they want to cancel, then you must accept that. Once the customer has made a clear statement that they want to cancel, then the customer must return the goods to you within 14 days, and again, this is something that you should include in your terms and conditions to make that clear.
Exceptions to Right to Cancel
There are some exceptions to the right to cancel, for example goods which deteriorate rapidly (such as food stocks), contracts that are concluded at public auction (which does not include ebay), and goods that are made to specification or are clearly personalized. In terms of what is made to specification and clearly personalized, I want to give you some examples. If a customer ordered a sofa and chose certain finishes from the product range, e.g. a teak finish with a certain color cushion, then that would not be personalized sufficiently for your customer to lose the right to cancel. If however your customer had asked for a finish outside of your product range and you’ve done that as a special order for them, then they would lose the right to cancel because you’d not be able to necessarily resell those goods to another customer.
Another example with a football shirt; if a father ordered a football shirt for his son but had the son's name across the back, then that would be personalised to the extent that the customer would lose the right to cancel because you might not be able to resell that particular football shirt with that name on. If however they had merely chosen the name Beckham across the back of the shirt and in Machester United colors, then that would not be personalized sufficiently for them to lose the right to cancel and they would still be able to exercise their right to cancel.
Lose the Right to Cancel
Customers can also lose the right to cancel if they do certain things to the goods once they receive them. So for example if they unseal goods that have been sealed for hygiene or health reasons, then they would lose their right to cancel. Similarly with sealed audio, video and software, if they’ve unsealed that audio, video, software then again they would lose the right to cancel. They would also lose the right to cancel if goods become mixed inseparably, so for example if you put something liquid and mixed it into something else and the goods become mixed inseparably, then the customer would lose the right to cancel.
Digital Content
The new regulations have introduced the concept of digital concept for the first time. What you need to do if you are selling digital content is you must not supply the digital content before the end of the cancellation period i.e. the 14 days, unless the customer has provided you with their express consent to you providing that digital content before the end of the cancellation period AND that the customer acknowledges that they are going to lose the right to cancel if you actually do that.
The final thing you need to do is that you need to confirm your receipt of the customers consent and acknowledgement. This is because otherwise, if the digital content is downloaded immediately (which is usually the case), customers could download it, use it, consume it, and then cancel within the cancellation period and ask for a refund. So this is to help traders with that problem, but you do have to jump through a number of hoops to make sure that the customer loses the right to cancel.
So just to repeat that, because this is fairly complex, in your terms of business, if you’re selling digital content, you need to (1) have express consent from the customer to you beginning to supply the digital content before the end of the cancellation period, (2) have their acknowledgement that they’ll lose the right to cancel and (3) confirm their consent and acknowledgement when you confirm the contract (in a durable medium). A ‘durable medium’ means that you should send an email once the customer has placed the order with a pdf of the terms to business attached to that email – you can’t just put in a link to a website page with the terms on, because that might change. So what you need to do is you need to take a snapshot of your current terms to business at the point that that customer has placed an order and the best way to do that is to make a pdf of the terms and attach that to the confirmatory email that you sent once the customer has placed their order.
Charge for Return Delivery
You can only charge for return delivery if you made this clear to your terms – otherwise you must pay for return delivery. Refunds must be provided within 14 days after the day on which you received the goods back from the customer or if earlier, 14 days after the day on which the customer supplies evidence of having sent the goods back. And it seems fairly obvious to me, but it is in the Regulations, so I will point it out – you must not charge a fee for refunding your customers.
Refund Diminution
You can deduct from a refund any diminution in value that’s caused by excessive handling by your customer. But you can only do this if you made it clear in your terms of business. So again, do include this. Now what is excessive handling? Well the BIS guidance says that what is acceptable handling is what might customer do with goods if they are actually in a store looking at the goods, rather than buying from a distance. So they gave an example of a toaster, and the toaster had been returned to the supplier and it had crumbs in the bottom of the toaster and BIS said that this was excessive handling.
It would have been acceptable for the customer to have opened the packaging and possibly even to have plugged it in to see whether it worked, whether it heated up properly etc but not actually to have put toast through the toaster and then returned in with the crumbs in. So the supplier was entitled to deduct from the refund diminution in value of that toaster. But again just to stress the point, you can only make that deduction if you made that clear in your terms of business.
Refunds
Refunds must be made by the same method by which the customer paid, unless stated otherwise in your terms. You must reimburse all delivery costs except where they chose a higher level of delivery in which case you only need to refund them the cost of the least expensive delivery.
So if example you have 2 delivery levels, one was your most basic at £2.99 for delivery within 5 days but they needed the product sooner and for next day delivery the price was £9.99, then you only need to refund them your lowest level of delivery i.e. the £2.99.
Deliver within 30 Days
Speaking of delivery, all goods must be delivered within 30 days unless the customer agrees otherwise. This “agreement otherwise” needs to be stated in your terms in business. So if you know that you need more than 30 days to deliver your products, then you must specify that in your terms in business. Now if the goods aren’t delivered within 30 days and that’s what you provided for in your terms in business, and the delivery within that time is “essential”, meaning either that (a) the customer made it known to you that deliver within that time period was essential or (b) according to all the circumstances in that case it was apparent that delivery within that time was essential, then the customer may treat that contract as at an end and may ask for a refund and you must without undue delay reimburse all payments to that customer.
What to do now?
So what should you do now? Well you have 3 options, you can either watch the next 2 videos or if you know you need to take action right now, what you can do is buy the template terms that I’m making available at the price of £97 or if you prefer bespoke terms of business, then do get in touch with me and I can talk you through how I can help you with bespoke terms and my prices for those start at £697 plus VAT.
Let Suzanne Help You
So if you want to do know more of how I can help you, and if want to get hold of one of the template terms of business or to contact me in relation to drafting bespoke terms of business, then go to selling online and you can see your options in more detail.
