Reprinted from La A La Mode, DLA Piper’s Fashion, Retail and Design E-zine

by Jean-Louis Kerrels and Julie De Bruyn (Brussels)

On June 23, the European Parliament adopted the Consumer Rights Directive.* Among the changes is a 14 day EU-wide right for consumers to change their mind about their online purchases, as well as new information requirements.

The Directive is intended to create a uniform set of consumer rights across the EU for B2C contracts and ends the lack of harmonisation between Member States. The new Consumer Rights Directive updates and merges the existing directives on unfair contract terms (Directive 1993/13/EEC), consumer sales and guarantees (Directive 1999/44/EC), distance selling (Directive 97/7/EC) and doorstep selling (Directive 85/577/EEC).

The original Proposal for the Consumer Rights Directive was submitted by the European Commission in 2008 and contained some controversial provisions, which could have had a significant adverse impact on online (fashion) traders. In this respect, the Council did not accept provisions requiring traders to refund the return cost of goods of 40 € or more from anywhere in the EU. The Council also rejected the controversial plan to force online retailers to ship to every EU Member State, provided that merchants specify early in the purchasing process to which countries they ship and explain why they do not ship to others.

Online retailers will be in compliance with the provisions of the new Consumer Rights Directive if they obey the following 10 commandments:

  1. 14 day withdrawal period – The period during which consumers can change their minds regarding an online purchase is extended from 7 working days to 14 calendar days. For sales contracts, the 14 day term starts from the day when the consumer acquires physical possession of the product(s). Where multiple goods are ordered by the consumer in one order but are delivered separately, the term starts from the date when the consumer acquires possession of the last product. If the trader fails to inform the consumer about its withdrawal right, the withdrawal period shall expire 12 months from the end of the initial withdrawal period.
  2. New exceptions to withdrawal right – For certain goods, the withdrawal right does not apply. In addition to the exceptions to the withdrawal right already mentioned in the Distance Selling Directive (such as goods made to the consumer’s specifications or clearly personalized by the consumer), the Consumer Rights Directive adds a few more exceptions to the withdrawal right, for instance for sealed goods which are not suitable for return due to health protection or hygiene reasons and which were unsealed after delivery (such as underwear or swimwear). The previous exception for auction sales (e.g. purchases on eBay) is no longer included in the new Directive.
  3. Obligations of the trader in case of withdrawal – Traders must refund all payments received from the consumer, within 14 days of the day on which the trader was informed of the consumer’s decision to withdraw, which is more burdensome for online retailers than the 30 days under the Distance Selling Directive. Such reimbursement must include delivery costs, although the trader is not required to reimburse the supplementary costs if the consumer has expressly opted for a type of delivery other than the least expensive type of standard delivery offered by the trader (e.g. “next day delivery”). The trader has to carry out the reimbursement using the same means of payment as the consumer used for the initial purchase, unless the consumer has expressly agreed otherwise.
  4. Increased price transparency – Traders are obliged to disclose the total cost of the product or service, as well as any extra fees. If the total cost cannot be reasonably calculated in advance, the manner in which the price is calculated must be provided by the trader.
  5. Information on who pays for returning goods – Traders must clearly explain beforehand that the consumer bears the cost of returning the good after they change their mind, otherwise the trader has to pay for the return itself.
  6. No surcharges for payment by credit card or customer service helplines – Traders are prohibited from charging consumers more for paying by credit card (or other means of payment) than what it actually costs to offer such means of payment. In the event the trader offers a customer service helpline, consumers will not be bound to pay more than the basic telephone rate.
  7. Information on digital products – Traders must include clear information on the functionality of digital content (including applicable technical protection measures) and any relevant interoperability of digital content with hardware and software that the trader is aware of or can reasonably be expected to have been aware of.
  8. Customers must be aware and give express consent when entering into binding agreements – Consumers must explicitly confirm that they understand that they have to pay a price. This provision was included to prevent fraudsters from trying to trick consumers for ‘free’ services, such as horoscopes or recipes.
  9. Banning of pre-ticked boxes – When offering additional options during the purchase process (e.g. for express delivery), pre-ticked (or pre-selected) boxes, where consumers are forced to untick the boxes if they do not want the extra service, are prohibited.
  10. Consequences of failure to deliver – If the trader fails to deliver the goods at the time agreed upon or within a 30 day period from the conclusion of the contract, the consumer can call upon him to make the delivery within a period appropriate to the circumstances.  If the trader fails to deliver the goods within the appropriate time, the consumer will be entitled to terminate the contract. Upon termination of the contract, the trader must, without any undue delay, reimburse all sums paid under the contract.
Although at first sight these new rules only seem beneficial to consumers, online retailers will benefit as well, since the stronger protection for online buyers will boost consumer confidence and consequently increase cross-border online purchases.
* After formal approval by the Council of Ministers, the Directive is expected to be published in the Official Journal of the European Union in early Autumn 2011. Member States will have a maximum of two years to implement the new rules.