Implementation of Consumer Rights Directive

17-07-2014


From June 2014 changes to the law will impact traders who sell goods and provide services to consumers, including in an online context.

Statutory Instrument No. 484 of 2013 European Union (Consumer Information, Cancellation and Other Rights) Regulations 2013 (the “Regulations”) implements Directive 2011/83/EU on consumer rights (the “Directive”) into Irish law. The Directive consolidates existing European consumer law, including the Distance Selling Directive 97/7/EC and the Doorstep Selling Directive 85/577/EEC.

While certain categories of contracts are excluded from the scope of the Regulations, there is an emphasis in the Regulations on off-premises, distance selling and contracts concluded by electronic means.  The Regulations are expected to significantly impact online traders.

KEY TERMS

Consumer

a human being not acting for the purposes of their business, trade or profession.

Digital Content

data produced and supplied in digital form.

Distance Contract

contract concluded between a trader and consumer under an organised distance sales or service provision scheme, using one or more means of distance communication.

Goods

tangible items, including gas, water and electricity for sale in a limited volume.

Off Premises Contract

contracts concluded, (or for which an offer was made by the consumer) away from the trader’s premises, such as in the consumer’s home, workplace or on an excursion organised by the trader.

Services

supply of services to a consumer excluding supply of digital content not on a tangible medium; gas, water and electricity not for sale in a limited volume and district heating.

Trader

a person or corporate entity acting in connection with their business, trade or profession.

 CONSUMER INFORMATION

The Regulations stipulate that contracts will not be binding on consumers unless the content and display of information provided to the consumer meets certain criteria.

On-premises contracts

Consumers will not be bound by a contract unless information on the goods, the provider, pricing, delivery, payment, complaints handling, after-sales services, duration of contract and functionality or interoperability (in the case of digital products) is provided in a clear and comprehensible manner.

Off-premises contracts

The information which is required to be provided to consumers in order for off-premises contracts to be valid is similar to the information required for on-premises contracts, but must include details of the existence of a right to cancellation (discussed below) and how it can be exercised.

This information must be provided on paper or another ‘durable’ medium (including email).  Traders must then provide a copy of the signed contract or confirmation of same to the consumer.

It should be noted that off-premises contracts with a value of less than €50 are exempt from the Regulations.  Off-premises contracts for repair or maintenance must meet a threshold of €200 to be caught by the Regulations.

Distance contracts

The information required for distance contracts to be valid includes the same information as off-premises contracts.  Distance contracts concluded through a website will not be valid unless it is indicated clearly and legibly at the beginning of the ordering process whether any delivery restrictions apply and the means of payment accepted.

Specific obligations apply when there contracts are concluded by way of a distance communication such that there is limited time available to the trader to display the required information to the consumer.  The initial display for concluding the contract may contain, at a minimum, the main characteristics of the goods; the identity of the trader; the total price; the existence of the right to cancel and information regarding auto-renewal of the contract and conditions for termination (if applicable).  However the trader must then ensure that the full suite of information is still provided to the consumer ‘in an appropriate way’ before the consumer is bound by the contract.

Consumers must always be made aware in a clear and prominent manner if and when they are under an obligation to pay.  If payment entails clicking a button, unambiguous wording such as ‘order with obligation to pay’ should be included.  If the contract is intended to ‘auto-renew’, this information, along with the conditions for termination must also be provided before any obligation to pay can be activated.  Following the conclusion of a distance contract, confirmation should then be made available to the consumer within a reasonable time and on a durable medium.

‘COOLING-OFF PERIOD’

14 day cancellation right

The most notable change to the existing legislation on off-premises and distance contracts is the increase from 7 to 14 days in the duration of the ‘cooling-off’ period in which a customer can unilaterally decide to withdraw from any obligations under the relevant contract[1].  If information on the right to cancel the contract is not included as required under the Regulations then the cancellation period will be extended such that it will expire 12 months following the expiration of the 14-day period which would have been applicable had the trader been compliant with the Regulations in the first instance.

Return and reimbursement

If the right to cancel the contract is exercised, the trader must reimburse all payments, including delivery charges, received from the customer.  If the trader does not collect returned goods from a consumer, the trader may withhold such reimbursement provided that reimbursement occurs within 14 days of receipt of the goods.  The direct costs of the return will be borne by the consumer unless the trader has agreed to bear those costs.  If the trader has not agreed to bear return costs and the item cannot, due to its nature, be returned by post, an estimate of the return costs should be included in the information provided to the consumer relating to cancellation and return.

Digital downloads and services already completed

In the case of the supply of digital content, a consumer who exercises the right to cancel the contract is not liable for the cost of that supply, provided that the user has not already expressly consented to the delivery/download of the content before the expiry of the cancellation period in the knowledge that the cancellation right would be lost by consenting to such download.  Similarly, the cooling-off period will not apply to services which have been performed with the express prior consent of the consumer in the knowledge that consent to the performance of the service would deprive the consumer of the right to cancel.

While contravention of this Regulation constitutes the commission of an offence, in the case of a dispute, the burden of proving that the cancellation right was exercised in compliance with the Regulations falls on the consumer.

FEES FOR MEANS OF PAYMENT

The Regulations prevent the charging of fees for the use of a particular means of payment, which exceed the cost borne by the provider for the use of such means of payment.  This provision is targeted at situations where higher payment mechanisms are used to drive down the headline price for the product or service.   In the event of a dispute the burden of proving compliance with the Regulations lies with the trader.  Where such excessive fees are found to have been charged, the customer is entitled to a refund of the excess amount.  It has been clarified with the European Commission that price rebates for payment by direct debit are not covered by this Regulation.

PROHIBITION OF ‘PRE-TICKED CONSENT’ FOR ADDITIONAL PAYMENTS

Regulation 26 is aimed at preventing hidden extra charges on consumers by obtaining consent to additional charges by way of default or opt-out provisions, such as, for example, pre-ticked boxes.  In the event of a dispute the burden of proving compliance with the Regulations is on the trader.

ENFORCEMENT AND PENALTIES

If found guilty of an offence a person will be liable to a fine, between €4,000 and €5,000, or up to 12 months’ imprisonment, or both.  Many of the Regulations are to be enforced by the National Consumer Agency.

CONCLUSION

In order to prepare for the Regulation taking effect and to avoid incurring penalties or attracting enforcement subject to publication by the National Consumer Agency, business operating via distance communications or via online sales channels should review their ordering processes (with a specific focus on communications, contractual terms and conditions and returns policies). It is important in particular to note:

  • the application of the Regulations to digital products;
  • the necessity to provide consumers with the correct information in a timely fashion;
  • the extent of the right of withdrawal (and the implications for not permitting this to be exercised in accordance with the Regulations);
  • the prohibition on additional payments displayed as default options; and
  • the treatment of payment surcharges that cannot be directly attributed to the cost of providing that payment method.

 


[1] The ‘cooling-off period’ provision does not apply to contracts for the following goods and services: goods whose price depends on fluctuations in financial markets; non-prefabricated or personalised goods made on the specifications of the consumer; goods which will deteriorate rapidly; goods which are by their nature inseparably mixed with other items; the supply of alcoholic beverages whose price has been agreed in advance; repair or maintenance specifically requested by the consumer; sealed health or hygienic goods; public auction contracts; passenger transport services; non-residential accommodation, goods transport, car rental, catering or leisure with a specified date or period of performance.

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