On June 13 2014 new regulations come in to effect that will have a direct impact on all those selling products and services online.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations were approved in December 2013 and are designed to bring UK distance selling legislation into line with consumer protection rules across the EU.
If you are selling online, or planning to, you’ll need to make sure your online shop complies with these new regulations.
Unsurprisingly, the legislative guidance is about as easy to digest as a phone book, so to save you wading through reams of clauses, we have put together a summary of key action points that you will need to ensure you comply with.
Is It Worth the Effort?
Well the simple fact is you have to comply whether it's worth it or not...
However, while there is no doubt that a lot of legislation is just bureaucratic red tape and a box checking exercise, we actually think a lot of these recommendations make huge amounts of sense and are things we would recommend you do anyway. The results are likely to pay back dividends in terms of increased customer confidence and, in turn, improved conversion rates.
Make Sure Customers Have All the Information They Need
If you have been trading online for any length of time, you should already be aware of the Distance Selling Regulations 2000, which the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 are replacing. Hence, much of the following should already be implemented on your site. However, we recommend you don’t leave this to chance and review all your existing terms and conditions to ensure they comply.
What Information Do You Need To Provide?
The following is a summary of the key points you need to cover and also include our suggestions on where to place these. The essence of the legislation is that this information should be easy to find – so don’t try burying it or making it hard to reach!
Tell the customer who you are
Customers need to know who they are dealing with, so make sure you include the following, either on your Terms and Conditions page in the footer of your website, or both:
- Your identity, including trading name and legal form – e.g. My Company Ltd trading as www.tradingstyle.com
- Your geographic address and relevant contact information, such as telephone and fax numbers and email address – not only does this ensure you comply with the legislation, but it has also been shown to improve buyer confidence, helping increase sales conversions – not a bad thing!
- If you are acting on behalf of another trader, you will similarly need to state that fact and include both the identity and geographic address of that trader
- It is quite common for a business to be registered at one address but actually carry on the business activities from a different location. If you are trading from a different address from your registered address, you need to define this, so that a customer can address complaints to the appropriate location and get a timely response
What are you selling, what are the costs and when will they arrive?
In a physical shop, a customer can physically interact with goods before purchasing (unless they are services or other virtual items). This is not possible in an online store, so unsurprisingly, goods or services must be described accurately so that the customer is fully informed as to what it is they may be buying. This is a good thing to do regardless of legal requirement – the more detailed and helpful your product descriptions are, the more likely a site visitor is to buy them. This would extend to providing good quality images, product specifications and downloadable materials.
It makes sense to include all this information on your product detail pages AND a summary before the customer actually places the order, although if too lengthy, it may make more sense to include some items on a supplementary page with a clear link, e.g. Delivery & Payment Conditions.
The legislation requires that you stipulate:
- Main characteristics of the goods or services – what does it do, what are its limitations
- If you are providing digital content services, include details on which hardware and software platforms the service is compatible with
- The total price of the goods, including any delivery or other charges, inclusive of VAT where applicable – this does not apply if you are a B2B website which does not sell directly to consumers
- If you cannot give a firm cost upfront (for example, if you are selling an ongoing subscription service), then clearly show the basis on which the ongoing costs will be calculated – so for example the total cost per month or per year for the service, the minimum duration of the contract and conditions for terminating the contract
- Payment options – if you offer Paypal and another service, let the client know – giving this choice is another great way to improve conversation rates
- Delivery times and options – at the latest, these need to be stated at the beginning stage of the ordering process; providing clear options on the product detail page may again persuade customers to buy from you – everyone loves free or fast delivery. If you can do both, even better, but that’s the subject of another blog.
- Delivery restrictions – if you don’t ship certain items to certain regions or countries, you need to make this clear
Returns & Complaints
In an ideal world, no customer would ever return something, but in reality, returns are a part of life, so you need to clearly define your returns and complaints policy and ensure they comply with the regulations.
We would recommend including this in a section under your Terms and Conditions, or on a dedicated page.
This would include:
- Your complaints handling policy
- Details of any after-sales assistance support or services
- Any commercial guarantees that apply
- Unless you are willing to pay for the cost of returns, you must make it clear that the consumer must pay for returns if they cancel
- Where a customer has a right to cancel, clearly state the terms, conditions, timeframes and procedure for cancelling
- Where a customer cannot cancel, clearly state the circumstances where the right to cancel does not apply – there are a number of examples of where a right to cancel may be lost, the legislation provides a full list, but these would include:
- Bespoke and customised products
- Products sealed for health or hygiene reasons which become unsealed
- Goods which deteriorate or expire rapidly
Does Your Website Have a Telephone Helpline?
While not mandatory under this new legislation, a customer services helplines is a great way to boost confidence to customers who may wish to call you before or after they make a purchase. However, if you do offer a telephone line for help or support, make sure you do not charge more than basic rate for the call.
That means your telephone number should be one of the following:
- A geographic number – these usually begin with 01, 02 or 03
- A mobile number, usually beginning with the prefix 07. Caution is recommended here, as use of a non-landline number can make some potential customers nervous
- A free phone number such as those beginning 0800 or 0808 – however, until reforms proposed by OFCOM come into force, charges can be made for using these numbers from a mobile – our advice is to provide an alternative geographic or mobile number
The Ordering Process
Another goal of the new legislation is to ensure that consumers fully understand the contract of sale that they are actually entering into – i.e. what it is they are buying, the terms under which the product or service is provided and what they are paying for it!
Again, this makes good sense for your ecommerce site, as a customer who clearly understands what they are agreeing to is far less likely to ask for refund on the basis they “didn’t know what they were signing up for”.
The Order Summary Page
In order to ensure the buyer is properly informed, the legislation requires that prior to confirming the order, a clear Order Summary page be presented to the user that meets the following requirements:
- A clear description of the main features of the products or services being purchased
- The total price of the products or services inclusive of applicable taxes
- A clear breakdown of any delivery charges or other charges, if applicable
Most ecommerce retailers will only need to conform to the points above, however, some additional requirements may apply to your site, particularly if you are offering any form of subscription service:
- Where you are offering a service or subscription of indeterminate duration, you will need to state the total cost of the service per billing period – so if you offer a service or subscription with a monthly charge of £9.95 per month, this would need to be clearly shown on the Order Summary page
- The contractual duration of the service (e.g. 12 months) or, if the contract of service is indeterminate (e.g. a subscription to a music streaming service) then you must state the terms and conditions (in summary) for ending the contract
- The minimum duration of the contract and the buyers’ obligations during that time (such as paying for it!) where applicable
The “Confirm Order” Button
The new legislation requires that the consumer is explicitly aware that by clicking on that button they are submitting their order and undertaking an obligation to pay for it.
Order confirm buttons that simply state “Submit”, “Submit Order”, “Proceed”, ”Order” or the like are not sufficient, as they don’t always give the impression that the buyer is entering into a legally binding contract and agreeing to pay for the products or services shown on the Order Summary page.
Most of our websites use the term “Pay Securely for this Order” on the last page of the checkout prior to taking the buyer to the payment process. This is in line with the legislation, which suggests the term “Pay Now”, with the added reassurance that the payment is secure.
There are some suggestions that enhancing this text to state “Order Now With Obligation to Pay” would add further clarity and we would agree with this, in particular for subscription based services.
However, the essence of the legislation is clarity, so variations on the above, that clearly state the consumer is agreeing to the order and payment thereof should meet legal requirements, although there is no further guidance or precedence on this at this stage – we will of course let you know if that changes.
So to reiterate…
If your site does not explicitly state to the consumer what they are purchasing and that they are agreeing to pay for it, they will not be legally bound to any sales contract with you.
No Sneaking In Additional Costs Without Asking…
Have you ever used a website where you are about to complete your purchase and then notice the costs you were expecting have suddenly increased because of some optional insurance or other service that you didn’t ask for has been lumped into the final total?
We hate that and no doubt you do too – it’s just not cricket to stick what are essentially optional extras into the buying process with asking for consent first. You wouldn’t do it to a consumer in a shop without asking and your website shouldn’t do it either.
The legislation caters for that too – so your website shouldn’t have any pre-ticked boxes for optional extras that add to the final balance. This includes your products’ (or product pages?) pages where those extras aren’t part of the product cost.
And Finally – Check Your “Cooling Off” Period
As you probably know, the cooling off period within which a consumer has the right to cancel their order is 7 calendar days. But that will be changing to 14 days from June 13th when this new legislation comes into force.
While this doesn’t structurally affect your website, other than ensuring your terms and conditions pages reflect this, it’s worth knowing, as it will require changes to your returns processes - and will also mean letting your staff know of these obligations.
The good news is the majority, if not all, ecommerce websites built by morphsites already comply with this legislation in terms of site behavior and structure. If you have any concerns in this regard or don't currently use morphsites, we would be happy to review your site for compliance.
In addition, it would be good to review your terms and conditions and other content on your site to ensure it meets the requirements. If you need legal advice, we have a number of contacts that will be able to assist you.