Consumer Contracts Regulations 2013 Guidance Notes

Introduction

The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (referred to throughout these notes as “the Regulations”) provide enhanced levels of consumer protection in a range of transaction types, most significantly distance sales and off-premises transactions (a common example of the latter being doorstep sales).

The Regulations impose new requirements on traders including those relating to pre-contract information, cancellation or “cooling-off” rights, refunds, the imposition of additional charges and confirmation of contracts. The Regulations came into force on 13th June 2014 and apply to all relevant contracts formed as of that date.

This guide explains the key consequences of the Regulations for e-commerce traders and makes some practical suggestions to aid in compliance.

Goods, Services and Digital Content

The Regulations address three separate types of transaction – those for the sale of goods, the provision of services, and the sale of digital content. The “digital content” category is new and refers to any digital content that is not supplied on physical media. Under the regulations digital content may take a range of forms including (but not limited to) apps, software, computer games, music, video or text. Logically the definition can also be extended to include images and other types of files that are capable of being sold and delivered digitally to consumers.

As will be seen below, the Regulations vary in certain cases depending upon whether a trader is providing goods, services or digital content. If one or more of those categories is being provided simultaneously the general rule is that different rules will apply to each component of the transaction. More detail will be provided in this regard when considering the different rules.

1. The Information Requirements

The Regulations set out a lengthy list of information that traders must make available to consumers before a contract is formed. It would be tempting to assume that such information would need to be presented in a list; however the Regulations say nothing about the form of the information, only that the consumer should be “reasonably expected to know how to access it”. What’s more, the information must be clear and comprehensible. We would suggest, therefore, that much of the information listed below would be presented in the normal course of e-commerce. The main characteristics of the goods, services or digital content, for example, would likely be provided in the context of a product / service detail page. The identity of the trader and contact details one would expect to find on an average “contact us” page.

Under Schedule 2 of the Regulations, the following pre-contract information must be given or made available to traders:

Information Comments on Compliance

1. Main characteristics of the goods, services or digital content. This information would likely be included as a matter of course on an e-commerce website under the heading of product or service information. Note that in the case of digital content additional detail should be provided as to compatibility, system requirements and so on (see below).

2. Identity of the trader. As this refers essentially to a trading name, this is likely to be provided by default on the header of a website. It would, we suggest, be worth also including the full company name somewhere that is easy to access, e.g. on an “about us” or “contact us” page. The same goes for the information required by 3, 4 and 5 below.

3. Address and contact details. As with the identity of the trader, we suggest that this information would be best put together on a dedicated page on a website. The contract details should include the trader’s geographical address and, where applicable, telephone, fax and email. With respect to telephone numbers, note the new restrictions on the use of premium rate numbers detailed below.

4. Address and identity of other trader for whom the trader is acting. If the trader is trading on another’s behalf, the other trader’s details must be provided to consumers.

5. Place of business address of trader and other trader for whom the trader is acting. Not to be confused with the addresses under point 3 and/or 4, this refers to a place of business where customers can contact the trader to address any complaints and is only applicable if the place of businesses is different to the address or addresses already provided under 3 and/or 4.

6. Total price (or how the total price will be calculated). This is another item that will generally be included as a matter of course. If the total price is known it should be clearly displayed. If it will be dependent upon factors specific to a customer’s order, for example, then the method of calculation should be shown (e.g. an hourly rate in the case of services).

7. Additional delivery charges, other costs, and how they will be calculated. This is information that we would generally expect to see presented during the order process when a customer is to select any additional items or features and/or their delivery preferences. As with point 6, known sums should be shown and variable amounts should be explained clearly.

8. Costs where the contract is of indeterminate duration or is a subscription. This is also information that would likely accompany a description of products, services or content and may, for example, take the form of a subscription pricing structure with fees per period and the available durations set out clearly for a customer to select.

9. Communication costs where not basic rate. This is more applicable to distance sales contracts other than e-commerce but may still apply particularly if customers are given the option of concluding a purchase over the telephone or by some other distance sales method. If the cost of communication is anything more than the basic rate, the customer must be clearly informed.

10. Payment, delivery and performance arrangements. Another detail that we would expect to see included either within the product/service/content-specific information, during the order process, or possibly both. The customer should have a clear understanding of how to pay and how their purchase will reach them, how services will be provided or how digital content will be made available.

11. Complaints handling policy. Details of the trader’s complaints handling policy should be provided. We would suggest that having the policy available in full on a web page would meet the requirements provided that page was easy for customers to find. Traders should take care to ensure that links and page titles are unambiguous and should also take care not to “bury” important information like a complaints handling policy.

12. Information about the right to cancel. Also known as the “cooling-off period”, the right to cancel is important and will vary according to whether the transaction is for goods, services or digital content. More detail about the right to cancel is provided below. The information can be made available in a trader’s own words or by using model wording included in the Regulations. As well as including the information (and indeed the means to cancel such as a cancellation form) on a dedicated page, we would also suggest including the information in a trader’s standard terms and conditions.

13. Consumer’s obligation to pay for the return of goods. Where the transaction involves the sale of goods and the customer cancels within the cooling-off period they are, by default, obliged to pay for their return. This can be varied and indeed some traders choose to offer pre-paid returns labels or similar means of covering the costs themselves. The Regulations only set the minimum standard – there is nothing stopping a trader being more generous.

14. Consumer’s obligation to pay for services provided within the cancellation period. As covered in more detail below at 4.5, this applies only if the customer has agreed to the supply of the services beginning within the cooling-off period. Customers should be made aware that they will be required to pay for services provided up to the point of cancellation. As detailed below, one suggestion to make this clear would be to include a checkbox as part of the order process requiring customers to acknowledge this.

15. Losing the right to cancel. As detailed below at 4.5 and 4.6, the right to the cooling-off period can be lost in certain circumstances, particularly in the case of services and digital content. As with point 14, we would suggest that a checkbox acknowledging that the right to cancel will be lost in the appropriate circumstances would be a clear way of complying with this information requirement.

16. Details of the trader’s legal duty to supply goods in conformity with the contract. This reminder would, we suggest, be best placed in the trader’s standard terms and conditions.

17. Details of after-sales services and guarantees. This information would likely best form part of the order process, being presented to the customer at a logical point so as to inform them of the after-sales service and/or guarantees available (particularly if there are options to choose from). If enhanced options are available that would incur additional costs, traders must now refrain from using any pre-ticked checkboxes in relation to them.

18. Details of relevant codes of conduct. This type of information, we would suggest, should be presented on a dedicated page with clear links pointing to it.

19. Contract duration and conditions for termination. This is another piece of information that we would generally expect to form part of the product/service/content details in the context of e-commerce. Customers should be given clear, unambiguous details of minimum contract periods, how and when contracts may be renewed or extended, and how they can be brought to an end.

20. Minimum contract duration. This is covered above under point 19. The fact that the Regulations make minimum contract duration a separate point, however, underlines the importance of including the information.

21. Details of consumer deposits and financial guarantees. If customers are required to pay any form of deposit or similar sums, we would suggest that this forms a clear part of the order process and is highlighted as a separate charge.

22. Digital content’s functionality and (where relevant) protection. In many cases, we would expect that this information would form part of the general product details pertaining to the digital content under point 1. There may, however, be other details that traders may wish to leave out of product descriptions to avoid “cluttering up” their web pages or to avoid “information overload” for customers. Nevertheless, details of additional technical functions such as tracking, the sending of usage statistics etc. as well as details of any DRM (Digital Rights Management) used should be provided. We would suggest either including such details within the details for each item of digital content or having a dedicated page (perhaps within a website’s “help” section) presenting the information that can be linked to from each product/download page.

23. Digital content’s compatibility. Here again is information that we would expect to be included in the general details under point 1. Hardware requirements and software compatibility are commonly provided with respect to digital content as a matter of course and we wouldn’t expect this to constitute a significant change for most traders.

24. Complaint and redress mechanisms. Where a trader is subject to some form of out-of-court complaint and redress mechanism available to customers, comprehensive information should be made available. We would suggest making this information available alongside the complaints handling policy details under point 11.

As can be seen in the table above, in many e-commerce situations providing the information required by the Regulations will be relatively straightforward. Indeed, in many cases traders will have been providing the information for a long time already. It is important to reiterate, however, that the information must be easily accessible for customers – if information isn’t presented directly to consumers then that information must be easy to find and clearly pointed out. Note also that where contracts are concluded by electronic means (i.e. e-commerce) that any delivery restrictions and the means of payment accepted by the trader must be indicated “clearly and legibly” at the start of the ordering process (if not before).

What’s more, certain pieces of information set out above must be provided directly before a customer places an order for goods, services and/or digital content. It will be particularly important, therefore, that traders ensure that their order process is designed in such a way that the following is presented accordingly:

• Main characteristics of the goods, services or digital content;

• Total price (or how the total price will be calculated);

• Additional delivery charges, other costs, and how they will be calculated;

• Costs where the contract is of indeterminate duration or is a subscription;

• Contract duration and conditions for termination;

• Minimum duration of contract.

It is important to note that the presence of this information is necessary primarily when the contract (i.e. the transaction) places the customer under an obligation to pay. Even in situations where a customer is placing an order for something that is free, however, and especially when the “free” refers only to a trial after which an obligation to pay will be incurred, we would suggest providing as much of the abovementioned information as possible so as to ensure that customers are fully informed and that the trader is protected.

1.1 Information Requirements – Concessions for Mobile Devices, Micro-transactions and Similar

Some forms of e-commerce may take a form other than a website. A popular example is that of so-called micro-transactions which may take place within apps or websites or – most importantly – on mobile devices. Where a contract is concluded through a means of communication allowing limited space or time, the information above may be presented differently.

Where space and/or time are at a premium, therefore, only the following from the list above need to be provided directly to the customer before the contract is concluded:

• Main characteristics of the goods, services or digital content;

• Identity of the trader;

• Total price (or how the total price will be calculated);

• Additional delivery charges, other costs, and how they will be calculated;

• Costs where the contract is of indeterminate duration or is a subscription;

• Information about the right to cancel; and

• Contract duration and conditions for termination.

It is interesting to note that the 2011 EU Consumer Rights Directive (from which the Regulations are derived) justifies the “softer” requirements on the basis that “certain mobile telephone screens or the time constraints on television sales spots” mean that fewer characters can be used. Even in such circumstances, however, we would suggest that the above list still requires a lot of information to be presented in a confined space – particularly with regard to the information on the right to cancel.

As for the remaining information from Schedule 2 of the Regulations (as listed above), this must still be available to the customer but it does not need to be put directly in front of them prior to sale. It can instead be “made available” by other means. We would suggest that putting it on a web page (or a series of pages depending upon how traders choose to present it) and providing links to those pages as part of the ordering or purchase process.

1.2 “Order With An Obligation To Pay”

This, believe it or not, is the suggested wording to replace the many “buy now”, “confirm”, “order”, “complete” and similar buttons that currently proliferate the world of e-commerce. To quote the Regulations in full:

“If placing an order entails activating a button or a similar function, the trader must ensure that the button or similar function is labelled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the order implies an obligation to pay.”

We would suggest that great care should be taken with order buttons. It cannot be denied that the wording suggested by the Regulations is an interface designer’s nightmare. Clean, simple web interfaces may be considerably disrupted by complying with the letter of the law in this case. Even more so can the accusation be levelled at the Regulations in the case of mobile e-commerce platforms, in-app purchases and the like. Nevertheless, given the potential risks of failing to comply, we would suggest that some effort is made to do so!

1.3 Failing to Comply

If a trader fails to provide the required information as outlined above they run the risk of being found to be in breach of contract. Further consequences in relation to specific pieces of information include:

• Failing to provide information on delivery charges can result in the customer not being liable for those charges;

• Failing to provide the correct pricing information for contracts of indeterminate duration may result in the customer not being liable for the charges or costs;

• Failing to provide details on the customer’s right to cancel can result in the cancellation period being extended, the trader being denied the right to make deductions from refunds for excessive use, and the trader being denied the right to charge for services provided up until the point of cancellation;

• Failing to provide details on the cost of returning goods can result in the trader, not the customer, being required to cover those costs;

• Failing to obtain the customer’s acknowledgement that ordering incurs an obligation to pay may result in the customer not being bound by the contract or order; and

• Failing to clearly label a “pay now” or “order” (or similar) button clearly may also mean that the customer is not bound by the contract or order.

2. Confirming the Contract

2.1 Information Requirements

The pre-contract information set out above must be provided again to the customer once the contract has been formed. Again, how the information is presented is not prescribed. It does not need to be a list – as long as the information is there, the presentation of it is up to the trader.

Under the regulations the information must be provided on a “durable medium”. The key word here is “durable”. Providing a link to a web page that may change at some point in the future will not be sufficient. The customer must be able to access the information at any time (unless they choose to dispose of it) and a degree of permanence is thus required. In the case of e-commerce, therefore, we would suggest including the information in an email or possibly even on paper – certainly in the case of the sale of goods the latter option would be feasible. Other guidance also suggests that storing the information in a customer’s online account would be sufficient though this would arguably be less “durable” than an email or hardcopy. The fact that the customer may delete the email or throw away the hardcopy without even looking at them is irrelevant – that is their choice. What is important is that traders comply with their obligations.

2.2 Time Limits for Confirmation

The Regulations require that the confirmation be provided to the customer “within a reasonable time after the conclusion of the contract”. In the case of goods, this should be no later than the time of delivery (thus making the paper hardcopy suggestion particularly useful). In the case of services, this should be before the performance of those services begins and we would thus suggest that email would be the best option.

Interestingly, the Regulations do not refer to digital content under this heading. We would therefore suggest taking the same approach as that suggested for services – an immediate confirmation email. If, however, the digital content in question consists of small, separate “items” (e.g. individual songs or other one-off purchases), it may be preferable to follow the suggestion of using a customer’s online account to store the information for the customer to view as they choose with smaller (shorter) confirmation emails each time a transaction is completed. At this stage, either option seems clumsy and has the potential to overwhelm a customer’s inbox to the point of being blocked by junk mail or spam filters; however in the absence of more sympathetic official guidance, we would recommend complying with the letter of the law for the time being.

2.3 Failing to Comply

As with the pre-contract information requirements, if a trader fails to comply with the post-contract confirmation requirements they will run the risk of being found to be in breach of contract.

3. Sale of Goods

3.1 Delivery Obligations and Time Limits

Under the Regulations it is the trader’s responsibility to deliver purchased goods to the customer. Subject to any express terms in the contract to the contrary, this term is automatically implied.

As for the time limit for delivery, this again is implied unless the trader and customer specifically agree otherwise. The Regulations require that goods are delivered “without undue delay”.

What does “without undue delay” mean? The Regulations interpret this as being no more than 30 calendar days after the date on which the contract is formed (i.e. the date of the transaction). In many situations, this will be unlikely to present a problem. Indeed in the competitive world of e-commerce, traders go to great lengths to beat their competitors in offering fast, good value delivery options. Nevertheless, there may be certain situations in which 30 calendar days is insufficient. This may be the case, for example, where goods are made to order.

If the 30 calendar day period is not realistic, therefore, it is important that the customer agrees to a longer period. The Regulations do not, however, define such an agreement. We would therefore suggest the following as possible means of complying with the Regulations in this regard (using one or more in combination):

• Including the longer delivery time in the product-specific information. For example: “All of our widgets are handmade to your exact specifications when you place an order. It can take our craftsmen up to 60 days to complete your widget and send it to you”.

• Incorporating clear wording explaining delivery times in the delivery options part of the order process.

• Adding an additional layer of protection by adding a checkbox requiring customers to expressly agree to a delivery time period that exceeds 30 calendar days.

The Regulations also refer to situations in which the “agreed time” for delivery is, in effect, immediate (i.e. at the same time that the contract is formed between the trader and the customer), however we cannot envisage any situation where this would apply in an e-commerce scenario.

3.2 The Passing of Risk in the Goods

Determining who bears the risk (i.e. the risk of loss or damage with respect to the goods) is important in any sale of goods transaction, particularly when those goods will spend a period in the physical possession of a third party carrier.

Under the Regulations it is the trader who bears the risk until the goods come into the physical possession of the customer (or another person identified by the customer who will take possession of the goods instead).

This, we would suggest, will be the position in the vast majority of cases, however the Regulations do envisage a scenario whereby the customer commissions their own carrier to deliver the goods. Under most circumstances this is not a situation that we can envisage occurring a great deal in e-commerce. Nevertheless, it is important to be aware of.

3.3 Failing to Comply

If the trader fails to deliver goods within 30 days and has not obtained the customer’s agreement to a longer delivery period (see above) or fails to deliver the goods within the agreed period, the customer may terminate the contract immediately (in writing or orally, though we would recommend keeping written records) if any of the following apply:

• The trader has refused to deliver the goods;

• Delivery of the goods within the agreed time period was essential (“essential” is not defined in the Regulations so the assessment will be based upon the circumstances at the time that the contract was formed); or

• The customer expressly told the trader that delivery within 30 days (or within another agreed period, as applicable) was essential.

Customers may, in such circumstances, specify a new delivery period or they may terminate the contract. In the latter scenario (or if the trader fails to comply with the new delivery period and the customer then terminates) the trader must reimburse any and all payments made by the customer “without undue delay”.

Instead of outright termination, the customer may also cancel the order (though we would find this difficult to practically differentiate from termination) or reject any goods that have been delivered. In the latter case, if goods are delivered, the customer may only reject them in their entirety where they form a “commercial unit” (i.e. where rejecting only part of them would impair their value).

As in the case of termination, if an order is cancelled or goods are rejected, the trader must reimburse the customer “without undue delay”.

4. Cancellation Rights

In distance selling transactions (e-commerce for our purposes in these guidance notes) consumers will have, in many cases, a cancellation or “cooling-off” period. This period is set at 14 calendar days and will vary according to the type of sale – i.e. for goods, services or digital content.

During the cooling-off period, customers may cancel the contract for any reason (and do not have to give reasons either, though traders may wish to provide the optional facility to do so as this can be a valuable means of gathering customer feedback and improving your business).

Traders are required by the Regulations to offer a model cancellation form to their customers (the form is included in Schedule 3 of the Regulations). The Regulations also state that traders can continue to offer their own cancellation forms alongside the model form. This, we would suggest, serves only to confuse matters. Implementing the model form with optional additional information prompts (for example, asking for feedback from the customer) would seem to be the most sensible option.

NB: There are certain goods and services that are fully or partially exempt from the Regulations, particularly where the right to cancel is concerned. For more detail, please refer to point 6 at the end of this document.

4.1 The Cancellation Period

As noted above, while the duration of the cancellation period is set at 14 calendar days, when it begins and ends will vary. It is also important to note that, as detailed below at 4.5 and 4.6, in certain circumstances the cancellation period is, for all intents and purposes, removed by default. The start and finish times for the cancellation period vary as follows:

• Goods: 14 calendar days from the day on which the goods come into the physical possession of the customer (or a person identified by the customer to take possession of them);

• Multiple goods (single order but goods or parts delivered separately): 14 calendar days from the day on which the last of the goods comes into the physical possession of the customer (or a person identified by the customer to take possession of them);

• Goods (regular delivery over a defined contract period): 14 calendar days from the day on which the first of the goods comes into the physical possession of the customer (or a person identified by the customer to take possession of them);

• Services: 14 calendar days from the day on which the contract between the trader and the customer is entered into (see exceptions in 4.5); and

• Digital Content: 14 calendar days from the day on which the contract between the trader and the customer is entered into (see exceptions in 4.6).

The Regulations, of course, only set out the minimum cancellation period. There is nothing preventing a trader from offering a more generous cooling-off period.

4.2 How Customers Can Cancel

Whilst traders are required to provide a model cancellation form by the Regulations (see above), the requirements imposed on customers are significantly more flexible. The customer may use the form provided by a trader or, if they prefer, may make “any other clear statement setting out the decision to cancel the contract”.

What might the clear statement be? We would suggest that the following should qualify as “a clear statement” and that the information necessary to enable customers to use these methods is made available alongside the cancellation form:

• Letter;

• Telephone call;

• Returning goods with a “clear statement”;

• Email.

The original legislation from which the Regulations are derived (the Consumer Rights Directive) only refers to the first three methods, however given the nature of e-commerce we would find it difficult to justify any argument against email also being an acceptable method of communicating a customer’s decision to cancel.

NB: The burden of proof is on the customer when it comes to showing that they have cancelled within the cancellation period. It is, therefore, in their best interests to ensure that a durable medium is used. For a reminder of what constitutes a “durable medium” please refer back to 2.1.

As to timing, provided the customer sends the communication before the cancellation period expires and can prove that it was sent, they are deemed to have cancelled the contract within the allowed time. It would seem, therefore, that even if a customer sends an email after the close of business on day 14, this would be sufficient.

4.3 Cancellation in Sale of Goods Transactions – Returning Goods

If a customer has received the goods and subsequently exercises their right to cancel, the goods must be returned to the trader “without undue delay” and in any case no more than 14 days after which the customer has informed the trader that they are cancelling the contract.

In most e-commerce scenarios we would expect that customers would return goods by post or some other form of courier service, however customers are also permitted to hand the goods back in person. Those traders, therefore, that trade online and through retail premises should give customers the option of returning goods purchased online to a retain store as well.

Under most circumstances we would not anticipate that this would cause a problem, however in certain circumstances e-commerce and retail stores trading under the same brand may in fact be separate entities. The regulations do not elaborate on such a scenario, however we would suggest that provided it is made clear to customers that this is the case and that they thus cannot return goods purchased online to retail stores, there should not be a problem.

Who, then, is responsible for the cost of returning goods? Under normal circumstances, the customer must bear the cost of returning the goods. Many traders, however, extend customers’ rights in this regard by offering a pre-paid (i.e. free) returns option. This is not required by the Regulations, but we would certainly suggest that it would help to build and maintain customer goodwill.

It is also important to note that if a trader fails to tell the customer that they will be responsible for the cost of returning goods (when providing the pre-contract information as set out above), the trader must bear the cost instead.

As for where the customer should return goods to, the Regulations consider a number of scenarios but our recommendation would be simply to provide a clearly labelled returns address, thus leaving no ambiguity for either the customer or the trader.

There may be cases where a trader is required to collect the goods. When dealing with certain types of goods (or, for that matter, certain ways in which traders may choose to deal with their customers) it may be sensible or desirable to offer to collect cancelled goods. If the trader has offered to do so, then they must. Other rules apply to so-called “off-premises contracts” (for example, door-to-door sales), but they are not applicable to distance contracts (under which e-commerce falls).

4.4 Cancellation in Sale of Goods Transactions – Refunds

Here again the phrase “without undue delay” appears. Refunds must be issued without undue delay and in any case no later than 14 calendar days after either:

• The day on which the trader receives the returned goods or the day on which the customer provides evidence that they have sent the goods back (whichever is the earlier); or

• If the trader has offered to collect the goods from the customer, the day on which the customer informs the trader that they wish to cancel.

What if the goods have not yet been dispatched when the customer cancels? If payment has already been taken we would suggest that the “without undue delay” requirement would still apply and that the customer should be refunded no later than 14 calendar days after the day on which they inform the trader that they wish to cancel.

Unless a customer agrees otherwise, the trader must refund all sums due via the same payment method originally used by the customer when they paid for the goods in the first place. The same rule applies to vouchers. A customer can only be refunded with vouchers if they originally paid with vouchers or if they have expressly agreed to accept a refund in the form of vouchers.

What about deductions? It may well be the case that the customer has removed the goods from their packaging, handled or used them in some way. Deductions can be made from refunds, but only in certain circumstances.

Customers are permitted to handle the goods to the extent necessary to establish their nature, characteristics and functioning. The Regulations give the example of the kind of handling that would normally be permitted in a shop to show what is permissible. Handling or use that goes beyond that, however, entitles the trader to make a suitable deduction from the refund – one that reflects the reduction in the value of the goods as a result of such handling. If the sum isn’t deducted from the refund (the trader may, for example, issue a refund as soon as the customer informs them that the goods have been sent back, though for this very reason, we would suggest not issuing a refund until the goods have been received) the customer will be required to pay the suitable sum to the trader.

A further important point to note is that even where some form of “premium” delivery service has been selected (i.e. anything which exceeds standard delivery costs), the trader is not obliged to refund anything beyond the cost of standard delivery.

Remember that if the customer has not been fully informed of their right to cancel, the trader will lose the right to make any deductions.

4.5 Cancellation in Service Contracts

As noted above under 4.1, in some cases the cancellation period can be effectively removed. Service contracts are one of the situations in which this may occur.

Taking the simplest scenario first, if a service is ordered but is not due to commence until after the 14 day cancellation period has passed, the cancellation right is unaffected and the customer is free to cancel during the 14 days.

If, however, services are to begin during the cancellation period, the situation becomes more complicated. Firstly, whether the services are to extend beyond the 14 days or whether they are to be completed within that time, the customer must expressly request that the service begins before the cancellation period is over. This is essential or the trader will be placed at a significant disadvantage and the customer will remain free to cancel without having to pay a single penny, even if the service has been fully performed!

In such transactions, then, we would suggest structuring the order process in such a way that the transaction cannot be completed without an express request (a suitably worded checkbox, for example) from the customer that the service begins within the cancellation period.

4.5.1 When services can be fully performed within the cooling-off period

In this scenario, once the services are completed, the customer loses the right to cancel and must pay for the services in full. This is subject, however, both to the express request requirement noted above and to a further requirement that the customer also acknowledges that their cancellation rights will be lost once the service is fully performed by the trader.

4.5.2 Where services begin within the cooling-off period

When the services begin but are not completed when the customer exercises their right to cancel, the customer must pay for the services as provided up to that point.

In such cases, the period for which payment will be due begins when the provision of services begins and ends at the time (note time, not date) at which the customer informs the trader that they are cancelling the contract.

The total due from the customer in payment for the services thus provided should be calculated in proportion to the service supplied up until cancellation and should therefore represent a relative percentage of the total price.

The Regulations make further provision for the case in which the total price is excessive. We are uncertain as to why this is included as few traders are likely to decide that their original price for the full services was excessive when working out what the customer must pay having now cancelled! Similarly, having already (one would assume) agreed to the total price, the customer would surely have a tough time convincing any trader that the total price was excessive having already received part of the services. Perhaps, we would suggest, the important point to take away here is to ensure that prices are reasonable and commensurate with the market rate in the first place. By taking such care, not only will traders ensure that their customers are getting a good value service but they will also be protected in the event that any dispute as to the reasonableness of the price arises in the circumstances considered here.

4.6 Digital Content and the Cancellation Period

NB: This section applies to the supply of digital content “not on a tangible medium” i.e. that which is provided as a download, stream or some other electronic form as opposed to being supplied on a physical medium such as a disc or memory stick. In cases where the content is supplied in such a manner, we would suggest that the rules pertaining to the sale of goods would apply.

Once again, as noted in 4.1, the cancellation period can in some cases be removed. This is of particular importance in the case of digital content. The very nature of digital content means that it will often be required and supplied instantaneously – nobody wants to wait 14 days before they can access a website or download a stock photo or music file. Surprisingly, however, this is the default position under the Regulations.

It is important to note, however, that the default position is all it is. It is possible (and, we would expect, to become the norm in the vast majority of cases) to remove the cancellation period when supplying digital content.

As with services, the customer must make an active choice to waive the cancellation period. The customer must give their express consent for the supply of the digital content to begin within the cancellation period and they must acknowledge that, by doing so, they will lose the right to cancel. Moreover, such consent and acknowledgement must be confirmed by the trader as part of the confirmation of the contract (in a “tangible medium”).

We would suggest that checkboxes at the appropriate point in the order process would again be the preferred way of achieving this and obtaining such consent and agreement.

4.6.1 What is “Digital Content”?

In short, “Digital Content” is anything that can be “produced and supplied in digital form” (as defined in the Regulations). In essence, therefore, it could be anything from information on a web page to a tiny text file to an entire operating system.

It is also important to consider the methods of delivery that would fall within the definition. As has already been noted, this is essentially anything that doesn’t involve physical media and could therefore include access to web pages behind a “paywall”, a direct download, a link to some form of storage where the content can be accessed at the user’s convenience (e.g. a “my library” or “my account” page) a link to a third-party download location, streaming, or even an email attachment.

4.6.2 Digital Content and Subscriptions

The information presented thus far considers the context of an individual piece of digital content being made available immediately; however the rules apply equally to a range of content made available under, for example, a subscription model. As long as the content is made available immediately, the customer’s consent and acknowledgement must be obtained to remove the right to cancel.

As for automatic renewals of subscriptions, the Regulations do not set out any express requirements. We would therefore suggest that the terms and conditions set out for a customer to read and accept when they initially subscribe contain a clear explanation of the right to cancel and when it is lost. By default, it would seem to be the case that the cancellation period in these circumstances occurs only once – at the beginning.

4.6.3 Cancelling Before Access and More Generous Terms

In practice there may or may not be a gap between the customer completing their order and the digital content being delivered to them or otherwise accessed by them. If there is a gap, this will, under our interpretation of the Regulations, provide a small window of opportunity for a customer to cancel under the regulations. In any case, we would suggest that this is (where possible or practical) something that is made available to customers. If a customer has not downloaded, streamed, viewed or otherwise accessed the content they have signed up for, we would suggest that it would make good sense to allow for cancellation. In particular, this would be useful in the context of auto-renewing subscriptions. A customer may simply forget to cancel the automatic renewal even though he or she has no intention of accessing the content any more.

From the trader’s perspective, the customer has not benefitted and the trader has not incurred any cost. Fairness, not to say a common-sense reading of the Regulations, would therefore suggest that cancellation in such limited circumstances should be allowed.

Moreover, in some cases, particularly those where a subscription model is used, it may be reasonable to offer a cancellation period even if a customer has accessed the content. As with the small “cancellation window” discussed above, we would suggest that if the benefit to the customer is small and/or the detriment to the trader is small, little will be lost by allowing more flexibility than the minimum standard in the Regulations provides for. What is more, some traders opt to do this as a means of bolstering customer relations and portraying a kinder, friendlier image. In a world as competitive as e-commerce the “we’re not evil” sentiment can be a powerful marketing tool!

4.6.4 Digital Content or Services? (Or Both?)

If a customer is paying for some form of download or streaming, the situation appears to be clear-cut. The customer is paying for digital content and is receiving that content. There are other situations, however, where websites may charge for access but do not provide a discernable “digital good”. Where, then, do these sit?

Clearly such a scenario will still involve digital content in the form of the website itself, images, text, information and so forth, but the overall nature of the site and the way in which it is designed to be used may more closely resemble a service.

There is nothing in the Regulations that prevents a trader in such a situation from having cancellation rights that treat the digital content and service aspects as separate entities, but this would be complicated (needlessly, we would suggest) for both the trader and their customers. The preferred route would perhaps be to treat such offerings as services, providing applicable cancellation rights (see 4.5 above). On the face of it, this may seem to be more generous; however much depends upon what the service is and how much of it the customer benefits from before cancelling. If, for example, the trader is providing an information or news service, one could argue that the service has been “provided in full” as soon as the customer reads their first article. If the trader is providing an online dating service, one could again argue that the service has been “provided in full” as soon as the customer has made contact with another user. Taking the latter scenario further, if the customer is fortunate enough to be in such a position after, say, two days, it would seem prejudicial to the trader to then require them to refund 12 days+ worth of the customer’s subscription fee, thus making the “provided in full” interpretation quite justifiable.

If, on the other hand, the service provided to the customer could be viewed as one which is only provided “in full” over a course of time it may be preferable, at least within the cancellation period, to allow for partial refunds.

The Regulations are regrettably unclear in this area but on the positive side, we would consider that this allows online traders some leeway. Nevertheless, we would advise care and caution when determining a cancellation policy in cases where customers are paying for something that is closer to a “service” than to “digital content”.

4.7 Cancellation and Ancillary Contracts

NB: The following applies only to ancillary contracts that provide for goods and/or services and does not extend to digital content.

In some e-commerce transactions it may be the case that additional services are offered alongside the main transaction. Common examples include insurance, extended warranties, maintenance and service plans.

Under the Regulations, if the main contract is cancelled, so too will be any ancillary contracts. The cancellation of ancillary contracts occurs automatically without any additional action required of the customer.

In some cases the parties to an ancillary contract will be the same as the parties to the main contract, i.e. the trader and the customer. If, however, a third party is involved (say, for example, an insurance company) it is the trader’s responsibility to inform that third party that the contract has been cancelled. The customer need do no more than cancel the main contract with the trader.

4.7.1 Refunds and Costs

The Regulations do not set out who is to be responsible for refunding the customer under any ancillary contracts; however government guidance suggests that the obligation lies with the party to whom the relevant payment was made. If, therefore, the payment under an ancillary contract was made to the trader, it is the trader that must issue the refund. If the payment was made to a third party then the responsibility to issue the refund lies with the third party.

In many cases, however, we would expect that, from the customer’s perspective at least, all payments go to (or at least via) the trader. That being the case, the trader should be the one to refund the customer and should then obtain the corresponding refund themselves from the third party.

As is covered above, there may be certain costs (or deductions from refunds) incurred by a customer for enhanced or “premium” delivery, for excessive use, for returning goods and for any services provided up to the point of cancellation. The same rules apply to refunds under ancillary contracts.

5. Restrictions on Additional Charges

The Regulations set out a number of restrictions on additional or premium charges being levied on customers. Key among these are the following:

• The requirement to obtain the customer’s express prior consent for additional charges. In practical terms, therefore, pre-checked boxes adding premium services or other items onto orders must be avoided. Careful, clear wording would also be valuable in such situations, we would suggest, so as to ensure that customers understand exactly what they are signing up for.

• A bar on premium rate helplines for use by customers to deal with an existing contract.

6. Exempt and Partially Exempt Contracts

The Regulations do not apply to certain contracts and we would strongly recommend that any traders whose goods or services may fall either fully or partly within any of the following obtain legal advice from a suitably qualified solicitor:

• Gambling (within the meaning of the Gambling Act 2005);

• Banking, credit, insurance, personal pensions, investments or payments (unless such services are offered as ancillary services to contracts which are covered by the Regulations);

• Rights in immovable property (or the creation of such rights);

• Rental of residential accommodation;

• Construction of new (or substantially new, e.g. conversion) buildings;

• Supply of food or drink on regular rounds (e.g. milkmen);

• Package travel and holidays;

• Timeshares;

• Vending machines or “automated commercial premises”;

• A single connection by telephone, internet or fax established by a consumer;

• A single connection by public payphone;

• Sale of goods by way of execution or other authority of law.

The Regulations apply only in part to certain contracts and, as with the above, we would strongly recommend that any traders whose goods or services may fall either fully or partly within any of the following obtain legal advice from a suitably qualified solicitor:

• Passenger transport services;

• Off-premises contracts worth less than £42 (NB: this applies to off-premises (e.g. doorstep sales) transactions and is thus outside the scope of e-commerce and other distance selling methods)

• Supply of medicinal or other healthcare products by prescribers or similar;

• Day-to-day transactions (NB: this applies to on-premises transactions and is thus outside the scope of e-commerce and other distance selling methods);

• Goods or services with fluctuating prices. In such cases there is no right to cancel.

• Customised goods or those made to the customer’s specification. In such cases there is no right to cancel.

• Rapidly deteriorating goods. In such cases there is no right to cancel.

• Vin en primeur or similar. In such cases there is no right to cancel.

• Sealed goods. In such cases, where the seal has been broken and the goods cannot be returned for health reasons, there is no right to cancel.

• Sealed audio, video or computer software. In such cases, where the seal has been broken, there is no right to cancel.

• Goods which become inseparably mixed with other goods after delivery. The right to cancel is lost after such mixing.

• Urgent repairs or maintenance. In such cases there is no right to cancel.

• Newspapers and magazines. In such cases there is no right to cancel.

• Contracts concluded at public auctions.

• Contracts for the supply of accommodation, transport of goods, vehicle rental services, catering or services relating to leisure activities, if the contract provides for a specific date or period of performance. In such cases there is no right to cancel.