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ECITA ISE: FCP Chapter 10 The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations (2013)

13 : Section 3 Further Consumer Protection (FCP) Chapter 10 The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations (2013)(CCR)

Thursday, November 6, 2014

Introduction

As part of the internal auditing procedures ECITA members’ websites are checked for compliance with the ISE. We offer a Website Auditing service to non-members, and as with ECITA members, if the site passes the Website Audit, certificates and reports are issued. Please contact us for details.

Website compliance issues discovered on an ECITA member’s site must be resolved within 7 working days of receipt of a Formal Infraction warning. Failure to resolve within the 7 working days will result in a Formal Infraction being lodged in the member’s file. If the infraction is of a legal compliance nature, it will also be passed to the member’s TSO. Formal Infraction warnings are not issued to non-members. Rather, you will be advised on any compliance failures, and given support to make the necessary amendments. In cases of egregious legal compliance failures, irrespective of whether or not the site owner has contacted us for a Website Audit, ECITA may report serious failures to Trading Standards and/or MHRA as appropriate.

What is required of you

•    Websites must be free from medicinal claims;
•    Under 18 sales should be prohibited by reasonable means*;
•    Phone contact number must be displayed;
•    There must be no indefensible claims (about cartridge sizes, longevity, etc.);
•    Out of stock items must not be listed for extended periods;
•    There must be no misappropriation of brands and trademarks; and
•    There must be clear product descriptions.

*Mandated age restrictions are scheduled to come into effect later in 2014, so this advice will be updated when necessary. Restricting purchases to over 18s is good practice anyway, so we would hope that all those who sell electronic cigarette products will want to do so responsibly.

Also, please see ANNEX XVIII AND XXIV for website auditing protocols.

What the law requires

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations (CCR) were introduced in 2013, and replace the Consumer Protection (Distance Selling) Regulations (2000) and the Cancellation of Contracts made in a Consumer’s Home or Place of Work Regulations (Doorstep Selling Regulations) 2008. The CCR came into force on 13th June 2014.

The CCR set out:

o    The information which a trader must give to a consumer before and after making a sale
o    How that information should be given
o    The right for consumers to change their minds when buying at a distance or off-premises (i.e. online sales)
o    Delivery times and passing of risk
o    A prohibition on any additional payments which appear as a default option
o    A prohibition on consumers having to pay more than the basic rate for post-contract customer helplines.

Where goods received are faulty or not fit for purpose or as described, consumers have different rights which are covered by separate legislation. (This refers to the Consumer Rights Bill(1) is making its way through the legislative process at the moment. Subject to Parliamentary approval, the Bill will come into force on 1st October 2015, and will elucidate Core Consumer Rights as follows:

o    Right to clear and honest information before you buy
o    Right to get what you pay for.
o    Right that goods are fit for purpose and services are provided with reasonable care and skill.
o    Right that faults in what you buy will be put right free of charge, or a refund or replacement provided.)

Information in the CCR

o    Many of the information provisions are already required by existing legislation and will be familiar to traders, but a small number are new. For example, information, when buying digital content, on what systems or hardware it will work with.

o    Schedule 1 to the regulations lists the information to be provided for on-premises contracts (see ANNEX XIV).

o    Schedule 2 to the regulations lists the information to be provided for distance and off-premises contracts (see ANNEX XIV).

o    Where cancellation rights exist, all distance and off-premises sellers covered by the regulations will need to provide the cancellation form set out in Schedule 3 to the regulations (see ANNEX XIV).

o    The online trader will need to make absolutely clear, through for instance a labelled ‘pay now’ button, where there is an obligation to pay.

Cancellation rights (distance and off-premises contracts only)

o    Cancellation rights will continue to apply to off-premises and distance contracts only. The cancellation period will extend from the current 7 calendar days (for off-premises) and 7 working days (for distance sales) to 14 calendar days for both to give consumers more time to change their minds.
o    Consumers should return items within 14 days of cancellation.
o    Online and other distance or off-premises traders will be able to withhold refunds until goods are returned (or evidence of return is provided) and they can reduce the amount of money refunded for goods returned which show evidence of use beyond the handling necessary to see whether the goods are as expected.
o    Traders must refund within 14 days of cancellation of service contract or receipt of goods (or of evidence of the consumer returning them).
o    Where the consumer cancels a contract, any ancillary contract (such as a warranty or credit agreement) is automatically cancelled.

Delivery and risk

o    Unless the trader and consumer agree otherwise, delivery of goods should be without undue delay and within 30 days.
o    Risk passes from the trader to the consumer when the goods are delivered unless the courier is one not offered or named by the trader as an option, but chosen and arranged by the consumer. In this case risk passes to the consumer when the item is delivered to the courier.

No additional payments as default option

o    Traders will need the active consent of the consumer for all payments – pre-ticked boxes for additional payments, for instance, will no longer be permitted.
o    Consumers will not be liable for costs which they have not been told, pre-contract, that they must bear.

No phone charges in excess of basic rate for post-contract phone queries

o    Where traders offer telephone helplines for consumers to contact them about something they have bought, there should be a number available on which the consumer can call for this purpose at no more than the basic rate.

Exemptions

Low value off-premises contracts (value less than £42) are exempt from the information and cancellation provisions of the regulations but subject to those on additional payments and charges and delivery and risk.

Application to On-Premises (Bricks and Mortar) retailers

I have a shop on the high street. What do I have to do?

1.    Firstly, bear in mind that products with a value of less than £42 are exempted as above.
2.    Schedule 1 lists the information that you need to provide to the consumer buying in your shop. This is unlikely to differ materially from what you already do. The regulations only require you to give the information in Schedule 1 where it is not obvious from the circumstances. Thus, you would not to give information such as your address if the location of the shop is evidence nor, for instance, a description of an electronic cigarette starter kit if the customer can pick it up to examine it, and the packaging/labelling makes clear what it is.
3.    If you agree to deliver any items, unless you agree otherwise with the customer, goods should be delivered without undue delay and within 30 days.
4.    If you offer a phoneline for after-sales care, or any other post contract queries, there should be a number available on which the consumer can call for this purpose at no more than the basic rate. (There is information in the Guidance on basic rate.)
5.    Any purchases in your shop which can be classed as day-to-day transactions completed immediately will be exempt from the information requirements in Schedule 1. However, even if this exemption from the regulations applies, you will need to comply with applicable information requirements in both the Consumer Protection from Unfair Trading Regulations (the ‘CPRs’) and the price marking order, which require important information on the nature and price of products to be given.
6.    The principle behind the exemption for day-to-day transactions sold on premises is that the consumer will be very familiar with the goods or services, and their cost, so that the level of information required by the Regulations would be superfluous. Thus buying a bottle of refill liquid, a battery, or a pack of cartridges (providing they have a value of less than £42!) would constitute day-to-day transactions. By their nature, such transactions are likely to be low cost items, and are treated differently to, for example, the sale of an expensive, high-end mod.

Application to distance sellers, i.e. online sales

1.    Under the current Consumer Protection (Distance Selling) Regulations 2000, you should already be familiar with many of the information and cancellation rights.
2.    Firstly, bear in mind that products with a value of less than £42 are exempted as above.
3.    Provide the information listed in Schedule 2 of the regulations and make available (e.g. by giving a link) a model cancellation form as set out in Schedule 3 (if a right to cancel exists) precontract, in a manner which is suitably clear for the consumer to undertand, and appropriate to the distance means being used (e.g. over the phone, on your website, etc.). Please see ANNEX XIV for a model cancellation form.
4.    Make sure you make clear all costs, including potential ones they may incur in the future. If you cannot give a firm cost upfront, you must show on what basis the final cost will be calculated. With regard to returns, you must make clear that the consumer must pay for returns if they cancel, unless you are willing to pay for that cost. If the item is not normally returnable by post, you should give an indication of how much it would cost the consumer to return.
5.    For online sales the consumer must explicitly acknowledge any obligation to pay. (For example, a button that says ‘pay now’). This is the case even if taking payment is to be deferred (e.g. if preceded by a free trial period).
6.    You must make information on main characteristics, total price (including any delivery or other charges), and if applicable the minimum duration of any obligation and how to terminate, clear and prominent, directly before the consumer places their order.
7.    Make sure that any adidtional payments are not a default option which the consumer has to act to avoid (e.g. do not pre-tick boxes for the consumer which they would have to untick to avoid a charge).
8.    Once the contract is concluded you must provide confirmation on a durable medium* within a reasonable time and not later than the delivery of the goods or commencement of the services.

The burden of proof that the required information has been given rests with the trader so it is in your interests to keep good records.

*    See below for requirements concerning the durable medium.

9.    If the consumer wishes any services to commence within the 14 day cancellation period you should gain their explicit consent and advise them that if they later cancel, they will need to pay for any services delivered until the point at which they cancel.
10.    The customer  has 14 days from receipt of the goods or conclusion of a contract for services to change their mind. They do not have to give a reason. However, there are some types of contracts which are exempt from cancellation rights, as follows:

As well as contracts wholly exempted from the regulations, a number of online and off-premises contracts do not attract cancellation rights. These include:

o    Bespoke and customised goods
o    Goods received sealed for health protection or hygiene reasons once unsealed
o    Goods once they have been inseparably mixed after delivery

11.    Provided the customer makes a clear statement that they want to cancel this need not be in writing. Once they have done so, they should return any goods within 14 days.
12.    You should ensure that any third party to an ancillary contract is notified and that, where appropriate, refunds are effected. NOTE: If the consumer cancels a contract, any ancillary contract is automatically terminated. The trader must inform any other trader who is party to the ancillary contract, without delay, that the consumer has cancelled the main contract. This does not, of course, prevent the parties to an ancillary contract, such as a warranty, from agreeing to continue warranty protection to cover other items than the cancelled item. Where third parties offer the ancillary contract, responsibility for refund should follow the original flow of funds. If the money for the ancillary contract was paid directly to the trader they should reimburse the consumer and recover from the third party. If the money was paid directly to the third party, it is the responsibility of the third party to refund the money to the consumer.
13.    You should refund all monies received, including the outbound delivery cost, within 14 days of cancellation of the services contract or within 14 days of receiving goods back. If the consumer provides proof of return before you receive the goods back, you should refund within 14 days of receiving that proof. If the consumer chose to have the goods delivered by more expensive means than the cheapest standard delivery option offered, you do not have to refund the full outbound delivery cost, but only the cost of the standard delivery option which the consumer could have chosen.
14.    You have a right to deduct monies from refunds where goods show signs of unreasonable use leading to diminished value. You cannot usually deduct for removal of packaging to inspect the item, but you can deduct for damage or wear and tear where the item has not just been checked but used.
15.    Unless you agree otherwise with the customer, goods should be delivered without undue delay and within 30 days. If you agree a particular date or period for delivery, you should deliver within that time.
16.    If you offer a phoneline for post contract queries, there should be a number available on which the consumer can call for this purpose at no more than the basic rate*.

*    a) Where a telephone helpline is provided, the basic rate requirement means not charging more to phone a trader about something you have bought than to call a friend or relative, that is to say the simple cost of connection. The telephone number provided should not provide the trader with a contribution to their costs.
b) The following numbers, if used by traders, would comply with the regulations:

o    Geographic numbers or numbers which are always set at the same rate, which usually begin with the prefix 01, 02, or 03;
o    Calls which can be free of charge to call, for example, 0800 and 0808 numbers. In certain circumstances charges to these numbers can be applied, for example, for those ringing from a mobile. However, OFCOM’s proposed reforms will mean these numbers will soon become free in all circumstances;
o    Mobile numbers, which usually being with the prefix 07.

c) Premium rate numbers would not comply. They begin with the prefix 09.
d) Other revenue sharing numbers would not comply. These are numbers in which a portion of the call charge can be used to either provide a service or make a small payment to the trader. These usually have the prefix 084 or 0871, 0872, or 0873.
e) Numbers with the prefix 0870 are not revenue sharing numbers. However, they can be higher than a geographic cost, and will vary depending on the tariff of the consumer’s telecom company. They would therefore not comply. Following OFCOM reforms in 2015, these numbers will permit revenue sharing and, in any case, would no longer comply with the basic rate requirements.
f) OFCOM has ensure those wishing to change from a 0845 number have access to 03 numbers where the only change will be the substitution of the digit ‘3’ instead of the ‘8’ in the prefix.
g) You do not have to provide a telephone helpline. Regulation 41 on charges for customer helplines only applies if you offer a telephone line on which consumers can contact you about something they have bought.
h) The Regulation does not require that all numbers operated by a business are at a basic rate. Only that wheree the trader provides a telephone line so that the consumer can contact them about a contract concluded, there should be a number available on which the consumer can call for this purpose at no more than the basic rate.
i) Sales lines are unaffected.

Provision on a durable medium

1.    The purpose of the ‘durable medium’ requirement is to ensure that, should a dispute arise at some point after the contract has been concluded, both parties have a record about what was agreed. The burden of proof that the relevant information has been provided rests with the trader. A durable medium allows the consumer to access information directed personally to them, in an unchangeable format for as long as they might reasonably need it.
2.    A durable medium allows, amongst other things, for information to be addressed personally to the recipient. Although information should be personally directed to the consumer, (for instance in an email, letter or personal account) the information itself need not be exclusive or tailored to the consumer, in the same way that a letter directed specifically to a customer can include standard terms and conditions.
3.    The regulations require confirmations for distance contracts and off-premises contracts to be provided on a durable medium. If you are trying to move to paperless systems, you will need to bear in mind that, for off-premises contracts, the consumer must agree to receive information on a durable medium other than paper. The confirmation is additional to the information you must give the consumer before making the sale. You do not need to include this information in your confirmation if you have already provided it on a durable medium pre contract.
4.    There ar e number of ways in which the trader can meet their obligation to ensure that they provide the relevant information in a durable medium:

o    A letter is a durable medium. Sending it is provision of that medium. Provided the trader took reasonable care to send it to the address given to them by the consumer, the trader is likely to have met their obligation.
o    A CD/DVD is a durable medium. Sending it is provision of that medium. Even if the consumer does not have a CD/DVD player, the information has still been provided.
o    An email is a durable medium. However, information contained via link to a website which may change, and which is embedded in an email is not. Sending the email to the address given by the consumer is provision of that medium. If the consumer does not look at their email account, or deletes the email, the information has nevertheless been provided on the durable medium.
o    A text message is a durable medium. Sending it to the consumer’s notified telephone number is provision.
o    A ‘personal account’ (such as those used by phone companies for online billing) on a trader website can be, or include an aspect which is a durable medium. It must be capable of storing information personal to the consumer, in a format which will be left unchanged and remain accessible to the consumer for a reasonable amount of time. Placing the information in the relevant part of the personal account is the provision of the information on the durable medium so that if the consumer wants to see it they have to log into it (in a similar way that they have to open emails, a letter or a text).

More favourable terms

1.    The regulations do not preclude the trader from offering more favourable terms than required by the regulations.
2.    If you offer, for example, a 28 day money-back period, you do not have to tell them about the 14 days since you are offering more, providing you give the consumer full information about your terms. However, if your favourable terms do not include all of the requirements mandated under the regulations, you must make this clear. For instance, if the consumer selects your standard delivery option then, if they cancel and return the goods, your refund should include any outbound delivery costs, should they change their mind within the statutory 14 day cancellation period. You can, however, ask them to pay both outbound and inbound delivery costs if they cancel outside that period. If you intend that they should pay for such a return within your extended period (i.e. after 14 days have elapsed) you must make this clear.

Rules on Cancellation (applicable to online sales contracts)

1.    Unless outside the scope of the regulations of specifically exempted from cancellation rights (e.g. bespoke products) (see exemptions identified above), consumers who enter into (or offer to enter into) off premises or distance contracts will have 14 calendar days in which to change their minds, and do not have to give a reason for doing so. They must be provided with the cancellation form as set out in ANNEX XIV but do not have to use it as long as they make clear that they are cancelling.

Because the burden of proof for showing cancellation within the cancellation period rests with the consumer, it will be in the consumer’s interest to keep some record of the cancellation.

2.    The 14 days for cancellation start the day after the goods have been received. Where different goods within an order are delivered at different times the cancellation period will run from the day after delivery of the last item.
3.    The consumer should generally return any goods within 14 days unless the trader has offered to collect them.
4.    The trader should refund within 14 days of receiving the goods back of receiving proof they have been sent back.
5.    A product formulated following a consumer order does not necessarily qualify as ‘bespoke’ in the context of the exemptions from cancellation rights. A bottle of eliquid, for example, can be produced following an order but it may be from a range which is offered elsewhere, in other words (in this context) a ‘standard range’. However, if the consumer asks the trader to source a unique flavouring for a specific order, and which is not in the range generally offered by the trader, that is likely to be a bespoke item, and therefore exempt from cancellation rights.  

Guidance(2)  on the CCR is available from BIS.

 

 

Footnotes

1 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/274912/bis-14-566-consumer-rights-bill-statement-on-policy-reform-and-responses-to-pre-legislative-scrutiny.pdf

2 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/310044/bis-13-1368-consumer-contracts-information-cancellation-and-additional-payments-regulations-guidance.pdf