The Office of Fair Trading (OFT) has recently reported that, following rapid growth in recent years, the UK internet shopping market is now worth over £21.4bn and in 2006 over 20 million people reportedly shopped online. Unfortunately, despite these very healthy signs, the OFT has also warned that many businesses are unaware of their obligations under the Consumer Protection (Distance Selling) Regulations 2000, SI 2000/2334 (the “Regulations”). Against this background, this note provides a reminder of some of the key provisions of the Regulations.
Other than in limited excepted cases (e.g. sale of land and financial services), the Regulations will apply to any business that concludes distance contracts for goods or services where the supplier makes exclusive use of at least one means of distance communication (telephone, internet, mail) up to the point where the contract is concluded.
The first thing businesses should note is that any information that is provided to customers must be provided in a clear and comprehensible manner that is appropriate to the means of distance communication used. Businesses must also pay due regard to the principles of good faith in commercial transactions and to the protection of those who are unable to give their consent, such as minors.
Businesses which conclude distance contracts with their consumer customers will likely be under an obligation to provide certain mandatory information to those customers. This would include, where appropriate:
- Their identity and address (if the contract requires payment in advance);
- A description of the main characteristics of the goods or services;
- The price of the goods or services, including all taxes;
- Any delivery costs;
- Any payment, delivery or performance arrangements;
- The existence of the customer’s right to cancel (see below);
- The cost of using the relevant means of distance communication where this is calculated other than at the basic rate (e.g. for premium rate telephone services);
- The period for which the offer or price remains valid; and
- The minimum duration of the contract (in the case of contracts for the supply of goods or services to be performed permanently or recurrently).
Furthermore, where ordered goods are unavailable and the business intends to provide its customer with goods or services of equivalent quality and price, the customer should be informed of this. The customer should also be informed that the cost of returning any such substituted goods (in the event of cancellation by the customer) will be met by the business. In such circumstances, it is not possible for businesses to contract out of bearing these costs.
In contracts where a businesses supplies pre-contract information to its customers which cannot be stored or reproduced, it will usually need to confirm this information in writing or in another durable medium which the customers can access. In the context of internet selling, this requirement can sometimes be met by sending customers an email, which they can print off or store on their computer.
Unless otherwise agreed, businesses must perform distance contract within a period of 30 days beginning on the day after the customer sends his order to them. If a business is unable to perform the contract within that period (or any other agreed period), it must inform and reimburse its customer accordingly.
Cooling Off Period
As mentioned above, in contracts for the supply of goods customers enjoy a cooling off period. If a customer gives a notice of cancellation (to the business or to its nominee) during this period, that notice will operate to cancel the contract.
Where a business has provided its customer with a durable version of the information described above, this cancellation period will be 7 days starting on the day on which the customer receives the goods. However, where a business fails to provide its customer with a durable version of the information set out above, this period is extended to three months starting on the day on which the customer received the goods. Where a business supplies a durable version of the information within 3 months of the date on which the customer receives the goods, the cancellation period is 7 days from the date the customer receives the information.
Customers do not enjoy these cancellation rights in contracts for the supply of:
- Services where, with the customer’s agreement, the contract has begun before the end of the applicable cancellation period and after the business has provided the required information described above;
- Goods or services whose price fluctuates in accordance with financial markets over which the business has no control;
- Customised or personalised goods which cannot be returned or which are liable to deteriorate or expire rapidly;
- Computer software, audio or video recordings after the customer has unsealed the packaging;
- Newspapers, periodicals or magazines; or
- Gaming, betting or lottery services.
Customers may also enjoy rights of cancellation and refund where fraudulent use has been made of their payment card.
The Regulations also protect customers from businesses which attempt to conclude contracts by sending unsolicited goods. In certain circumstances, these businesses will lose their rights to the goods they send and the recipient consumer will be entitled to use, deal or dispose of the goods as if they had been an unconditional gift.