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The new EU Consumer Rights Directive 2014, which comes into force on June 13, has been drafted in a bid to regulate distance selling across the European Union. All 27 EU member states have agreed to adhere to the rules, which are designed to encourage cross-border trade.
From an international ecommerce standpoint, it certainly simplifies retailers’ responsibilities when operating localised European websites, but may require some changes and actions. The Directive clarifies the contractual obligations between the seller and purchaser in respect to returns and refunds, and gives increased rights to the consumer when purchasing digital downloads.
We have highlighted the major changes in the EU Consumer Rights Directive, and explained what this means for both UK-based retailers and their localised EU websites.
Right to withdraw extended from 7 days to 14 days
In addition to extending the right to withdraw from seven to 14 days, customers need to be informed of the 14 day cancellation policy before placing an order. If a retailer does not make this clear in the purchase process, it could lead to a cooling off period for a maximum of 12 months after the initial 14 day period.
Actions: In basic terms you need to update your website T&Cs, order policies, dispatch notes and review how the customer is made aware of their rights on your site before placing their order.
Retailers need to provide a downloadable cancellation form to customers. Retailers can continue to use their own returns notes and processes, however a link to standardised form needs to be offered to customers on the website.
Refunds – from 30 to 14 days for return of funds & shipping costs
The refund period begins once the retailer has received the goods or the cancellation form. The retailer then has 14 days to return the funds to the customer.
You are required to refund the cost of standard shipping to customers. This will affect margins and should be factored in to your P&L. When a customer has opted for an express form of shipping, they are still eligible to receive a refund equal to standard shipping.
Actions: Update your T&Cs, returns policy and educate your customer services team on the changes and any altered internal processes.
Cost of returns – customer responsibility
Retailers must inform the customer at the point of sale who is responsible for the cost of returns, in addition to an estimated price for the return. If this is not made explicit to the customer, the retailer will be responsible for the cost of returning the goods.
This will mean that retailers will need to estimate the cost of return shipping from each of their EU localised sites.
It is important to note, that up until this point, retailers have had to cover the cost of shipping and returns to German customers. This is no longer the case.
Partial refunds due to diminished value
Business can make partial refunds when the value of the goods has diminished as a direct result of the customer handling the product beyond what is necessary. The new legislation requires that customers take “reasonable care” of the goods being returned.
Anything in plastic wrapping (i.e. DVDs) can be classed as consumed if the wrapping has been removed therefore may not be eligible for a refund.
Actions:Highlight this in your terms and conditions. Review your internal process for refunds, involving customer services and the warehouse staff responsible for assessing returned goods. Any discrepancy needs to be discussed with the customer.
Cost of goods and pay now
The total cost of goods needs to be made clear at the point of sale, which means that all taxes, duties and shipping costs need to be highlighted during the checkout process.
Retailers must receive explicit acknowledgement from the customer of their “obligation to pay”. Non-compliance can entitle the customer to a refund. In basic terms, call to action labeling at the checkout should be “Pay Now” instead of “Buy Now” or “Check Out”.
Order confirmation and definition of durable medium
Confirmation of the contract details need to be sent to the customer via a “durable medium”. An email counts as a durable medium, so does a website so long as the content that is accessed is a personal page (i.e. a page that sits within a customer account area which they log-in to). In addition, the personal contract has to be something that the customer can store and reproduce when they need to.
A link to a page on a website that could change is not durable, nor personal, and it also does not allow the customer to reproduce it in an unchangeable form.
There is a long list of items which need to be included in the customer contract, and many retailers are fearful of the new length of the confirmation emails. A solution could be to send two confirmation emails – one text version with the contract, addressed personally to the customer and another the standard version as it is currently.
Boxes throughout the purchase process cannot be pre-ticked. This includes all marketing communication opt-ins and additional services (i.e insurance on a flight). All sign-ups need to be actively ticked by the customer.
Phone services and communication responsibilities
No premium rate phone services are allowed. Retailers need to offer either a standard rate or free telephone number to customers. Retailers also need to offer an email address through which they can be contacted rapidly.
Technical helplines for assistance with using or troubleshooting a product post-purchase can still be premium rate.
Credit card charges
Surcharges for the use of credit cards - over and above the actual cost to the retailer – are no longer allowed.
Customers have the right to cancel orders up until the download process has started. The customer explicitly has to give consent to the commencement of the download, and needs to acknowledge that their right to the withdrawal from the contract terminates once the download commences.
In addition, customers need to be clearly told about any functionality and relevant inoperability in respect to a digital download.
Action: Make sure you have a pop-up box or tick box for the customer to acknowledge their rights.
The Consumer Rights Directive 2014: in conclusion
The biggest impact on retailers will be factoring in the cost of shipping when refunding customer orders and for those with localised German websites, re-educating their customers if and when they decide to stop offering free returns.
Certainly the one that has everyone talking is the “Customer Acknowledgement of Obligation to Pay Now”. We have discussed this at Practicology and agreed that ‘Pay Now” should be an adequate call to action.
Having a uniform policy across the EU will certainly facilitate cross-border trade, and make it that much easier to offer localised, translated websites.
Contact us if you would like to speak further about how the changes could impact your ecommerce operation.