Legal

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Best Practices Relating to UK and EU Legislation

There are a various UK and EU laws and regulations affecting your use of BlueSnap services in connection with the online sale of goods and services.

The following summary is intended for guidance purposes only to help our BlueSnap merchants comply with such laws and regulations. It is not intended as legal guidance or comprehensive advice. As BlueSnap has a UK-based subsidiary serving the EU we are concentrating on the UK perspective in this outline.

General Consumer Legislation

There are various laws and regulations in the EU and UK that affect sales to end customers and add implied conditions relating to the goods sold or services provided, that are deemed to govern the terms of contract between merchants and their customers. These terms and conditions cannot be excluded.

Consumer Rights Act 2015

The primary UK legislation is embodied in the Consumer Rights Act 2015.

Supply of Digital Content

The Act specifically covers contracts between trader and consumer for supply of digital content, in addition to goods and services. Digital content includes computer system software, mobile apps, textual media, video and audio material as well as mobile phone applications. The law also recognizes that some sales may include a mix of digital content, goods and/or services.

A trader is any person(s) or company acting for purposes relating to a trade, business, craft or profession, and includes charities, non-profits, governmental and local authorities.

A trader based outside the EU selling to consumers within the EU will be covered by such legislation.

A consumer is any person not acting for the purposes of a business. It is up to a trader to demonstrate that a person is not a consumer.

Under the Consumer Rights Act certain basic standards are applied to every transaction for the supply of digital content. The content supplied must be:

  • Of satisfactory quality
  • Fit for its purpose
  • As described.

The standards also extend to content that is given free together with other paid elements of a transaction.

In the event of breach a consumer usually has the right of repair or replacement and price reduction. Other remedies may include a claim for damages, the right to a full refund or to enforce fulfillment of the contract.

As regards any pre-contractual information that is given by the trader, the provisions of the Consumer Contracts Regulations 2013 are also applicable (see below).

Supply of Services

The 2015 Act applies the following standards to every contract for the supply of services:

  • The service must be carried out with reasonable care and skill
  • Information given to the customer is binding where the customer relies on it
  • Price must be reasonable
  • The service must be carried out within a reasonable time

If services are supplied together with goods, then the standards relating to goods will usually apply.

In the event of breach of contract the consumer is entitled to repeat performance or a price reduction.

Other remedies in addition to the legislation include the right to claim compensation or have remedial work carried out by another trader.

Supply of Goods

The following standards apply to transactions for the sale and supply of goods (including hire purchase, hire, part-exchange and contracts for works and materials):

  • Satisfactory quality including, safety, durability, and freedom from defects
  • Fitness for purpose
  • Match description
  • Correct installation (where appropriate)

If the contract is breached statutory remedies include the right to reject (usually up to 30 days), repair or replacement, and price reduction, in addition to other remedies such as a claim for compensation for losses that have occurred.

Additional legislation covers the use of misleading and aggressive selling practices, extension of protection to recipients where products are purchased as gifts and this was known to the trader.

If a trader fails to disclose that it is a limited company and there is a breach of contract then the consumer may be able to claim directly against the directors of the business as individuals.

Unfair Contract Terms

The Consumer Rights Act 2015 updates past legislation dealing with unfair contract terms and notices relating to the exclusion and/or limitation of liability for consumer transactions.

Provisions that seek to exclude liability for death or personal injury caused by negligence are not to be used in consumer contracts and may give rise to enforcement action as unfair commercial practice by the Competition & Markets Authority or other regulatory bodies. Terms that seek to exclude liability for faulty or misdescribed goods or digital content are also nullified and may result in enforcement action. Exclusion of the statutory rights of a consumer is also forbidden.

Other terms of exclusion and limitation of liability will be generally subject to a test of fairness and transparency. A term is likely to be deemed unfair if it causes a significant imbalance in the parties’ rights and obligations to the detriment of the consumer. Contracts should be drawn up in a way that respects consumers’ legitimate interests.

Terms likely to be deemed unfair include:

  • Denial of full redress
  • Tying consumers into the contract beyond what would normally be expected
  • Trader not having to perform its obligations
  • Consumers unfairly losing prepayments
  • Trader being able to arbitrarily vary terms
  • Consumers being subject to disproportionate financial sanctions

Consumer Contracts (Information, Cancellation & Additional Charges) Regulations 2013

These UK regulations came into force on 13 June 2014 and replace the Distance Selling Regulations 2000 and Doorstep Selling Regulations 2008. The new regulations enforce EU Consumer Rights Directive 2011. The regulations cover transactions between a trader and a consumer. The likelihood is that these provisions will be deemed to also cover foreign traders selling to UK consumers and well as UK merchants.

  • It must be clear who is selling the product along with details of the geographical (physical premises) and email address. PO boxes are insufficient.
  • If the merchant is selling on behalf of another party then that party’s full geographical address and contact information must be disclosed.
  • A merchant can no longer charge online for addition items added by a pre-ticked box.
  • An online service contract can be cancelled within 14 clear days after being entered into.
  • The 14 days is a legal minimum and can be extended by the merchant.
  • For online purchase of goods the right to cancellation starts from the date of ordering and ends 14 days after receipt of the goods. There is then a further 14 days to return the goods.
  • The button for payment should be clearly marked with Pay Now or a similar clear designation.
  • A refund should be made with 14 days of cancelling or 14 days of return of goods to the merchant.
  • If the right to cancel is not properly provided then the cancellation period is extended to 12 months.
  • A merchant needs to provide an accurate description of goods and services, plus relevant information regarding the length of time of any commitment on the part of the consumer.
  • Total price of goods and services must be made clear.
  • Relevant information must be provided about compatibility of digital content with hardware and relevant software.
  • Cost of delivery should be made clear as also who bears cost of return of products if the right of cancellation is exercised. If this is not made clear then merchant must bear cost of return.
  • If digital content is downloaded within the 14 day cancellation period consumer must agree to waive cancellation rights.
  • If contract for goods is cancelled then merchant has to bear the initial delivery costs in any event.
  • There is no right to cancel in respect of CDS, DVDs, software with a broken seal, perishable, tailor-made or personalized items.
  • With respect to downloadable products these should only be supplied with the 14 day period if the consumer has given express consent to downloading within that period. Customer must acknowledge that once the download starts they will lose their right to cancel.
  • With respect to services, these should not be supplied within the 14 day cancellation period unless a consumer has requested this. If the service is provided in full within the 14 days then the right to cancel will be lost.
  • There is no statutory cancellation period for hotel bookings, flights, care hire, concerts and other event tickets or urgent repairs/maintenance.
  • Goods must be provided within the agreed time frame and no more than 30 days after the date of contract.
  • Merchant must bear the cost of the return of faulty goods.
  • It is forbidden to charge more than basic call rates for calls by existing customers to merchants about products that have been purchased.
  • The regulations include model cancellation instructions – http://www.legislation.gov.uk/uksi/2013/3134/schedule/3/made
  • Note The Consumer Protection (Amendment) Regulations 2014 extend references to goods and services to also cover digital goods.

E-Commerce (EC Directive) Regulations 2002

(These regulations are still in force and there is some overlap with the 2013 regulations set out above). The regulations relate to sales by Internet, mobile and email, and cover business and consumer transactions. They apply to a UK-based merchant whether servicing just UK or any other member state.

Merchants must disclose the following:

  • Full name of the business and indication if a limited company, partnership or individual along with relevant names of partners/individual.
  • Geographic address at which business is established
  • Contact details, including email address
  • Details of any publicly accessible trade or similar register where business is registered
  • If service is subject to an authorization scheme or if a member of a professional body, details of the relevant supervisory authority or body
  • Details of any code of practice to which the merchant subscribes
  • VAT registration number
  • When referring to prices, a clear and unambiguous indication of those prices and whether the prices include taxes and delivery costs
  • Details of stages involved in the ordering process, including any costs involved in distance communication if the cost is anything other than a standard rate.
  • It is important to explain fully how contracts are formed and the relevant procedure for taking and refunding payment from customers’ credit cards.

Online order forms should make it easy for users to correct and clear incorrect data.

Customers must be told the steps involved in completing an online contract prior to or at the start of the process.

Provision of Services Regulations 2009

The regulations apply to UK providers of charged services and to individuals or organizations in an EU country that use a relevant services. The regulations cover B2B and B2C services and relate primarily to the provision of information. The provisions are similar to the two previous sets of regulations.

Regulation 8(1) of the POS Regulations requires the following information be made available to all customers:

  • Contact details, including a postal or email address or fax number, a telephone number, and the service provider’s official address;
  • Name;
  • Legal status and form of trading entity;
  • Geographic address of where the service provider is established;
  • Details of any registration on a public register;
  • Details of any authorization scheme to which the service provided is subject;
  • VAT number;
  • Details of any professional title granted, if carrying on a regulated profession;
  • General terms and conditions;
  • Any contractual terms, if any, regarding the governing law applicable to the contract;
  • The existence of any after-sales guarantee that is not legally required;
  • The price of the service;
  • The main features of the service; and
  • Any professional liability insurance or guarantee the service provider is required to hold.

Some additional information has to also be provided if requested pricing, price estimate, reference to any professional rules applicable in the relevant EU state, any steps to be taken to avoid conflict of interest.

Such information is to be given or made available prior to contract and can be by digital means.

There are further regulations against discrimination due to place of residence.

The 2009 Regulations also require merchants to respond to consumer complaints as quickly as possible and to use best efforts to resolve such complaints.

Data Protection Act 1998

This legislation will apply to merchants having a presence in the UK or collecting information onto UK-based servers. The Act lays down a number of principles of which the following are particularly relevant.

  1. Merchants must have legitimate grounds for collecting and using personal data and should not use the data to the detriment of individuals. Merchants need to be transparent about how data is used and must ensure nothing unlawful is done with the data. Data usage should covered in merchant’s privacy policy.
  2. Individuals have a right to view the information held on them, and have a right not to be marketed to.
  3. There are requirements regarding the release/transfer of data outside the EU.

Merchants should note that the European Union is set to make significant reforms to the area of data protection through the General Data Protection Regulation due to come into effect in early 2018. Many businesses are already taking active preparations to be able to conform with the new Regulation which demands greater focus on data privacy.

See: http://ec.europa.eu/justice/data-protection/reform/index_en.htm

 

EU Alternative Dispute Resolution (ADR) Directive & Online Dispute Resolution (ODR) Regulation

The ADR directive and ODR regulation are covered in the UK by the Alternative Dispute Resolution for Consumer Disputes Regulations 2015 and the Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015.

Businesses are required to inform consumers that they have the right to seek redress for unresolved complaints and disputes through certified Alternative Dispute Resolution schemes and the EU Online Dispute Resolution service.The free EU service that will be available for consumers to use as from February 15th, 2016 at the following address: http://ec.europa.eu/consumers/odr. This service is intended to help resolve disputes arising out of any purchases made either domestically or across EU state borders.

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