The EU Consumer Rights Directive what you need to know ACC - August Legal Quick Hit Mark Webber, Partner 7 August 2014
Overview Overview of EU Consumer Rights Reform Consumer Rights Directive Overview of key changes Compliance challenges for digital business Implementation in EU member states New EU level Guidance Document Compliance checklist www.fieldfisher.com 2
Context of EU Consumer Law Reform Pre- reform: Europe Many different consumer protection directives Patchwork of implementation 2008: Commission proposes maximum harmonisation directive to bring all consumer laws into single directive Unfair Commercial Practices Directive in force Post- reform: Europe 2011: Consumer Rights Directive (2011/83) in force Compromise text adopted. Only 2 directives repealed Focus on information given to consumers and cancellation rights Implementation deadline: 13 December 2013 In force: 13 June 2014 Bringing consumer legislation into the digital age www.fieldfisher.com 3
The Consumer Rights Directive (CRD) New rules in force (as implemented in each EU jurisdiction) since 13 June 2014 If you are a trader selling goods, services or digital content to a consumer in the EU, these regulations will apply to you Where goods received are faulty or not fit for purpose or as described, consumers have different rights which are covered by separate legislation www.fieldfisher.com 4
Nearly two months on..little discernible adoption.. www.fieldfisher.com 5
What Contracts Does it Apply To? B2C and not B2B Within scope contracts between customers and traders include: distance contracts i.e. online, phone or mail order off-premise contracts i.e. doorstep sales on-premise contracts But not day-to-day transactions performed immediately www.fieldfisher.com 6
Fundamental Changes Implemented by the CRD The CRD is not all encompassing with regard to consumer rights. It focusses on 4 key areas: 1. The provision of pre-contractual information (onpremise, off-premise and distance selling contracts) 2. Cancellation rights for off-premise and distance selling contracts) 3. Express consent of consumers for any payment obligations 4. Prohibition of excessive fees for paying and contacting traders www.fieldfisher.com 7
Key Changes Pre-Contractual Information On premises contracts Schedule 1 information must be 'given or made available' in a 'clear and comprehensible manner' (if not 'apparent from the context') before the consumer is bound. Immediately performed 'day to day' transactions excluded. No specific consequences of failure to provide information Off-premises contracts Schedule 2 information must be 'given' in a 'clear and comprehensible manner', and a cancellation form must also be provided, before the consumer is bound (unless less than 42 in value) to be provided on paper, or if customer agrees, another durable medium www.fieldfisher.com 8
Key Changes Pre-Contractual Information Distance contracts Schedule 2 information must be 'given or made available' in a 'clear and comprehensible manner' and in 'a way appropriate to the means of distance communication', and a cancellation form must also be provided, before the consumer is bound limited subset of information must be provided where space is limited with the rest provided in 'another appropriate way'. consumer does not have to pay the following costs if the trader does not provide Schedule 2 info regarding delivery charges, costs per billing period/monthly costs and costs of returning goods www.fieldfisher.com 9
Electronic Contracts Pre-Contractual Information Additional disclosures required For electronic contracts with an obligation to pay, the trader must disclose in a 'clear and prominent manner' and 'directly before' an order is placed the total price/main characteristics/delivery charges/ costs per billing period/monthly costs and duration of contract (amongst other info) The trader must ensure that the consumer 'explicitly acknowledges' (i) that the order implies an obligation to pay, and (ii) where there is an order button label this with 'order with obligation to pay''. Non-compliance with the bullet point above means the consumer is 'not bound'. In addition the trader must ensure that a website indicates clearly and legibly at the beginning of the ordering process whether (i) any delivery restrictions apply; and (ii) which means of payment are accepted. www.fieldfisher.com 10
Electronic Contracts Pre-Contractual Information And even more disclosures required Where applicable, the functionality, including applicable technical protection measures, of digital content; and Where applicable, 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. www.fieldfisher.com 11
Model For The Display Of Information About Online Digital Products PRODUCTS www.fieldfisher.com 12
Model For The Display Of Information About Online Digital Products www.fieldfisher.com 13
Key Changes Cancellation Rights Cooling off period for cancellation extended from 7 to 14 days Special cancellation rules for digital downloads: Must obtain consumer s express consent and acknowledgement that they will lose their right to cancel. Confirmation of mandatory contract information must be: in a durable medium. Meaning of this has changed. Online is OK provided: (i) personal, (ii) fixed format, (iii) available as long as customer needs and provided within reasonable time Refunds: 14 day deadline to process refund www.fieldfisher.com 14
Key Changes Obligation to Pay Buttons that create obligation to pay must be labeled to make this obvious (e.g. Pay Now or Confirm and Pay ) No pre-ticked boxes New term implied into consumer contracts that seller has: (a) complied with information and process requirements; and (b) confirmed information in a durable medium www.fieldfisher.com 15
Key Changes No Excessive Fees No premium rate customer support numbers Model cancellation form Set out all technical or delivery restrictions www.fieldfisher.com 16
Key changes No Excessive Fees Payment surcharges: fees imposed in addition to the headline price of goods / services Excessive fees for using a particular payment method (e.g. credit card) prohibited Relevant contract term is unenforceable to the extent of any excess charged www.fieldfisher.com 17
CRD: Challenges for digital businesses Digital content Compliant ways to obtain consent/acknowledgement Services Uncertainty re partial refunds Implementing user messaging changes Transactions via social media Website platforms www.fieldfisher.com 18
Consumer Rights Directive European implementation France Germany Italy Spain United Kingdom Date implemented Consumer's written consent required for binding telephone contracts? 17 March 2014 27 September 2013 Yes (for cold calls only) 21 February 2014 29 March 2014 13 December 2013 Yes Yes Yes No Local language pre-contractual information required? Yes Yes Yes Yes No www.fieldfisher.com 19
EC Guidance on the CRD Anticipated by November 2013, but issued as the law took effect Influential and useful for interpretation but not legally binding A living document so we may see practical updates Certain online scenarios are examined and a view on compliance is given It s an interpretive tool BUT does not provide a model or examples of compliance or what good should look like www.fieldfisher.com 20
Key takeaways Compliance Checklist 1. Review user journeys and user messaging 2. Check accuracy of product details in any communications (including adverts) 3. Check information provided on durable medium 4. Digital downloads: implement consent/ acknowledgement solution 5. Review refund policies 6. Check labeling of Purchase / Order / Pay buttons 7. Change premium rate telephone helplines 8. Review manner of demanding payments from consumers 9. Watch out for direct exhortations to children ( Buy Now ) 10. If selling apps with microtransactions: check for compliance with regulatory guidance and be transparent about costs www.fieldfisher.com 21
Thank you Any questions? Mark Webber Partner E-mail: mark.webber@fieldfisher.com Phone: +1 (650) 422 9900 Follow: @digitechlaw Connect: https://www.linkedin.com/in/markwebber www.fieldfisher.com 22