E-commerce is the fastest growing retail market in Europe. Compound annual growth is currently running at around 12 percent per annum, predicted to result in an online retail market worth €233.9 billion (approximately US$262 billion) in 2018. However, the majority of online trade has, to date, been within each state’s own borders. Consumers have generally been more cautious about ordering from states outside their own because of concerns over uncertain consumer protections: how can I be sure I get my goods; what is the delivery charge; what if I need to return?
Harmonization of European laws, from a disparate set of rules (including the old Distance Selling Regs of 2000), should help ease those concerns. In effect for nearly a year, the EU Consumer Rights Directive offers further protection to consumers buying across borders. This Directive is also assisting global retailers in managing their online sales.
The overall focus of the Directive is about providing consumers with information to help them make informed decisions. This is not just about terms and conditions. Online retailers, or e-tailers, also need to consider the structure of their websites and operational practices.
In the Directive, delivery restrictions and acceptable means of payments must be clear from the start of the ordering process. Also, clear disclosures must be made about the retailer, the product or service, price and delivery information in a “durable medium.” Therefore, while the instantaneous e-mail is still common practice, the level of information required to be provided to the consumer has increased since 2014. In a nod to m-commerce, retailers only need to provide a sub-set of information when consumers are buying “on the go.”
1. Cooling-off period − Retailers must provide consumers with a 14-day cooling-off period in which they may decide to cancel the contract and return the goods or services. If retailers do not provide clear information about this, the period can be deemed extended to 12 months. Exemptions still apply for goods with a short shelf life or that have been personalized, or for hygiene reasons.
2. Cost of returning − It remains the case, following the introduction of the Directive, that, unless explicitly referenced, the cost of returning unwanted goods during a cooling-off period falls to the retailer.
3. Refunds − Retailers must refund customers within 14 days of a cancellation, provided that the customer returns the goods within this period.
4. “Pay now” vs. “order” − If there is any obligation for consumers to pay for goods or services during the purchase process, that obligation must now be clearly displayed. On a practical level, this means that the button consumers click on to enter the contract should be labeled “pay now” as opposed to “order” − the latter (in the UK’s interpretation at least) fails to explicitly indicate the requirement to immediately pay.
5. Cancellation form − Online retailers must now make the standard EU-wide withdrawal form available to their customers.
6. Opt-ins and pre-ticked boxes − The Directive now prohibits pre-ticked boxes. Therefore, insurance and other up-sells, as well as data mining activities, must be actively agreed to.
7. Delivery and passing of risk − Though the Directive appears to require that retailers deliver goods and services within 30 days unless otherwise agreed, there is still ambiguity, given the variety of alternative delivery modes that are increasingly available, such as delivering an item to a deposit box in a public location or store (like Amazon lockers) or ordering groceries online and then picking them up at a physical location. Therefore, it is best for retailers to be clear and explicit on what constitutes delivery and when it will occur.
8. Digital content − Consumers must now receive clear information about the interoperability and compatibility of digital content as well as relevant technical restrictions. Retailers should also expressly obtain a consumer’s agreement to waive the cooling off period rights where content is downloadable.
9. Customer helplines − Premium rate help lines are no longer permitted; all helplines must be available at the basic rate.
Find out more about the EU Consumer Rights Directive and its meaning for your business by contacting the author.