Nic Murfett, interactive entertainment and sports groups associate at London law firm Harbottle & Lewis, explains what the new digital content laws are – and what they mean for online retailers..
In November 2011 the European Commission published its Directive on Consumer Rights which clarifies the protections afforded to consumers in respect of digital content.
In an effort to harmonise consumer protection across the EU, all Member States were required to implement the provisions into their laws by June 13th 2014. In the UK, the majority of the Directive has been implemented into English law by the introduction of the Consumer Contracts Regulations 2013 (the Regs), which came into force on June 13th.
Whilst many of the requirements introduced will be old news to most mobile, tablet and online games firms (as most of these requirements were reflected in the OFT’s Principles for Online and App-based Games which were introduced earlier this year), they will likely have a considerable impact on UK online retailers.
Of the changes the following are likely to be of most significance:
1. Pre-contract information
All of the information set out in Schedule 2 of the Regs must be provided to consumers before the consumer enters into a contract with the online retailer (before the purchase is concluded) in a manner which is easy to understand. Schedule 2 of the Regs includes a catch-all requirement to disclose information relating to “the main characteristics of the goods or services.”
Consumers will benefit from an extended 14-day minimum cooling off period for most goods (and certainly all boxed games). This represents an increase from the existing seven working days.
Consumers will now also have the right to cancel a service that has begun within the cooling off period provided that they pay for the services performed up to the point of cancellation. This could cover game/platform subscriptions fees.
As for downloaded digital content, no such cancellation right will exist once the download has commenced provided that this has been made clear to the consumer and the consumer has acknowledged this.
Online Retailers must inform consumers of their extended cancellation rights. Any failure to do so results in the consumer’s cancellation right being extended by a full year.
The Regs also require Online Retailers to provide consumers with a model cancellation form.
The Regs provide that consumers, when requesting a refund within the cooling off period, will be obliged to return goods bought online within 14 days and will be responsible for the costs of doing so. Online Retailers will be able to claim compensation for any decrease in the value of the goods returned which results from anything other than “necessary handling”.
4. Online Checkout
The Regs prohibit default payments for additional goods and services or charitable donations being made without the consumer’s express consent. Online Retailers will therefore need to avoid using pre-ticked boxes during the checkout process.
Online Retailers will also need to ensure that consumers expressly acknowledge that by placing an order they will be required to make a payment. Online Retailers should therefore avoid using phrases such as ‘Place Order’ or ‘Complete Checkout’ particularly if such phrases are not accompanied by an explanation that by doing so, the consumer will be bound by an obligation to pay. Phrases such as ‘Pay Now’ or ‘Order and Pay’ should be used instead.
Consumers must be given a copy of the contract they have entered into with the Online Retailer in a ‘durable medium’ (e.g. an email). A link to the retailer’s terms and conditions will not be sufficient if terms and conditions are subject to change.
The Regs oblige traders to deliver goods to a consumer within 30 days of purchase unless some other deadline has been agreed with the consumer.
All refunds must now be processed within 14 days (down from 30 days). However, Online Retailers will be entitled to wait for goods to be returned, or for evidence of the return to be provided.
7. Helpline charges
Helplines can no longer be premium rate telephone numbers.
Given that consumers will soon have a direct right of recourse against Online Retailers by virtue of the Consumer Protection (Amendment) Regulations 2014, all UK online retailers should take time to ensure that they comply with the Regs to minimise their exposure and ensure that their terms of sale are enforceable against their consumers. Further guidance can be found on the Department for Business Innovation & Skills’ website.
Nic Murfett is an associate in the interactive entertainment and sports groups at London law firm Harbottle & Lewis.