Welcome to the Consumer Contracts
Regulations Training Number 2
Regulations Training Number 2
Welcome to this training of the new Consumer Contracts Regulations 2013 that came into effect on the 13th of June 2014. Hopefully, you've watched video 1 that was about The Right to Cancel. Today we’re going to discuss the 2nd most important thing, namely Information Requirements. We're required to provide a fair bit of information under the existing law (i.e. before the new Consumer Contracts Regulations came into force) but there are even more information requirements now. The information requirements include informing the customer of:
- the main characteristics of goods or services
- the identity of the trader
- the total price payable
You should have already have 15 or so areas of information requirements contained in your existing terms of business (pre the Consumer Contracts Regulations). However the new regulations have added another 13 requirements that you must provide to the customer. So what are these additional information requirements?
Suzanne Dibble Introduction
So before we get into that, let me just remind you of who I am. My name is Suzanne Dibble, and I’m a multi-award winning business law expert. I have worked with hundreds of small business owners to make sure that their businesses are properly protected. I’m a recognised expert in this area and regularly have organisations, such as Barclays and Wiley, approach me to write books and be a guest expert on their small business site to keep small businesses up to date with things just like this – with new changes in the law that are really going to impact on their business.
The New Information Requirements
The new information requirements (which must be provided before the customer enters into the contract) have a number of different levels as to how you need to provide the information. Some of the information you need to provide in a “clear and comprehensible manner”, then there is a further set of information that you need to provide in a “clear and prominent manner directly before the order is placed”, and then finally, there’s some other information that you need to provide “clearly and legibly at the latest at the beginning of the ordering process”. So it’s quite complicated as to what information you need to provide and how you actually need to provide it.
First area of the new CCR Information Requirements
The information that you have to provide “in a clear and comprehensible manner” is actually 24 pieces of information. You have to provide this information to your customers before they enter into the contract and that includes things like your place of business. Previously, you could have just put in your geographical address which could have been your registered office, but now you have to put in your actual place of business. The guidance we’ve received from the European Commission says that the place of business is the place where the essential decisions concerning the traders general management are taken and where the functions of its central administration are carried out.
So if you work from home then it is clear that your home is where the essential decisions are taken and where functions of central administration are carried out. This means that you are going to have to disclose your home address before the customer places the contract.
You’re also going to have to add in things like your Complaint Handling Policy and the existence of Relevance Codes of Conduct. From the the guidance we have, it would seem that “in a clear and comprehensible manner” means that it’s okay to have a link to your terms of business in a place where your customer can access it before they finally press the “order now button” and actually enter into the contract.
If you want to discover what the entire 24 bits of information that you need to provide in your terms of business are, then you can look at the legislation – just go to schedule 2 of the Regulations and all of the information you need to provide is set out.
However that is the difficult way of doing it – to discover the easy way of doing it, keep reading on and I will tell you a much much easier way of making sure you’re providing all of the required information to your customers.
If you don’t make this information available relating to delivery charges, ongoing monthly costs or the cost of returning the goods, then the customer does not have to pay for those charges.
Digital Content
We touched on digital content in the last video and there are information requirements that are specific to the digital content. That includes functionality and and technical protection measures and compatibility of the digital content. You also need to include the express consent of the consumer to you providing the services before the end of the cancellation period and also their acknowledgement of the fact that they have lost the right to cancel.
The European Commission guidance on digital content says that the following information should be given in relation to functionality. It should include
(1) The language of the content (and specify if that is a different language from any instructions included in the content)
(2) The method of providing the content, for example streaming online or downloading
(3) Specification of whether access to the download is for a specified time, and
(4) For video or audio files, it should show the playing duration of the content. It should also include the downloadable files’ file type and size of the file and you should also make clear whether there is a commitment or not by you or any third party to maintain or update the product.
Then finally you should also include any limitations to the use of a product, so that might include limits to the times or the duration that a digital product can be watched read or used, limits to the reuse of content for purposes such as private copies or restrictions based on the location of the consumer’s device and whether any functionalities are conditional on additional purchases such as paid content, club membership or additional hardware or software.
If you’re providing the digital content to consumers, (and remember this is all just about consumers not sales to businesses), you might want to find the commission guidance on this and look at annex 1 which provides a model for the information you need to give about digital products. Again, that’s the hard way of doing things, if you want to do things the easy way then read on and I’ll be telling you the very easy way that you can comply with all of it. And remember, if you don’t make the information available about digital content that you need to, then the customer does not have to pay and that could lead to situation that the customer has downloaded and consumed the digital content but then cancels and asks for a refund and legally they would be entitled to that refund.
2nd Level of Information Requirement
Now the 2nd level of information that you need to provide is that you must make the customer aware in a clear and prominent manner and directly before the customer places the order of certain information. So this is a higher level than the last information that we were talking about where that information can be provided in the terms of business. And this information that you need to provide includes:
(1) the main characteristics of the goods or services,
(2) the total price charged,
(3) the total delivery charges,
(4) monthly costs if there are any,
(5) the duration of the contract, and
(6) the minimum duration of the contract if it’s of an indefinite period.
The European Commission guidance on when this actual information is needed to be provided is at the moment at which the customer is asked to verify the order and where they can actually see and read before placing the order and without having to navigate away from the page. So that would suggest that this information cannot be contained in a link to terms of business; this information has to be available on the actual checkout page itself before the customer press the final pay now button and the contract is concluded.
So this means in all likelihood that you will need to change your checkout page in order to comply. Now that might mean, if you are using a template website, that you have to go back to the provider of the website template and ask them to change that for you. If it’s your own website, and if you’re not able make that type of change to your website yourself, it will involve you going to a website developer and asking them to do it for you. But either way you need to make sure that on the final checkout page before the customer presses ‘pay now' button, that those 6 key points are provided on that page.
3rd Level of Information Requirement
Now the next level of information which is an even higher one is that it has to be provided clearly and legibly and at the latest at the beginning of the ordering process. The 2 information requirements that this level of information requires are:
(1) whether any delivery restrictions apply and
(2) which means of payment are accepted. So this needs to be provided at the beginning of the ordering process.
There isn’t any specific guidance on this point but arguably that might be even before the customer clicks on a product to add it to the basket. So for each product in the product description, you need to included whether any delivery restrictions apply to that product and which means of payment are accepted.
Change Order Now Button
You will also need to change your ‘order now' button or whatever you may call it, because it needs to be a clear and an unambiguous formulation indicating that placing the order entails an obligation to pay. So if you have a button that says ‘register', ‘confirm' or anything like that, then you will need to change that to either use the term ‘pay now', ‘buy now' or ‘confirm purchase'. This also applies if you’re offering free trial, even if there is no immediate payment, where you still need to have a button that says pay now and that makes the payment obligation clear.
If you don’t change your button to “pay now” or something else that indicates the obligation to pay, the consumer is not bound by the order.
Contracts made by tweets and texts
If the contract is made by a distance communication that is limited in space or time for example a tweet or a text, then you must provide certain information within that tweet or text. Now it’s probably not that likely that contract is actually concluded through a tweet or a text, as most often than not you’ll be directing people to a website through a tweet or a text, but if a contract is actually concluded through that tweet or text then you do have to provide the following information within those characters. The information you have to provide are:
(1) the main characteristic of the products or services,
(2) your identity, and
(3) the total price or if there isn’t a total finite price, how the price is calculated.
You’ll also need to include any additional delivery charges, the cost where the contract is of an indeterminate duration or subscription, and also information about the right to cancel. Then you will have to provide a link to the rest of the information that you need to provide i.e. a link to your terms of business that then provides the rest of the information (the 24 information points that I mentioned earlier).
Contracts made by telephone
If you have a telephone call to conclude a distance contract, then at the beginning of the call you you must make clear your identity, or if you’re phoning on behalf for somebody else, their identity, and the commercial purpose of the call. Then once you’ve provided all of that information pre contract, you must provide confirmation of all of that information in a durable medium.
A durable medium should enable the consumer to store the information for as long as it is necessary for him to protect his interest stemming from his relationship with you. The easiest thing for you to do is for you to send on your confirmation email a PDF of your terms of business which will contain all of these pieces of information. Note you can’t just send a link to your existing terms of business because they might change; it needs to be a snapshot record of what that particular customer has agreed to and what information you’ve provided them within your terms of business. So the best way to do it, is to have a PDF of the terms of business that’s sent to the consumer following the placing of the order. The confirmation needs to be provided within a reasonable time of the order being made and not later than the time of delivery or performance of the services.
If You Don’t Comply
If you don’t comply with the law in this area, there are certain adverse consequences. For example, if you don’t provide customers information about delivery charges, then the customer doesn’t have to pay for those delivery charges. If you don’t provide them with a ‘pay now' button, making clear the obligation to pay, then the customer is not bound by that contract. In addition to those impacts on your business, if you don’t comply with the law and you can be on the receiving end of private action for breach of contract by your customer and perhaps more importantly, you can also be in the receiving end of an investigation or enforcement by an enforcement authority and that is obviously something that no small business owner wants.
What to do now?
So what can you do now?
You have 3 options:
1. As you know this is a three part series of videos, so you could just watch the next video, and try to figure out how to implement this in your business. However, as you have seen, the legislation is complicated and this is something I wouldn't recommend – far better for you to bring in the experts and spend your time on things that are within your area of genius, so that you can relax and know that everything is taken care of properly.
2. You could buy the template terms I’m making available in this video series. They cost just £97 and can be used over and over again in your business and you will be confident in knowing that your business is properly protected. To buy the template, just click here and you’ll be able to buy the template from that page.
3. If you’re concerned that your business is 100% protected, then get in touch with me to find out more about me drafting about bespoke terms. To get a quote for bespoke terms, contact me and we’ll be in touch to discuss that further. To give you an idea of my fees, my fees for drafting bespoke terms start at £895 plus VA and this work will be carried out through the regulated entity that I am contracted to.
That’s all on information requirements. The next video is all about additional charges and the remaining bits of the new regulations so please do watch out for that.
I hope that this video will be useful for you and if you have any questions about any of the information I’ve provided you with or how you can get hold of the template, then please do get in touch with me. Until the next video, all the very best.
