We are all fully aware what the last year has represented. Living through the unprecedented circumstances of 2020 has meant that we have had to adapt. Luckily, because of the nature of who we are, we are adaptable beings. So, if your business wasn’t online at the start of 2020, then you most certainly will have taken the steps to change this by the time the year ended, if, of course, the business is one that can also adapt.
However, while you may be aware of the rights and duties you would have with face to face shoppers, which are covered generally by the Consumer Rights Act 2015, you may not be aware of those extra responsibilities and liabilities that you would have with running an online business.
We asked Amanda Hamilton, of NALP, to outline the statutory or regulatory requirements you are obliged to fulfil and to which you must adhere to with an online business.
Obligations increase when you run an online business and with more and more shoppers using online facilities to meet all their needs, it’s even more important to get it right from the start, making sure you understand your obligations and ensuring that your terms and conditions are clear.
Consumer Contracts Regulations
Online sales come under the Consumer Contracts Regulations 2013 (CCR) which came into force on the 13th June 2014. This states that the burden lies with the seller to provide key information to consumers. This information must be comprehensive and not only cover a full description of the item being sold and the cost but also how the cost is calculated. It should also state:
- How consumers can pay for the item(s) giving details of any additional costs and when the item will be delivered
- Details of consumers’ right to cancel, the cost of returning the item(s) and who pays for the cost of the returned item(s)
- Details of how to cancel the purchase
- The location of the seller or the trader on behalf of whom the seller is selling
- In respect of digital items, information on the compatibility of hardware and software as far as the seller can reasonably be expected to be aware
If, as a business, you do not provide this information then you may be sanctioned under the Consumer Contract Regulations. This could mean that the right to cancel given to consumers can be extended automatically from the standard 14 days after payment or receipt of the item(s) to a maximum of one year.
Similar rights to cancel apply to services that are purchased online e.g. the right to cancel starts as soon as a contract is signed and ends 14 days later. But again, if the information required under The Regulations is not evident, then the right could be extended for up to a year.
In respect of refunds, you are obliged to refund the cost of the item and standard delivery within 14 days after receiving the returned item or within 14 days of receiving proof of that item being returned (for example, proof of posting). On the other hand, if you have agreed to collect the returned item, then a refund should be forthcoming within 14 days of cancelling the contract, whether or not the item has already been collected.
A fundamental fact to accept is that, as an online seller, you should expect more returns and be prepared to pay refunds more than if you ran a physical shop. Of course, this will depend on what you are selling. For example, if it is clothing or shoes, then clearly, there is more chance that these items may not be suitable for the buyer, who is, after all, taking a risk by purchasing as seen online, without being able to try them first.
Exemptions from CCR Regulations
The CCR regulations also refer to digital items sold online, which are exempt from the standard CCR regulations. For example CDs and DVDs. In both these cases, once the seal is broken, the seller can legitimately refuse to refund or accept returns.
Similarly, other exemptions include items bought that are for health and hygiene purposes where there is some sort of seal that is broken.
Online bookings relating to holidays, hotels, flights or venue hire are also exempt under the CCR but that doesn’t mean that the consumer has no redress. These contracts made online may well come under other consumer protection legislation or there may be redress within the general English common law, for example, breach of contract.
What about memberships of gyms or dance studios? Well, if it is within the 14 day period, then either a full refund or partial pro-rata refund, if the consumer has already used the facilities within that time. Some organisations will, in fact, offer no sanction at all to membership cancellations whenever they are made, and that is the prerogative of every business. Even more reason to make various decisions like this before commencing your online business, and to make your terms clear in your Terms and Conditions (T&Cs).
Talking of T&Cs , these must be readily available so that consumers can check certain information before purchasing anything. While the minimum period of cancellation under the Regulations is 14 days, you may decide to extend this for certain items or at certain times of the year (for example, Christmas or Easter) and that gives consumers a longer period in which to make up their mind whether or not to cancel.
As a seller you must not supply a digital download – be it music or software – until the 14 day cancellation period has passed to allow consumers, to be absolutely sure that this is what they want.
However, consumers can give his/her express permission to do so, in which case, their right to cancel is lost. In practice most consumers click a button to ‘download now’ and receive their digital book or music immediately, which means their right to cancel is lost. It must be made clear that if they do this, they lose their right to cancel.
Calls to helplines
It is strictly prohibited under the Consumer Contract Regulations to charge in excess of a normal call rate to any helpline. In other words, no premium rate numbers are allowed!
With all that has been going over the past year, and the huge increase in online buying, it’s important to understand your rights as a business and the rights of those that utilise your business, so that both parties are protected. Be sure to keep your T&Cs up to date and clearly visible and accessible to the consumer.
About the author
This article has been written for ByteStart by Amanda Hamilton is Chief Executive of the National Association of Licensed Paralegals (NALP), a non-profit Membership Body and the only Paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England). Through its Centres, accredited recognised professional paralegal qualifications are offered for a career as a paralegal professional.