Distance selling regulations now in force

In 1998, the European Commission estimated that by the year 2000, 10% of all commercial transactions would be conducted by way of the Internet. It is now estimated that by 2004, most households will have at least two Internet-enabled devices. The Government is set on a course to achieve its stated aim that the UK should be the best environment for electronic trading by 2002, and alongside a commitment made by the Prime Minister in March of this year to ensure that everyone who wants it will have access to the Internet by 2005, is introducing a raft of measures to give the consumer confidence in Internet trading.1

The Consumer Protection (Distance Selling) Regulations 2000, which implement EU Directive 97/7 on The Protection of Consumers in Respect of Distance Contracts, and which were scheduled to come into effect in June, 2000 have now been passed, and came into force on 31st October, 2000.2

The Regulations apply only to dealings under an organised scheme with a ‘natural’ individual, so all inter business (B2B) contracts are excluded, as are dealings between individuals, and one-off transactions. There are several categories of contract that are specifically excluded - contracts for the sale of land (including building contracts) with a qualification in respect of certain rental agreements; contracts relating to financial services, (which are the subject of separate Regulations); and deals concluded at an auction. Some anomalies have also been identified, and the list of exceptions also includes transactions ‘concluded by means of an automated vending machine or automated commercial premises’, as well as use of a public pay phone. There is also a limitation of the application of the Regulations to contracts for the supply of groceries by regular delivery and contracts for the provision of accommodation, transport, catering or leisure services.

Suppliers will have to provide the consumer with practical details, including details of their identity, a meaningful description and the price of the goods or services, and the arrangements for payment, and delivery or performance, as well as delivery costs. If the contract creates a long-term arrangement for the supply of goods or the performance of a service, the minimum period has to be disclosed. The Regulations also give the consumer a right to cancel during a ‘cooling off period’, and this right has to be specifically mentioned in the contract.

The consumer must be informed if the supplier proposes to provide substitute goods or services in the event of those ordered being unavailable, and that in these circumstances, he will be kept clear of the cost of returning unwanted substitute goods to the supplier.

All of this information has to be provided in good time before the conclusion of the contract, meaning in effect, that it has to be included in websites, in catalogues and on order forms. The supplier’s commercial purpose in offering the goods or services also has to be made clear, and this specifically includes telephone sales, where the trader’s intention has to be disclosed at the beginning of the conversation. (No more claims of “I’m not trying to sell you anything”)

Thereafter, the Regulations require the supplier to confirm this information in a durable form, (which can be by e-mail), and to give further details including arrangements for the return of goods, a geographical address for complaints, and information on the conditions and procedures relating to the exercise of the right to cancel the contract. Consumers are, of course, already familiar with the concept of a ‘cooling off period’, and this aims to address most of their concerns.

Where the supplier has complied with the Regulations, the cooling-off period is seven working days from the day after the date of the contract, in the case of services, or from the day after the date of delivery of the goods, but if the supplier has fallen short of what is required, the cooling-off period is extended by three months. There is, however, a provision for late notification within the three month period.

Certain contracts are excluded from the right to cancel unless the parties agree otherwise, such as contracts for perishable goods or for the supply of goods made to the consumer’s specifications. However, where there is a right to withdraw, the consumer must be reimbursed within thirty days.

Recovery of the goods is an issue of note for suppliers. Unless the contract makes specific provision otherwise, on cancellation, the duty imposed on the consumer by the Regulations is to take reasonable care of the goods, not part with them for twenty-one days, and also to allow the supplier access to uplift them. The Regulations themselves do not require the consumer to return goods but if he is required to do this under the contract and fails to do so, there is a provision that the consumer must pay the supplier’s recovery costs.

Originally, the measures in the draft Regulations proposed fairly draconian measures against suppliers. Contracts falling short of the requirements were to be unenforceable against the consumer, and the onus of proving compliance was in most instances stated as lying with the supplier. Further, the draft Regulations provided for the creation of new criminal offences for failure to comply with certain requirements. At the end of the day, however, the DTI considered that the sanction of the extended cancellation period for failure to provide information and the availability of an interdict procedure to the enforcement authorities would suffice to ensure compliance. Complaints about breaches can be made to the OFT (and to weights and measures authorities) who can, if considered appropriate, apply for interdict (or interim interdict) against a supplier acting in breach of the Regulations. Power is also given to the enforcement authorities to take an undertaking from a supplier in relation to future activities, and the OFT can publicise this, and any court order.

The DTI did indicate, however, in a press release given at the time of the passing of the Regulations, that it is considering whether it would also be appropriate for it to give consumers the right to claim compensation for any loss that they might suffer as a result of failure of a supplier to comply, and that it would keep the need for introducing criminal sanctions under review. Although thus stopping considerably short of what had been proposed in the draft Regulations, these provisions do nevertheless create several extra hoops for the supplier to jump through. The DTI is in the process of issuing information to both suppliers and consumers and no doubt on-the-ball suppliers will soon seek advice on best practice. Consumers too will require guidance on their new rights.

Marjory MacDonald is a member of the Society’s Electronic Commerce Committee