Businesses which sell to consumers are trying to work out how they can continue to trade and keep a distance from the public. It is not an easy task; the staff need to be safe (and feel safe) and footfall is now non-existent. Telephone and website ordering, with the product then either delivered or offered for collection, offer a solution. If this is new to your business, what do you need to consider to comply with consumer protection laws?
Also, thinking long term, is this something your business will have to consider just to stay competitive? Will customers’ way of buying goods be changed by being forced to use new ways of buying over the lockdown period? Nobody can be absolutely certain of the answer but there has been a general drift towards internet shopping and starting more people on that path may accelerate the change.
This article is meant as an overview of some differences in consumer protections you will encounter when moving to more remote trading, and how to avoid falling foul, to help your business thrive in the new environment.
The reason it needs to be considered is that the law treats consumer contracts differently depending on whether they are formed on-premises, off-premises or at a distance. There are criteria to identify the type of contract, so first we will identify the contract and then set out, for the two main differences, the considerations for compliance. Finally, what if you do not comply?
On-premises contracts are contracts formed with the consumer coming to the business’s place of business and forming the contract; the ‘traditional’ way of going to the shop, paying and walking out with your goods.
Off-premises contracts are contracts made between two people, a person at the business and the consumer, but not at the business premises. This covers the ‘doorstep’ contracts, where there is a visit to the customer’s home, or meetings at a neutral venue or on an excursion organised by you (think golf days, etc); as unlikely now as a customer coming to you.
A distance contract is one where there you are not in the physical presence of the customer as the contract is formed. The covers contracts formed over the internet, the telephone, by e-mail or mail-order (for a retro feel). It needs to be an “organised distance sales or service provision scheme”, there is no definition given. A website which takes orders will be covered, as will sending terms by e-mail for the customer to return.
One-off exceptional transactions are generally considered to not be distance contracts, but that thinking is being put to the test now. If a customer calls asking for goods to be posted because they cannot come to the shop once and the shop does not normally take orders that way, that is ‘one-off’. Now that all customers cannot come to the shop and the shop has chosen to stay open, it is probably no-longer a ‘one-off’.
It is worth noting that these only apply when the contract becomes binding. If you allow the customer to order something online or by phone but they have the right to not actually buy it, that may not be a contract. If, for example, the customer can order plant pots, but decide if they want to buy when they actually see them, the contract is formed when they agree to buy, and you agree to sell. If you take the plant pots to their house, that is probably an off-premises contract, and if they come to your business premises to collect, that probably an on-premises contract.
When you have identified what type of contract you are forming, you can look at the requirements. There are excluded contracts and partly excluded contracts. If your contract is excluded, you will probably know because they are sector specific. An important partial excluded contract is where the payment from the consumer is less than £42.00. If it is not excluded, you must consider:
Information
This is the first major difference with dealing face-to-face and dealing at a distance or at a non-business premises. The purpose of this is to try to put the consumer in the position in which they would have been had they gone to the trader’s premises; knowing where to reach them, where to enforce their consumer rights and where to take faulty goods, for example.
You must provide certain information to the consumer before the contract is concluded. The information you must provide is the same for off-premises and distance contracts and is broadly similar to that which you will be providing for a traditional on-premises contract. Consider, however, that the consumer will not have the label on the physical product before buying, so you may need to find a way to give them this information. Similarly, the seller’s address is something you can imply because the customer arrived in the shop, not so when dealing at a distance.
Information must be clear, comprehensible and in a manner appropriate to the transaction.
The full list of information you need to provide is in Schedule 2 of The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. If you are charging for the distance service then those costs need to be in (specifically included, if the customer will have to pay for the postage to return the goods) and you need to state whether or not there is a right to cancel (see below).
After the contract is concluded, you must provide confirmation of the contract. In a suitable medium and within a reasonable amount of time. The information must be able to be stored by the customer, so e-mail, paper or a downloadable pdf would be suitable, but on a website where the information could be altered or removed later would not be.
If you start taking online orders, there are further rules with which you must comply. These are extremely important, because without these the consumer is not bound by the contract. You need to ensure that the customer understands that the order means they have an obligation to pay and if this is done by clicking a button, that button must be very clearly marked to show that clicking it means an obligation to pay. If your button is labelled “Buy Now” or “Commit to Buy” or similar, it is likely to be compliant, because they are both short and certain buying statements. If it says, “Go Ahead”, “Proceed” or “Move to Next Stage of Buying”, then it is probably not acceptable, because all could be reasonably interpreted to not mean a final commitment.
Right to cancel
The second major difference with selling at a distance is the right to cancel. This is in addition to the right to return faulty items or goods of unsatisfactory quality.
Off premises and distance contracts must offer the customer a right to cancel within 14-days of the customer receiving the goods, commonly called the cooling-off period. There are exemptions from this, and the right can be lost. Contracts for bespoke or personalised items are exempt, as are those for perishable goods (similarly, newspapers, magazines and periodicals are exempt) because they do not fit with the ability to cancel because they are short term or not something you would inspect in a shop first if bought on premises.
Losing the right to cancel follows the same logic: goods sealed for hygiene reasons cannot be returned after they have been unsealed, sealed video or audio products cannot be opened and returned and goods which have been mixed to an extent that they cannot now be separated (you cannot return a cake and ask for a refund on the flour, eggs and sugar you used to make it).
If your contract has a right to cancel, you have to tell the consumer, and tell them how to cancel. If they have to pay to return the goods, you have to tell them, and you have to tell them what would cause them to lose the right to cancel.
Should a contract be cancelled by the consumer the goods will need to be returned to you. If you offered to collect them or it you delivered them and they are too big to be returned by post, you will have to collect them. You must, within 14-days of receipt (or proof of sending, if lost), refund the customer everything they paid to you, including delivery charges (but not additional delivery charges where the customer opted for an expedited or premium service).
Consequences
If you do not comply the general position is that you cannot rely on the contract or that right. For example, if you fail to make it clear that clicking the online button means the customer is committed to buy, you cannot enforce that contract. If you do not tell the customer they have to pay the return postage costs, you cannot make them pay the return postage costs.
Similarly, if you do not tell the customer about the right to cancel, the period in which they can cancel is extended.
Failure to tell the customer of their right to cancel, the time limit and conditions, and that they will have to bear the cost of returning the goods, in off-premises contracts is a criminal offence. It is well worth the time to get this right.
This is just a snapshot of the main consumer rights differences between trading with consumers at your business premises and doing so more remotely. If you are thinking that this is a good opportunity for your business to move into online trading there are a number of other things you will need to consider, not least the Information Society Services (Electronic Commerce (EC Directive) Regulations 2002, SI 2002/2013). It may seem daunting to have to get so much in place and to have to comply with a whole new set of rules, but there is help available and the rewards almost certainly justify it.
If you need to speak to someone about any of the issues above, please contact David Artley at dartley@jacksons-law.com or Tony Wentworth at twentworth@jacksons-law.com or call 01642 356500.
David Artley, Solicitor, Corporate and Commercial
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