Introduction
The Consumer Protection (Distance Selling) Regulations 2000 (the "Regulations") came into force in the UK on 31st October 2000. This article highlights the most important aspects relevant to businesses and provides guidance on how best to comply.
Note, we provide six articles on distance selling. The others are:
Explains the Regulations in detail and how to comply.
Explains the most important laws and best practice for distance selling.
Different rules apply to selling financial services from a distance. Those rules are explained in detail here.
Explains the rules for refunds under Regulation 14 of the Distance Selling Regulations
Explains how to comply with the Distance Selling Regulations
The Regulations apply to all distance contracts. A ‘distance contract’ is one:
- for the sale of goods or the provision of services;
- between a supplier and a consumer (note that business to business distance selling is not caught by the Regulations);
- under an organised distance sales or service provision scheme run by the supplier (this covers, for example, sales made through a call centre or from a web site; however one-off contracts concluded by email are not relevant);
- where the supplier communicates with the consumer without ever coming face to face with the consumer up to and including the moment at which the contract is concluded (i.e. by 'distance communication').
This means that if you sell by leaflet dropping in letter boxes; press advertising with order forms; in catalogues; by telephone with or without human intervention; by email; by fax; and by television, the regulations apply to you and you must comply.
Note, there is a distinct difference between the cancellation rules whether you sell goods or supply services. The differences are explained in a separate article entitled ‘Distance selling: cancellation”.
The Regulations are one of the most critical areas of compliance for businesses which fall into the category of distance selling. We have therefore split this article into a number of sections as follows:
- What must I do to comply?
- Prior information
- Exemptions
- Right to cancel
- Cancellation periods for goods and services
- Exceptions to the right to cancel
- Recovery of money paid by consumer
- Return of goods by consumer after cancellation
- Goods given in part-exchange
- Performance of the contract within a certain time period
- Payment by card
- Inertia selling / unsolicited goods
- No contracting-out
- Consequences of breach
- Summary
What must I do to comply?
A supplier must:
- Provide consumers with certain information prior to conclusion of the contract;
- Give consumers confirmation in writing or in another durable medium which is available and accessible to the consumer (email is acceptable, but providing the information on a website is not), of the prior information and also provide consumers with additional information (e.g. in respect of cancellation rights). The term "in writing" is used as a convenient shorthand and references in this article to confirming information "in writing" should be read as including "or in another durable medium which is available and accessible to the consumer";
- Repay sums paid by consumers within a certain time period if they cancel;
- Perform the contract within a certain time period.
We shall now tackle these one by one.
Prior information
Regulation 7 requires you to provide the following information to the consumer before they agree to buy from you – that it, anytime before they contract is formed. In our opinion, the sooner the better. If you do not tell the consumer, the contract is not enforceable.
- the identity of the supplier (who you are) and (where the contract requires payment in advance) your address;
- a description of the main characteristics of the goods or services;
- the price of the goods or services, including all taxes;
- delivery costs, where appropriate;
- the arrangements for payment;
- the arrangements for delivery or performance of the service, e.g. when the customer can expect delivery of the goods or performance of the services;
- the existence of a right of the seven day cooling off period;
- if the consumer is to use a premium rate telephone number, the cost of the call must be specified before charges are incurred for the telephone call;
- how long the price or any special offer remains valid;
- the minimum duration of the contract in the case of a contract to supply goods or services continuously (e.g. in a contract for a mobile phone or for cable TV services), or recurrently (e.g. in a contract with a monthly book club);
- whether or not substitute goods or services may be provided in the event of those ordered by the customer being unavailable; and
- notification that the supplier will meet the costs of the consumer of returning any substitute goods he or she does not want.
This prior information must be provided in a clear and comprehensible manner which is appropriate to the means of communication. For example, if the customer has contacted you by email, it is reasonable for you to respond by email. However, if the customer has contacted you by telephone, it is not acceptable to provide the information by email randomly – you should tell the consumer that you shall email them and to be really safe, you could repeat the information via the telephone too.
If you cold call consumers by telephone, there are special rules regarding any distance contract concluded during the course of the conversation. The contract will not be enforceable unless, at the beginning of the conversation, you make your identity and the commercial purpose of the telephone call explicitly clear.
Further, in the case of a dispute, you must prove that the information was provided in accordance with the Regulations. The best way to do this is to include it automatically within the standard telescript. In any case, if you operate over the telephone you most likely have to provide such information as standard in order to comply with data protection legislation.
Written confirmation and additional information
Regulations 8 provides that if the consumer then agrees to contract, you must follow up by providing this information again, in writing, along with further information, including the following. If you do not provide this information, the contract will be unenforceable. This confirmation must be in writing (email is permitted). This is what you must provide:
- a statement saying they have a right to cancel the contract if they wish and they go about cancelling;
- details of the cancellation process to enable the consumer to cancel the contract, including the provision of the name and address of the person to whom the consumer should send the notice;
- whether you or the consumer is responsible for the cost of returning the goods to you if they cancel;
- (for supply of services) information on the consequences of agreeing to performance of a service starting before the end of the usual seven working day cancellation period;
- the geographical address of your place of business to which the consumer may address any complaints;
- information on any after-sales services and guarantees; and
- the conditions for cancelling the contract, where it is of an unspecified duration or a duration exceeding one year.
This information must be given to the consumer as soon as possible and:-
- prior to the conclusion of the contract, or
- before or during the performance of the contract (and, in contracts for the sale of goods, at the latest at the time of delivery of the goods where goods not for delivery to third parties are concerned. This means that where consumer A orders goods to be despatched to consumer B, the information must be given to consumer A prior to the conclusion of the contract).
If you supply services you are not be subject to the obligations to provide written confirmation and additional information where those services are supplied on only one occasion and are invoiced by the operator of the means of distance communication.
However, you must take all necessary steps to ensure that the consumer in such a one-off contract is able to obtain your address and the place of business to which they can complain.
Exemptions
The Regulations do not apply in any way to:
- most contracts for the sale or transfer of land or for building on land, except short rental agreements;
- contracts for financial services (this area is regulated by the Financial Services (Distance Marketing) Regulations;
- contracts concluded by an automated vending machine or automated commercial premises (such as photographs taken from an automated photo booth);
- contracts by telephone via public pay-phones; and
- contracts concluded at auction (however, it must be a genuine auction in order to qualify for the exemption – so "buy it now" slots on internet auction sites will not be exempt as such sales are not concluded by a process of auction).
In addition, some parts (see below) of the Regulations do not apply to:
- contracts for the supply of food, beverages or other goods intended for everyday consumption supplied to the consumer's residence or to his workplace by regular roundsmen (e.g. a milkman, but not a supermarket); and
- contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period.
The parts of the Regulations which do not apply to the contracts above are provisions relating to:
- information given to the consumer prior to the conclusion of the contract;
- written confirmation;
- cancellation rights;
- recovery of money paid by the consumer;
- return of goods by the consumer after cancellation;
- goods given in part exchange; and
- mandatory performance of the contract within 30 days.
Right to cancel
Under the Regulations a consumer can cancel a distance contract at any time during the "cancellation period" by notifying the supplier in writing. A cancelled contract must be treated as if it had never been entered into by the consumer. For example, if the consumer has entered into a credit agreement in order to purchase the goods, that agreement must also be cancelled at the same time as the distance contract.
For more on cancellation, including exception to the right to cancel, please see our article entitled “Distance Selling: cancellation”.
Recovery of money paid by consumer
On the cancellation of a contract, any sum paid by the consumer must be repaid as soon as possible and, in any case, within thirty days of cancellation. The full price paid for the goods including the cost of delivery must therefore be refunded. A supplier may (except where goods are returned because they are faulty) impose a reasonable charge to cover postage costs incurred by the supplier where it bears the cost of the consumer returning the goods provided this is clear in the contract and the consumer gets notice of this in advance as part of the written confirmation relating to the right to cancel.
Where the supplier wishes to send substitute goods (e.g. where the original goods ordered are not in stock, but similar goods are available), the supplier must not only have provided for the possibility of sending substitute goods in its contract so that the consumer was informed that this could be a possibility but, in the case of the consumer cancelling the contract and returning the goods, the supplier must bear the cost of such return.
Return of goods by consumer after cancellation
If the consumer has, before cancelling the distance contract, acquired possession of the goods, the consumer will be under a duty to restore those goods to the supplier and, in the meanwhile, to retain possession of the goods and take reasonable care of them. This duty to take reasonable care ends if the consumer delivers or sends the goods at his own expense although the consumer is under no obligation to do so except at his own premises and in pursuance of a written request by the supplier.
Note that failure by a consumer to return goods will not permit the supplier to delay in making a refund. Similarly, if a consumer returns damaged goods he or she does not necessarily lose the right to cancel. The supplier can only rely on the right of action against the consumer for breaching the statutory duty to take reasonable care of the goods.
If, within 21 days following cancellation of the distance contract, the supplier requests the consumer to return the goods and the consumer unreasonably refuses or unreasonably fails to comply with the request, the consumer's obligation to retain possession and take reasonable care of the goods continues until he delivers the goods to the supplier.
If the supplier fails to request the return of the goods within 21 days following cancellation of the distance contract, the consumer's obligation to take reasonable care of the goods ceases at the end of the 21 day period.
Where the supplier is holding any sum as security, the consumer is not under an obligation to return the goods after cancellation until the supplier discharges any duty on him to release the security under the Regulations.
Goods given in part-exchange
In a situation where the supplier had agreed to take goods in part-exchange and those goods have been delivered to him, if the consumer cancels, the supplier must return the part-exchange goods in a condition substantially as good as they were delivered within ten days of the cancellation, otherwise the consumer is entitled to a sum equal to the part-exchange allowance.
If no part-exchange allowance was agreed, the sum shall be what would be reasonable to allow for the part-exchange goods if no notice of cancellation had been served.
Performance of the contract within a certain time period
Unless the parties agree otherwise, the supplier must perform the contract within 30 days from the day after the consumer sent his order to the supplier.
If you are unable to perform the contract within this period, you must inform the consumer and repay any sum paid as soon as possible (and in any event within 30 days), although you may agree a revised date for delivery with the consumer.
A contract which is not performed within the 30 day period shall be treated as if the consumer never entered into it, but the consumer will still have remedies for non-performance.
If a longer period than 30 days is required then this must be clearly stated in your terms and conditions and the prior information. You may perform the contract by substitute goods or services of equivalent quality and price if the contract provided for this possibility and the supplier gave the consumer the prior information in the appropriate way.
Payment by card
Regulation 21 states that where fraudulent use has been made of a consumer's payment card in respect of a distance contract then the consumer will be entitled to cancel any payment which has been made as a result of such fraudulent use.
Note that the Regulations refer to "payment card" and not simply credit card. This means that debit cards, charge cards and store cards will be afforded protection under the Regulations as well as credit cards.
Inertia selling / unsolicited goods
A person who, having sent in the course of business unsolicited goods to a person with a view to the recipient acquiring them but who has neither agreed to acquire or return the goods, makes a demand for payment or threatens legal proceedings to get payment will be guilty of an offence. The recipient of such unsolicited goods may use, deal with or dispose as if they were an unconditional gift.
No contracting-out
Any term in a distance selling contract which is inconsistent with the protection of the consumer as set out above shall be automatically void.
Consequences of breach
If a supplier is in breach of the restrictions on the use of means of distance communication, he can be sued for compensation by a consumer who has suffered damage as a result of the breach.
The power to consider complaints and seek court orders for compliance with the Regulations rests with the Director General of Fair Trading.
Summary
- Goods must be delivered within thirty days unless otherwise stated.
- Basic company information must be provided to the consumer
- Consumers have a seven day ‘cooling off period’
- You must send an order confirmation
If the contract is cancelled, the customer must ‘restore’ the goods to the supplier. This does not mean returning them, but instead, making them available for collection by the supplier. However, if there was a clause in the contract that required the customer to return the goods at their cost should the contract be cancelled, the customer will have to return the goods at their cost. If this is the case, and the goods are not returned, the supplier may collect the goods and charge the customer the direct costs of collection.
- Where the consumer cancels the contract, the vendor must refund all monies paid within thirty days.
The consumer is protected under the regulations within the cooling off period. Once the period has expired, the Sale of Goods Act 1979 then protects the consumer. Under the Sale of Goods Act 1979, the goods must "conform to contract". This means they must be as described, fit for purpose and of satisfactory quality (i.e. not inherently faulty at the time of sale).
Goods are of satisfactory quality if they reach the standard that a reasonable person would regard as satisfactory, taking into account the price and any description.
Aspects of quality include fitness for purpose, freedom from minor defects, appearance and finish, durability and safety.
If the goods are faulty, the consumer can ask either for a refund, or for the goods to be repaired or replaced at no cost to them, or for compensation.
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