About this series of articles
This article is the first in a series about the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013, often abbreviated to CC (ICAC). This law came into effect from 13 June 2014, replacing older distance selling law.
The series explains the law, and how to apply it to your business so that you remain compliant.
We hope that our information articles are thorough and easy to digest and make understanding the implications for your business easier.
Background to the law
The CC (ICAC) is UK law that implements an EU directive. The EU directive aimed to harmonise consumer rights across Europe - often introducing rights that did not exist previously in some countries - making them similar to those already in place in member countries such as the UK.
For UK businesses, the changes with older law represent evolution rather than a revolution.
Because the law pre-dates the UK's exit of the EU, the rights that the CC (ICAC) give still apply equally to UK citizens and EU ones. This may change as the UK diverges from the EU.
Is the law applicable to your business?
If you are a business and sell goods, services or digital content to a consumer, the Regulations will most likely apply to you.
A consumer is defined as an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession.
The law applies to businesses that trade online and offline, from Internet retailers to personal tax accountants.
Some types of business (but not many) are exempt, either completely or just from the requirement to offer the customer a right to cancel. Note that there are not many that are. Check the list of exemptions from consumer contract regulations.
Where your contracts are formed is important
The application of the Regulations has been split into three categories, covering:
- contracts made on premises, such as in high street shops or when visiting the offices of a professional service provider like your solicitor or your physiotherapist
- contracts made off premises, for example when you sell goods at an exhibition, or on the doorstep of your customer
- distance selling, which of course includes mail order and Internet sales
Your obligations and the rights of your customer vary according to the category of contract. Many businesses sell in more than one way, and therefore will find themselves in more than one category.
How the regulations affect your business
The Regulations state that:
You must provide pre-contract information for distance and off-premises contracts
You must provide the information required by Schedule 1 and 2 of the Regulations to your customer before they agree to accept your offer.
An extended cancellation period
Consumers have a right to a cancellation period (a 'cooling off' period) of at least 14 days. This is an increase from the previous 7 days period. There are also extensive obligations on a seller relating to cancellation.
Cancelling goods, services and digital content
As a seller, you must follow relevant provisions applicable to goods, services and downloads to tell your customer about their cancellation rights and how to use the model cancellation form (see below).
Provision of a model cancellation form
You must provide a model cancellation form that your customer may use, if they wish, to cancel their order or return the goods. Dealing with the form and providing an explanation of how to use it is complicated.
Refunds
If your customer cancels their order you are obliged to refund their money in full within 14 days.
Labelling and clear payment buttons (online traders only)
You must make the total price clear to your customer before they are induced to make the contract. In other words, you must spell out the full deal before you ask them to agree to it.
When you have provided the information, told them about cancellation and given the total cost, you must still make clear that when they click that final button for an Internet purchase, they know they are committing to buy.
That means the button text must be clear as to what will happen. Use 'Pay now' or 'Order and pay' as text and not 'Proceed with your basket' or other words which your marketing team suggest might be better.
Pre-ticked boxes (online traders only)
You may not use pre-ticked boxes as acceptance of a financial or other obligation. This prevents last minute up-selling without giving the customer full information and obtaining his informed consent.
You may use pre-checked boxes to encourage acceptance of a newsletter or other marketing material provided acceptance is not connected with the immediate contract.
Excessive call charges
Quite apart from the requirements relating to information, cancellation and returns, there is an additional, unrelated prohibition on charging more than the standard rate for a phone call.
Specifically, you may not make money from a customer’s call to you and you may not ask them to call you on an arrangement with your telephony provider where they charge your customer more than standard rate.
'Standard rate' is not defined.
Are there any benefits to businesses?
The Regulations do provide some relief to the trader. They:
- bind the customer to return the goods within 14 days of his cancelling the contract
- allow the trader to withhold a refund until goods are returned or evidence of return is provided
- allow the trader to deduct an amount for the diminished value of goods when refunding payment
Further information
We recommend that you read the second article in this series about identifying whether contracts are classed as on-premises, off-premises or distance next.
Unless you are exempt from the Regulations or are already compliant, you are likely to need to update your customer contract templates. These are likely to include your terms of sale on your website if you sell online and your offline customer contract if you sell offline.
If you have any questions about the Consumer Contract Regulations 2013, or would like help updating your contracts to comply, please ask us. We’d be delighted to help.