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Law for Business

Knowhow - guidance - precedents

21 MAR 2014

Change your website or face cancellations nightmares

Simon Bates

Head of Commercial

"Change your website or face cancellations nightmares," lawyers warn retailers. But new regulations also spell the end of "wardrobing" and premium rate helplines...

With the online share of the retail market rapidly approaching the 20% mark, legal experts have issued a stark warning to every business selling through the Internet: you have until 13th June to make important changes to your website and your acknowledgement emails... or face potential cancellation nightmares.

It's on that date that the UK has to come into line with new EU based laws on the cancellation rights of other European consumers. In simple terms, consumers will now have a 14-day "cooling off period" to replace the current seven working days one. But if retailers don't make those terms clear on their website, consumers could have up to 12 months to enjoy a "money-back" cancellation right.

And it's not just e-retailers who will be impacted by the changes: stores taking orders for "non day-to-day" items (such as furniture) will have to change their paperwork too, as will car dealers and those who sell goods and services on people's "doorsteps" - such as double glazing and central heating companies.

"This is a potential minefield," says Simon Bates, who heads up the commercial division of Jordans Corporate Law. "Many businesses seem unaware of the alterations they need to make, and equally we have seen plenty of examples of companies who have tried to make the changes - but not done it properly. It is particularly important for "doorstep" sellers to comply as, in their case, they can face possible criminal prosecutions.

"This could be a bonanza time for website companies, because many retailers won't have the access rights or technical skills to make the necessary amendments, which include everything from the terms and conditions section of the website through to the ‘order now' button. E-retailers even have to provide a standard cancellation form"

There will now be an obligation to label any on-line order button with the words "order with obligation to pay" or similar wording.

One other major change is a prohibition on practices such as the use of pre-tick boxes for payment of additional services, while the use of premium rate customer telephone helplines will also have to end.

Those selling downloads online could also be hit. The changes mean that consumers will not have a right to cancel once a download has started - provided that the retailer has informed them of this and obtained their explicit acknowledgement. However, as Simon points out, the retailer can really lose out if they do not do this: "Once a person has downloaded an app, track or game, for instance, they could then cancel the sale and get a refund. The regulations are very explicit on this and say that the consumer does not have to pay."

A particular problem faces those selling "non day-to-day" goods in shops, garages and other retail outlets. "They now have to give certain written information to customers which is a new concept for them. Further there is no precise definition of what a ‘day-to-day' item is in the new regulations," says Simon. "In fact, it's fair to say that the guidelines are very vague in places.

While the new regulations represent a significant boost in consumers' rights, there is some good news for retailers: the end of "wardrobing". "Apparently there are many people who buy clothes on-line, wear them once or twice and then return them," says Simon. "Retailers will now have the right to reduce the refund to reflect any loss in value where goods have been used, so this might well spell the end of that particular phenomenon."

So what can retailers do to avoid cancellation costs, legal challenges or damage to their reputation?

"Certainly the new regulations sound daunting," says Simon Bates, "and the fact that the accompanying guidelines aren't very detailed doesn't help. But we are running a series of seminars around the country over the next few months to help explain the changes.

"Jordans is also offering a quick, low-cost audit of websites and order acknowledgement procedures that retailers have already changed, and we have specialist advisers who will take you and your webmaster through the alterations from scratch. To be honest, trying to explain in writing just what changes need to be made and where can be tricky. It is often simpler to sit with people in front of a screen and make the changes online."

For more information contact Simon Bates on 0117 918 1210 or email SBates@jordanscorporatelaw.com.

Press contact: Carol Prince 0117 918 1284

Issued for: Jordans Corporate Law, 21 St Thomas Street, Bristol BS1 6JS.

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