Application of the Regulations
The Regulations will only apply to non-business sales transactions such as when a consumer purchases goods and/or services for personal use. The Regulations specifically do not apply to financial services, sales of real property or land construction. Additionally, certain provisions of the Regulations will not apply to goods intended for everyday consumption or services contingent on performance by a specified date, i.e., hotel reservations, catering services and train or airline tickets.
The Regulations will apply whenever the buyer is located in an E.U. Member State, or when there is some other “close connection” to such Member State. Any attempt to waive the rights given a consumer under the Regulations will be null and void. This is so in spite of differing law in the retailer’s jurisdiction, or any choice of law provision in the contract applying the law of a non-E.U. Member State.
Disclosure Requirements
The terms of a sales contract governed by the Regulations must be in plain and easily understandable English. Before a transaction nears completion, the retailer must send the consumer “prior information.” Prior information includes the name and identity of the seller; a description of the goods and/or services; the price of the goods and/or services, including any applicable tax and delivery costs; the method of payment and delivery; the length of the offer; and the existence of a right to cancel the order. The retailer must also disclose any costs associated with transaction including toll overseas phone charges.
Cancellations and Refunds
After placing an order, a buyer has seven business days to cancel the order without penalty. If a buyer delivers to the retailer a notice of cancellation within the requisite cancellation period, the retailer must cancel the contract and refund any money that the buyer may have paid. The buyer is under no obligation to provide a reason for canceling the order. If the prior information is not provided before the buyer’s acceptance of the order, the buyer can have up to three months to cancel the contract plus the seven business days mentioned above. It is important to note that the right to cancel does not apply to customized goods, perishables, opened audio, video or software, periodicals, or gaming and lottery services.
Once the buyer cancels the order, the retailer must refund any money paid within thirty days. If the buyer elects not to cancel, the retailer must ship the goods within thirty days. If the retailer is unable to fulfil the buyer’s order, the retailer must then notify the buyer of this and refund any money paid within thirty days of the notification.
Unresolved Issues
There are still some issues to be resolved before the Regulations will officially be implemented. One of these such issues is the appropriate sanctions to apply to retailers not in compliance with the Regulations. These sanctions could include barring the retailer from enforcement of the contract, criminal charges and a fine as high as 2,500 pounds sterling. Also up for negotiation is the proposal that a buyer be able to hold goods until the required refund is made. It is very important for U.S. retailers to note that the Regulations will most likely prohibit any unsolicited e-mailing, or “spamming.”
If you have any questions about the Regulations or how they might apply to your online sales, please contact a member of Arent Fox’s Advertising Law group.