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New consumer rights legislation goes live

By Retail Technology | Friday June 13 2014

The EU Consumer Rights Directive ushers in changes to cancellation, refunds and online ordering

Today, the new EU Consumer Rights Directive came into force, bringing about changes that are of particular interest to retailers who trade online.

Implemented in the UK by the Consumer Contracts Regulations, the legislation sets out common rules for businesses, making it easier for them to trade across Europe. It also levels the playing field for doing business by phone, mail, online or off-premises, cutting cross-border transaction costs.

Clearer online ordering

The directive on consumer rights brings about changes in the online ordering process. Order buttons must now explicitly show that the consumer is entering into a contract with an obligation to pay, with wording such as ‘order and pay now’ replacing ‘confirm’ or ‘buy’.

Pre-ticked boxes for charged additional services, such as additional insurance on a mobile phone contract, are no longer permitted. In addition, the ‘cooling off’ period is now extended to 14 days from its present 7 and refunds must be made within 14 days of receiving the goods.

“The EU Consumer Rights Directive is the black swan of retail legislation,” commented Phillip Smith, UK country manager of reviews and reputation website Trusted Shops. "On one hand, it will provide a welcome measure to safeguard consumers when ordering goods online, providing transparency and enabling people to buy with confidence. But the changes to the order buttons, ticking of boxes, right to cancel and refunds policy could cause a major headache for some online retailers.”

The new legislation also prevents retailers from charging more for credit card payments than it costs them to provide the service and from charging more than the basic rate for hotline calls.

Increased cost for retailers
Louise Taylor, senior counsel at international law firm Taylor Wessing, stressed that the regulations which aim to increase consumer confidence are also likely to bring about increased costs to businesses too. 

She also noted that there were still grey areas in the legislation. “Traders will either need to grapple with those grey areas now or wait for further regulatory guidance,” said Taylor. “The main challenge will be striking the balance between strict compliance and maintaining the user experience for consumers.”
"While the regulations aim to increase consumer confidence and benefit businesses by increasing consumer spend, there will be some increased costs to businesses as a result – not only the costs of getting compliant with the regulations, but also new ongoing costs of compliance.”

The Flash Eurobarometer 358 and 359 (2013) indicated that 23% of consumers had bought something based on fraudulent advertising in the previous 12 months, while 44% had come across fraudulent adverts.

The research also revealed that only 25% of EU traders sell across borders and that 40% of EU traders see the cost of complying with different national consumer protection rules as a big obstacle to trade.