How new EU distance selling regulations affect small businesses

Rik Hellewell discusses how changes to EU distance selling regulations could be problematic for small enterprises.

Many business owners may not be aware that a new EU Directive comes into force on June 13, which has some major implications for how traders conduct their business.

It is a law which may well be difficult to implement in practical terms and could prove to be unpoliceable in practice.

The directive is also a potential minefield for businesses themselves, which need to get up to speed with the new regulations and to implement measures that will militate against their burdensome effects.

The EU Consumer Rights Directive, which is due to come into force on June 13, will provide a single set of rules for distance selling and contracts formed away from a business’s premises anywhere in the EU.

The following guidelines are designed to help small business owners that ‘distance’ sell or practice door-to-door trading through the minutia of the new directive.

What are the Distance Selling Regulations (DSRs) rules

The Distance Selling Regulations (DSRs) are the rules that apply if businesses are selling products or services to consumers without face-to-face contact, and where the consumer has not had an opportunity to examine the goods before buying or discuss the service in person.

It means that a vast array of communications will need to be changed, costing businesses many hundreds, if not thousands, of pounds.

This includes unaddressed or addressed printed matter; letters, press advertising with order forms, catalogues, telephone with or without human intervention, email, fax, and television (teleshopping.) This new bureaucratic burden will cause additional pressures on small business, in particular.

Regulations like these need to be thought through by practically-minded business people from whom feedback should be sought way in advance of laws being steamrollered through.

As business owners, we all still remember the ‘cookie policy’ with its opt-in only rule for websites – now two years down the track and not one single prosecution, that we’re aware of, has been made for non-compliance.

Distance selling embraces a huge number of businesses of all types and sizes, including our own network of 105 national franchisees.

The regulations cover services provided to both business and to consumers; for example, estate agents, construction services, restaurants, storage services and financial advisers.

Also included are consumer services; for example, tourism, leisure services, child minders, private schools and universities, driving instructors, cleaners. Business services such as advertising, waste management, training, professional services are also included.

Businesses will need to provide consumers with a model cancellation form to use when cancelling contracts. Whilst the design of the form is not mandatory, businesses will need to ensure that any cancellation form made available to their customers contains all of the information required.

Many online businesses will elect to provide a suitable cancellation form on their websites, rather than using a hard copy form. However, where a distance contract has been concluded on the telephone, it is best practice for hard copy cancellation forms to be sent to the consumer.

Whilst it is sadly inevitable that the EU law will be in force on June 13, the question of whether it is enforceable is still a moot point.

Summary of the main changes that need to be made by businesses:

  1. Right of withdrawal from contract in distance selling – in other words the time the consumer has to return the goods. Changes from current seven days to 14 days.

Action: T&Cs and Returns policy needs to be amended.

  1. Customers must be informed about their right of withdrawal. Non-compliance could lead to the cooling off period being extended for a maximum of 12 months from the end of the 14 day period.

Action: T&Cs and returns policy needs to be amended.

  1. Ecommerce businesses must supply a downloadable form for consumers to use to cancel contracts/initiate returns.

Action: Access to the form should be incorporated into the online ordering process.

  1. Refunds must be made within 14 days (from current 30 days) of the receipt of the ‘withdrawal/returns’ form, provided the goods are returned within that period. Refunds must include the cost of standard postage as advertised on the retailers website.

Action: T&Cs and returns policy needs to be amended, and systems for refunds need to be reviewed and updated.

  1. Retailers need to inform the customer at the time of the sale who will be responsible for the cost of returning the goods, with an estimate of cost. If this is not made explicit, then the retailer will be obliged to refund the cost of returning the goods to the consumer.

Action: Clear messaging needs to be added at the check-out/confirmation stage.

  1. The total costs of goods or services, including postage and tax, must be made clear at the point of sale.

Action: Review pricing transparency and clarity of your calls to action.

  1. Automatic opt-ins and pre-ticked boxes for additional services – such as marketing permissions or email newsletter subscriptions – will no longer to allowed. Consumers must tick the box themselves.

Action: If you have pre-ticked opt-ins, these need changing.

  1. Premium rate customer service or support lines no longer allowed.

Action: Convert any premium rate lines to standard rate or free.

  1. Surcharges no longer allowed for paying by credit card over and above the actual cost to the retailer of credit card payments.

Action: Amend payment terms and mechanisms if necessary, and review pricing model if necessary.

Exceptions:

  • Financial services and travel services also have different provisions.
  • Products will still need to be in a re-sellable condition, and retailers will be able to make partial refunds in some cases. However, for the vast major of retailers who sell physical products not subject to instant consumption, these rules will apply.

Further reading on regulations

Related Topics

Red Tape

Leave a comment