The New Consumer Rights Directive

Dear reader

My colleague Sherif Malak has been busy ploughing his way through the new Consumer Rights Directive, which merges 4 existing EU consumer directives into one set of rules (including the Distance Selling Directive ), was final adopted by Europe’s Council of Ministers earlier this month. 

Bottom line: this Directive takes some important  steps to harmonising consumer protection for online purchases. It should - at least in theory - make it easier for e-tailers trading cross border to have a common, pan European set of rules in certain key areas of consumer protection such as cooling periods and the provision of information online to consumers. Whilst member states have two years to implement it, e-traders would be well advised to be aware now of what's coming down the compliance track.

The Directive, infamous for extending the cooling-off period for consumers by generally allowing them with 14 days to withdraw from purchases from distance sellers, further updates and upgrades a number of provisions in the previous directives, as well as providing new rules to “ensure a high level of consumer protection and establishing the real retail internal market, making it easier and less costly for traders to sell cross border and providing consumers with a larger choice and competitive prices.”

Most significantly it seeks to do this by harmonising consumer law not only by providing a minimum level of protection for consumers but, perhaps more unusually, by going further and, subject to a few specific areas, prohibiting Member States from introducing or maintaining more stringent protections.  Of equal note is its bringing of consumer rights into the 21^st century, by targeting e-commerce (including m-commerce) by express reference to online and digital services and content.

So what’s new protections will be available for consumers?  Some main ones are:

• An extended 14 day cooling-off period to withdraw from purchases made at a distance if consumers change their mind (and which is extended to a year if they are not duly informed of this right).
• A 14 day period by which traders must provide a refund (including original delivery costs) following a consumer’s withdrawal.
• The banning of pre-ticked boxes for “extra services” and of charging consumers for credit card fees and hotlines in excess of the actual cost to the trader (a certain airline should take particular note!)
• Greater clarify with respect to information provided for digital content including hardware and software compatibility requirements and details of technological protection methods.
• A right to withdraw from purchases of digital content before it is actually downloaded (as opposed to when it is made available for download e.g. via a link in an email).

Together with the recent announcements from 5 of the “big 6” energy companies that they will end cold calling door-stop selling practices and the extension of the Advertising Standard Authority’s remit earlier this year in March to cover the digital non-paid for space, many might 2011 looks like it is shaping up to be the “year of the consumer”.

However, before despairing at the potential additional costs, traders would do well to keep the following points in mind:

• Traders, especially e-tailers, will now have a reduced legal compliance burden when targeting more than one EU country: the Directive creates a level playing field with respect to the requirements of consumer law in each Member State.
• The Directive finally acknowledges that a trader may withhold a refund until the cancelled goods have been returned (or failing that, proof from the consumer that they have been sent back).
• A model withdrawal form and cancellation instructions can be used by traders to make compliance with the rules easier.
• The extension to the cooling off period is, in effect, 5 calendar days, and not double!  This is because  previous cancellation period was 7 working days i.e. a minimum of 9 calendar days (possibly more during periods with public holidays).
• Customers will now be under a time-limited statutory duty to return cancelled goods within 14 days.
• If a consumer has opted for anything other than the least expensive delivery option, the trader only need refund the latter in the case of cancellation.
• The Directive explicitly acknowledges that consumers will be liable for any diminished value of goods resulting from their handling (other than handing required for inspection and testing).
• The initially proposed requirement for traders to pay for return postage for cancelled purchases over 40 euros has been scrapped.
• So too has the requirement that traders must deliver purchases to consumers in any Member State (which together with the ECJ’s recent rulings in the FAPL cases, could struck another blow for territoriality).

So, all in all, there appears to be enough advantages for traders in ushering the new regime of consumer rights that will soon be upon us!

Have a good week

Laurie Kaye / Sherif Malak

 

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