New guidance distance selling regs

20 November 2006

Ian Williamson

The Department of Trade and Industry (DTI) and the Office of Fair Trading (OFT) have jointly issued new guidelines on the Consumer Protection (Distance Selling) Regulations 2000 (the Distance Selling Regulations). However, the new Guidelines do not change the inadequacies in the Distance Selling Regulations perceived by many businesses.

The new Guidelines were issued on 12 September 2006 and follow a joint public consultation by the DTI and OFT in August 2005. The consultation invited those responding to answer a set of questions and also comment on a form of draft guidance. The new Guidelines are very close in substance to the draft guidance accompanying the consultation.

The new Guidelines contain the DTI and OFT’s joint position on the Distance Selling Regulations including the changes which became effective in April 2006 (due to the Consumer Protection (Distance Selling)(Amendment) Regulations 2005). There is also a brief discussion on the Electronic Commerce Regulations and the Privacy and Electronic Communications Regulations. The new Guidelines are a general guide and are stated to be aimed at small and medium businesses and also those who may be required to enforce the Distance Selling Regulations, such as Trading Standards Services.

The new Guidelines replace various previous versions of DTI and OFT guidance on the Distance Selling Regulations. However, certain other sector specific guidance (such as the joint guidance relating to the sale of motor vehicles at a distance) remains valid.

The new Guidelines are simply the DTI and OFT’s interpretation of the law – they do not have the force of law and do not amend the Distance Selling Regulations. However, they are important since the OFT is the main enforcement authority for the Regulations. It is clear from the responses to the consultation that there is scope to interpret the application of the Distance Selling Regulations in practice and that the DTI and OFT’s position is not universally accepted. It is also apparent from the responses to the consultation that some businesses perceive that the Distance Selling Regulations are flawed in places.

For example, certain respondents asserted that the way the Distance Selling Regulations are being enforced in the UK has resulted in significantly increased costs for businesses and that the balance of the interests of consumers and businesses has been lost. Accordingly, they argue, businesses in the UK are operating at a competitive disadvantage to their EU competitors. Other responses highlight the greater rights obtained by a consumer who purchases online when compared to similar sales made on the High Street. These comments largely surround the consumers’ unconditional rights of cancellation and refund and the fact that there is no requirement in the Distance Selling Regulations for consumers to return goods when they exercise their cancellation rights. Of course, the duty on the consumer to return goods following cancellation can be written into the underlying terms and conditions. This, however, is separate to the right for a full refund and therefore the online retailer will be obliged to make the refund even when the goods are not returned. Whilst the DTI and OFT reject the contention that the UK has interpreted the underlying EU Directive more stringently than other jurisdictions, the responses to the consultation do demonstrate apparent discontent in the business community.

The new Guidelines emphasise that they are not a substitute for legal advice and that many of the contentious points will have to be addressed by the courts before a definitive statement of the law can be made. Given the scope for ambiguity in the Distance Selling Regulations, and the perceived dissatisfaction of some businesses, it seems probable that there are a number of cases yet to come.