New consumer rights take effect

Charities (including their trading subsidiaries) and social enterprises which sell goods or services to consumers should be aware of new regulations which came into force last month.  The new Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (Regulations) will apply to most types of consumer contract entered into on or after 13 June 2014.

The Regulations replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellations of Contracts made in a Consumer’s Home or Place of Work Regulations 2008 (known as the “Doorstep Selling Regulations”).  As well as enhancing a consumer’s right of cancellation, the Regulations also expand upon what pre-contractual information a consumer must be given.

Not all consumer contracts are covered by the Regulations.  For example, residential letting contracts, contracts for the sale of medical products and contracts for the sale of lottery tickets are excluded.

However, the changes will be particularly relevant for charity shops or charities which sells goods or services online or by telephone or away from their own premises e.g. on the doorstep or street.

The main changes affecting online sales include the following:

• there is a prohibition against using pre-ticked boxes or other default settings to “add on” payments to the sale of an item.  For example, where a charity adds an optional donation to the sale price, charities will need to ensure that consumers have to opt into making the donation rather having to opt out;
• it will have to be made clear to consumers at the time of placing an order that the order carries an obligation to pay.  The Regulations state that order buttons must be labelled with unambiguous wording such as “order with obligation to pay“.  Failure to do so will mean that the consumer is not bound by the contract;
• Charities will need to provide certain prescribed information to consumers pre-contract, without which the contract may be voidable.  The required information includes:

1. details of the main characteristics of the goods/services;
2. details of the total price inclusive of all taxes;
3. the identity of the trader together with relevant contact details;
4. the consumer must be made aware of their right to cancel the contract;
5. the trader’s complaints policy;
6. the consumer must be made aware of all delivery arrangements; and
7. the duration of the contract.

• for distance and off-premises contracts the “cooling off” period has been extended from 7 working days to 14 calendar days.  This is the period during which, in most circumstances, a consumer can change their mind and decide to cancel the contract.  Charities will need to amend any terms and conditions so that reference is made to the correct cancellation period.  Failure to do so will extend the consumer’s cancellation and refund period to up to 12 months; and
• Traders who offer helpline numbers, including after-sales support, can continue to do so but only where such numbers charge the caller at a basic rate.  Premium rate numbers will only be permissible where an alternative basic rate number is available and it is placed with equal prominence as the premium rate number.

As the Regulations apply slightly differently to each type of contract, charities and social enterprises will need to review the various ways they enter into consumer contracts and consider how the Regulations will affect those particular contracts.  In most cases charities and social enterprises will need to update their terms and conditions of supply and their returns, refunds and cancellation policies.

For more information please contact Chris Hook or 0191 211 7929.