Many businesses are moving away from a high street presence to selling online. For new business ventures, distance selling is likely to play an important part in your marketing so you need to familiarise yourself with consumer protection legislation and distance selling regulations.
- What is distance selling?
- What is online selling?
- Distance selling laws and regulations
- The key distance selling rules
- Information that must be provided under the Consumer Contract Regulations
- Exceptions to cancellation rights under the Consumer Contract Regulations
- When don’t the Consumer Contract Regulations apply to distance selling?
- The consequences of non-compliance with the Consumer Contract Regulations
- The Electronic Commerce Regulations and online sales
- Distance selling business to business
Distance selling regulations: an overview
What is distance selling?
Distance selling is selling goods or services at a distance. The definition of distance selling is evolving with technological advances. Originally distance selling involved a salesperson at the customer’s doorstep but now includes online transactions by apps, such as Just Eat.
Distance selling includes:
- TV shopping by phone, app, or online to pay for products or services
- Door-to-door sales
- Mail order catalogues
- Temporary stalls at fairs or exhibition centres where a purchase is discussed but the contract is concluded when the customer returns home by phone, internet, or other means. Sales don’t count as distance selling if the contract is completed with the customer at the temporary stall
- Online and digital purchases
The two essential aspects of a distance selling contract are:
- The business is regularly distance selling
- The business and consumer only engage in at-distance communication (such as online or telephone) until the contract is finalised
What is online selling?
Some commercial solicitors refer to distance selling and others to online selling so the terminology can get confusing. Distance selling is wider in scope than online selling as it includes any sales contract made where there is no face-to-face contact between seller and purchaser but it incorporates online selling.
Online sales include website sales or transactions by an app. The definition is wide enough to cover sales through your business website or a third-party website, such as Amazon or Etsy, or eBay. It includes ‘click and collect’ purchases. However, distance selling regulations don’t apply if a consumer reserves goods online and then goes to a shop to review and buy the reserved items.
Distance selling laws and regulations
The Consumer Rights Act 2015 governs businesses selling goods or services at a distance and under the Act, a business must ensure:
- Goods are as described
- Goods are fit for purpose and of satisfactory quality
- That if goods are faulty, the business must give a full refund up to 30 days after the item was purchased
- That if goods are found faulty up to six months after purchase and the goods can't be repaired or replaced, then a consumer can also ask for a full refund in most cases
Two sets of regulations apply to distance sales:
- The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (CCR) - These regulations cover the sales of most kinds of goods and services at a distance
- The Electronic Commerce (EC Directive) Regulations 2002 (ECR) - These regulations cover electronic contracts. For example, purchases online via a business website, by email, text, or SMS. A business must comply with the Electronic Commerce Regulations regardless of whether the customer is an individual or a business.
In addition to the Act and CCR and ECR, there are sector-specific rules and regulations, such as:
- Direct marketing by telephone, mail order, or email is regulated by data protection laws and codes of practice
- Premium-rate phone services are regulated by the Phone-paid Services Authority under its code of practice
It is best to check with a commercial solicitor to see what additional industry-specific distance-selling regulations apply to your business.
The key distance selling rules
The key rule your business must follow when distance selling is to give customers the following detailed information before the contract is entered into:
- Costs and fees - You must identify the costs and any extra fees. The customer must explicitly agree to them
- Payment - Any ‘call to action’ to buy online must be clearly labelled. For example, ‘Buy Now’ or ‘Pay Now’
- Paperwork - Customers must receive a hard or soft copy of the contract in writing or by email
- Return of goods - Subject to various exemptions and time limits, customers can cancel a contract during a cooling-off period and can ask for a refund for paid-for goods. Consumers are allowed a minimum 14-day period to test the products
- Telephone calls - premium cost telephone lines cannot be used for existing contracts
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If your business needs help with distance selling and the Consumer Contract Regulations, including reviewing your business practices and sales documentation, our commercial solicitors can help.
Information that must be provided under the Consumer Contract Regulations
The CCR set out the information your business must provide to a consumer before and after the sale of goods or services. If distance selling takes place online then you must also meet the additional obligations under the Electronic Commerce Regulations.
Before an order is placed your business must provide the following information under CCR:
- Identity - At the start of any telephone call, the identity of your business, the commercial purpose of the call, your email address, and, if you require payment in advance, your postal address and VAT number
- Description and duration - A clear and thorough description of the products and services and information on the minimum contract duration, and if the contract is a rolling contract, any conditions for ending the contract
- Action - What steps the customer must take to conclude the sale, place an order and make payment
- Price and payment - The total price (including taxes), how long this is valid, the price calculation and methods of payment, and the options for delivery and the costs involved
- Cancellation rights - A business must provide a cancellation form and say if the business will provide a substitute if the product or service is not available and the cost of returns (if any) if the consumer returns goods. Customers must be told they can cancel their order up to 14 days after their order is delivered and your business must refund the purchase price within 14 days of your business receiving the goods back or getting evidence that the consumer has posted the goods to you, whichever is sooner. If a customer isn’t told about their right to cancel, they can cancel the contract at any time in the next 12 months but if your business informs them about the right to cancel during the 12 months, they have 14 days to cancel the contract from when they were told about their rights. A deduction from the value of the goods can be made if you consider the customer has handled the goods excessively. You can’t deduct monies if the goods have been removed from the packaging or tried on as distance-selling purchasers are entitled to handle goods in the same way they would in a retail store. If a buyer decides to cancel a purchase because they’ve changed their mind, a business can charge for the cost of the return if this cost was stipulated in the pre-contract information. If the goods are faulty, your business must pay for the costs of returning the item and refund the cost of the original delivery at the basic rate.
- Guarantees - Any guarantees that apply to the goods
- Complaints - An address that the customer can use to contact you with any complaints
- Phone calls - If your business has a dedicated phone line for sales, then the costs of calling this number should be stated (if it is more than the basic or standard rate) and any other communication channels used
- Digital materials - If you are selling digital material, information about compatibility and functionality
After a distance selling order is placed your business must:
- Contract - Provide a copy of the contract by paper, email, or another format so that the customer can save it for future reference. A copy of the contract must be provided no later than when the goods are delivered.
- Delivery - The goods must be delivered within 30 days unless a different timescale was agreed
Under the Electronic Commerce Regulations (applicable to B2B sales as well as to B2C sales) if your business sells goods online, by email, or by text message, you must provide details of any trade organisations or professional bodies your business belongs to and give information about any authorisation scheme applicable to your business. If your business advertises on the internet, by email, or by SMS, you must state the identity of your company, clarify what you are advertising and identify the terms of any offers.
Exceptions to cancellation rights under the Consumer Contract Regulations
The right to cancel does not apply to some goods:
- Perishable food products or goods that deteriorate
- With fluctuating prices
- Newspapers and magazines
- Betting and gambling services
- Bespoke goods made to order, such as tailored clothing
- Accommodation, transport, food and drink, and leisure services provided for a specific event or on a particular date or within a specified period
- Day-to-day food and drink delivered house to house
- Package travel and timeshares
- Unsealed software, CDs, and similar items
- Digital downloads once the download process has started
Whatever the nature of the item, the purchaser is entitled to return faulty goods, such as food products that have perished before delivery or earrings that are faulty.
When don’t the Consumer Contract Regulations apply to distance selling?
CCR doesn’t apply to distance selling where the goods or services are:
- Worth £42 or less
- Free or paid for NHS prescriptions and treatment
- Financial services
- New building construction although the rules apply to extensions
- Food and drink or consumables supplied regularly, such as milk deliveries
- Package travel costs - holidays, timeshares, and holiday clubs
- Flight, bus, train, and passenger travel tickets
- Contracts to let a property a customer will live in
- Vending machine purchases
- The use of a payphone or paying to use an internet connection
The consequences of non-compliance with the Consumer Contract Regulations
The Consumer Contract Regulations (CCR) apply to distance-selling transactions giving the individual consumer additional rights unless the type of business activity falls within a CCR exemption. If your business doesn’t follow the CCR your business could be made to:
- Provide the goods or services as agreed
- Pay compensation
- Pay an unlimited fine or individuals could receive a prison sentence
The Electronic Commerce Regulations and online sales
As well as complying with CCR, your business must comply with the Electronic Commerce Regulations (ECR) when selling online.
Before an online order is placed your business must:
- Provide a description of your goods, services, or digital content and state the minimum contract length and give information on conditions for ending rolling contracts or contracts with no end date
- Give clear information on price and payment so customers know they must pay when they place an order and list the steps involved in placing an order
- Provide delivery information and options including the total delivery cost or delivery cost calculation
- Give information on order errors and take reasonable steps to let customers correct order errors
- Languages by informing customers what languages are available
- Sales contract information so customers can locate and print or download the contract. The contract should be confirmed as soon as possible after the sale
- Information such asemail address and the cost of using phone lines or other means of communication to complete the purchase if the charge is other than the standard or basic rate
After an online order is placed your business must:
- Confirm the contract as soon as possible and no later than when goods are delivered, service is commenced, or digital content is downloaded
- Provide a copy of the contract by post, email, or another format. The customer must be able to save the contract
- Delivery asgoods, services, or digital content must be delivered within 30 days unless there is an agreed alternative delivery date
There are additional rules for sales of digital downloaded or streaming online services. Your business must provide information in your contract confirmation and pre-contract information to ensure the customer:
- Confirms they are aware they lose their 14-day right to cancel before they download or stream content
- Agrees to an instant download before they start the download process
If your business doesn’t comply with the rules your customer retains their 14-day right to cancel without paying for the downloaded or streamed digital services.
Distance selling business to business
When selling B2B via email, text, or online, certain consumer-type regulations apply to your activities under the Electronic Commerce Regulations. When your business advertises or sells through distance selling your business must state your:
- Business name, address, contact details, and VAT number
- Any authorisation scheme to which you are subject
- Any trade or professional organisations you belong to
- Prices, taxes, and delivery costs
In addition, your business must make it clear that the information is for commercial purposes, and identify any promotions or competitions and any conditions of purchase. Your business also has to provide the purchasing business with clear details of how contracts are concluded and your terms and conditions.