Are You A Distance Seller?

GREGORY ABRAMS DAVIDSON SOLICITORS For you, for business, for life. Home / News  / Are You A Distance Seller? I was recently asked by a client who runs a successful online business information service about the UK laws governing distance selling to both consumers and businesses. So after researching his particular issue, I thought I would write a general note on the topic.   The Distance Selling Regulations   The Distance Selling Regulations (full title: Consumer Protection (Distance Selling) Regulations 2000) (“DSRs”) implement European Council Directive (97/7/EC) and for most goods and services, provide additional rights to consumers buying at a distance to encourage confidence in this method of buying.   The protection the DSRs offer is important because consumers cannot inspect goods or services before they buy when they shop at a distance.   All European Union (EU) member states were required to implement the Directive in their national legislation and the in the UK they came into force on 31 October 2000, amended by SI 689/2005 effective from 6 April 2005 (This amendment made changes to the requirements to provide information when supplying services and to cancellation periods for the supply of services.)   The purpose of the legislation is to: give consumers confidence to buy goods and services where there is no face to face contact with the seller, and ensure that all traders selling at a distance in the normal course of their business meet certain basic requirements.   The DSRs provide protection in terms of basic business information, cancellation, refunds, returns etc. Businesses must provide consumers with clear information so that they can make an informed choice about whether or not they wish to buy from you. In most instances you must also give consumers the right to a cancellation period.   The information you give must include details about: your business the goods or services you are selling your payment arrangements your delivery arrangements, and consumers’ right to cancel their orders where appropriate. This pre-contractual information and some additional information, must be confirmed in writing or another durable medium.   Know Thy Customer   The DSRs are aimed at protecting consumers and specifically exclude business to business contracts.   “Consumers” means anyone who buys goods and services using one of the methods to which the DSRs apply (i.e. the internet, text messaging, phone calls, faxing, interactive TV, or mail order – via catalogues, mail order advertising in newspapers or magazines). This excludes anyone buying in the normal course of their business (http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698.pdf)   Whether or not the DSRs are applicable depends upon the nature of your customer. If you sell to businesses then your returns / cancellation policy is governed by your contract with that buyer i.e. your own Terms of Service.   If you sell to both businesses and consumers, it might be worth considering separate terms for each class of customer i.e. a spearate cancellation policy for business buyers as different regulations apply. Alternatively, it might be worth defining a B2B contract that includes a clear returns policy to reduce such quibbles in future.   If there is no contract / terms and conditions of sale (not preferable if you are running a business, then it could be argued is none then you could argue that the goods were sold and purchased in good faith and ‘caveat emptor’ applies i.e. let the buyer beware.   As a business who is using standard terms in contracts with consumers, you must also comply with the Electronic Commerce (EC DIRECTIVE) Regulations 2002 (http://www.bis.gov.uk/files/file14635.pdf) and the Unfair Terms in Consumer Contract Regulations 1999 (UTCCRs), with which Businesses who are using standard terms in contracts with consumers must also comply.   Exclusions – No Returns   In most cases the consumer will have seven working days to cancel their contract, but in some cases the right to return does not apply. The following items cannot be returned: newspapers, journals, periodicals; unsealed video and audio recordings; unsealed computer software; items that may perish; items that change in value due to circumstances out of the sellers control; tailor made and bespoke items; and personalised Items.   Non-Application   The DSRs do not apply to the following contracts:   Property – Contracts for the sale of land, that is the sale of freehold or leasehold interests. The DSRs do, however, apply to short term tenancy or leasehold agreements (rental agreements) provided the contract is between a business and a consumer and has been concluded by distance means.   Construction – Contracts for the construction of a building where the contract also provides for a sale or other transfer of an interest in the land on which the building is constructed. However, the DSRs do apply where a consumer already has rights over the land and subsequently enters into a distance contract with a builder to construct a building on the land.   Financial Services – Contracts relating to financial services to consumers. However, these services are likely to be subject to the information giving and cancellation provisions contained in the Financial Services (Distance Marketing) Regulations 2004 (SI: 2095 2004) (FSDMR) and, where relevant, the Consumer Credit Act 1974 (CCA).   Conditional sales and contracts for hire purchase (which are covered by the FSDMR and the CCA). However contracts for hire services, for example the hire of electrical items or clothing, are covered by the DSRs. (Note: A conditional sale is where a consumer becomes bound to purchase the goods from the outset, but they do not own the goods until they have fulfilled all the conditions of the contract (usually paid all the instalments. Hire Purchase is hiring of goods with an option for consumers to purchase at the end if they want to.).   Vending Machines – Products bought from vending machines (for example bars of chocolate or cans of drink) or automated commercial premises such as pictures taken by automated photo booths.   Public Pay Phone – Contracts concluded with a telecommunications operator in respect of a telephone call