Online Trading – What’s New?

Selling online is hardly a new phenomenon. What has taken a number of businesses by surprise however is the sharp level of its growth in recent years.

Ofcom has recently stated that UK adults now spend more time using technology devices than they do sleeping. In 2008, 53% of adults bought online, today some 74%. The Centre for Retail Research’s finding is that e-commerce is the fastest growing retail market in Europe, with sales in the UK, Germany, France, Sweden, The Netherlands, Italy, Poland and Spain expected to reach a combined total of £111.2bn in 2014, and online sales in the U.S. to reach $306bn.

It is hardly surprising then, with more customers than ever, and more affluent consumers shopping online, that regulators are increasingly focused on the need to ensure consumer laws keep pace with this trend, maintaining consumer confidence and efficient markets.

As a result of such increased focus then, one key change in recent months has been the introduction of the Consumer Contracts Regulations 2013, which have replaced the Distance Selling Regulations.

For some time now, traders have been used to the cancellation rights afforded to consumers under “distance selling contracts.” The new Regulations however have introduced some key changes to these basic rights, which all traders, regardless of size, need to be aware of.

Key Changes

  • The cancellation period (often known as the “cooling off” period as it enables consumers to change their minds without reason) has been extended from 7 to 14 days. Traders must provide a model cancellation form for this purpose and the refund must cover the total price, including the outbound delivery charge.
  • Goods must be returned within 14 days of cancellation, and no refund has to be given until this happens. Unless the trader has offered to pay, the trader must make clear in advance that the consumer must pay the cost of return.
  • Cancellation rights are extended to cover digital content/downloads, but only if the consumer has not started the download (or expressly waived the right to cancel).
  • Traders must provide added information in advance, including additional contract information and confirm if the right to cancel is excluded. Whilst the right to cancel is wide ranging, it does not extend to all online sales. The exceptions have now been extended to include e.g. contracts under £42, supply of alcohol, sale of sealed goods where return is not suitable due to health or hygiene reasons, supply of accommodation, catering and certain leisure activities. If this information is not supplied, or not supplied in the manner required, cancellation rights can be extended by up to one year.
  • Traders cannot charge for items pre-selected as part of the purchase process, rather than the customer actively adding it to their basket (e.g. such as an extended warranty).
  • Goods must be delivered within an agreed timeframe (at the latest, within 30 days).
  • The consumer cannot be required to use a premium rate telephone line for post-sales enquiries.
  • Traders must make it clear when payment is triggered (e.g. by using a button that indicates “pay now”).

Next Steps

The Regulations introduce important changes for online traders. To avoid contract claims, complaints, regulatory investigations and potential negative publicity, website terms should be reviewed for compliance.

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.