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New EU Consumer Rights Directive

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The new EU Consumer Rights Directive was adopted by Member States in the Council on 10/10/11 having been approved in the EU Parliament on 23/6/11. It is required to be translated into national law by the end of 2013. With current government rhetoric aimed against Europe, and taking a supposed pro-business stance, whilst implementation would not be difficult, I do not expect it to be undertaken early.

There is also a 50 Euro minimum transaction in the Directive. Member States can provide for a lower figure, although again I would be surprised if the UK does so.

The main provisions are:

1) Increased price transparency
Traders have to disclose the total cost of the product or service, as well as any extra fees. Online shoppers will not have to pay charges or other costs if they were not properly informed before they place an order. This is aimed at removing price traps where apparently free items are suddenly charged for, and at ensuring clear pricing information.

This includes a new provision which prohibits traders from charging consumers more for paying by credit card (or other means of payment) than the actual cost to the trader. Traders who operate telephone hotlines allowing the consumer to contact them in relation to the contract will not be able charge more than the basic telephone rate for the telephone calls.

All of these provisions will fill current legislative gaps across the EU and in the UK, as shown by the current UK enquiries into the cost of credit card transactions with some traders.

2) 14 Days to change your mind on a purchase
The period under which consumers can withdraw from a sales contract is extended to 14 calendar days (compared to seven days in current EU law). This means that consumers can return the goods for whatever reason if they change their minds.

  • Extra protection for lack of information: When a seller hasn’t clearly informed the customer about the withdrawal right, the return period will be extended to a year.  Practitioners need to be aware of this particular provision as the wrong information on a website could play havoc with returns policies.
  • For fellow eBay addicts, the right of withdrawal is extended to online auctions, such as eBay – though goods bought in auctions can only be returned when bought from a professional seller.
  • The withdrawal period will start from the moment the consumer receives the goods, rather than at the time of conclusion of the contract, which is currently the case. The rules will apply to internet, phone and mail order sales, as well as to sales outside shops, for example on the consumer's doorstep, in the street, at a Tupperware party or during an excursion organised by the trader.

In addition traders must refund consumers for the product within 14 days of the withdrawal. This includes the costs of delivery, which is currently not required.

Consumers will be provided with a model withdrawal form which they can (but are not obliged to) use if they change their mind and wish to withdraw from a contract concluded at a distance or at the doorstep. This will make it easier and faster to withdraw, wherever a contract is concluded in the EU.

Consumers will still be able to withdraw by other methods – letter, email or telephone. However it is the burden of proof is on the consumer to prove withdrawal. Use of the form, and keeping a copy, will assist that greatly.

The Directive sensibly suggests that traders “may” provide this withdrawal form on their website. This would seem to be a missed opportunity to make provision of the form mandatory.  I can see very few traders encouraging withdrawal without compulsion.

If traders want the consumer to bear the cost of returning goods after they change their mind, they have to clearly inform consumers about that beforehand, otherwise they have to pay for the return themselves. Traders must clearly give at least an estimate of the maximum costs of returning bulky goods bought by internet or mail order, such as a sofa, before the purchase, so consumers can make an informed choice before deciding from whom to buy.

Practitioners clearly need to be aware of the detail of these provisions, and the contracts that they do not apply to, as listed in the Directive. Detailed review of trader’s websites and contractual information will need to be undertaken to ensure compliance.

For companies that trade across the EU, different implementation dates in Member States could cause difficulties. It may be preferable to take a proactive stance and change company policy early.

This latest Directive confirms the thrust of EU legislation towards consumer protection standards applying on a uniform basis across all Member States.  This is driven, at least in part, by EU Justice Commissioner, Viviane Reding. Her latest initiative is a Common European Sales Law, aimed at reducing barriers to trade across the EU. However, the consumer organisation Which? are on record opposing this provision if it should reduce protection for consumers in the UK. Ironically, it seems that UK provisions could be eroded rather than all provisions across the EU “levelled up” to the best standards of consumer protection.

By consumer law solicitor and Stephensons’ Partner, Andrew Leakey