Distance Selling Act Information

The UK’s Distance Selling Regulations

This article is based on UK law. It was last updated in May 2007.

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Introduction

The Consumer Protection (Distance Selling) Regulations 2000 (the “Regulations”) came into force in the UK on 31st October 2000. This acticle is designed to give you an overview of the regulations and how they afect ‘most’ small businesses. We would recommend that all details of the Regulations, on the government websites.

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When do the Regulations apply?

The Regulations apply to distance contracts. These are contracts:

  • for the sale of goods or the provision of services;
  • concluded between a supplier and a consumer (note that business to business distance selling is not caught by the Regulations);
  • under an organised distance sales or service provision scheme run by the supplier (which will cover, for example, sales made through a call centre or from a web site; but one-off contracts concluded by email are not intended to be caught by the Regulations);
  • where the supplier communicates with the consumer without ever coming face to face with the consumer up to and including the moment at which the contract is concluded (i.e. by ‘distance communication’).

Means of distance communication would include:

  • unaddressed or addressed printed matter (this could include leaflets dropped through letter boxes);
  • letters;
  • press advertising with order forms;
  • catalogues;
  • telephone with or without human intervention;
  • email;
  • fax; and
  • television (teleshopping).

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Exempt distance contracts

The Regulations do not apply to all distance contracts and there are a number of exemptions from some or all of the provisions of the Regulations.

The Regulations do not apply at all to:

  • most contracts for the sale or transfer of land or for building on land, except short rental agreements;
  • contracts for the supply of financial services;
  • contracts concluded by means of an automated vending machine or automated commercial premises e.g. pictures taken from an automated photo booth;
  • contracts by telephone through the use of public pay-phones; and
  • contracts concluded at auction (although draft guidance on the Regulations suggests that it must be a genuine auction in order to qualify for the exemption – “buy it now” slots on internet auction sites will not be exempt as such sales are not concluded by a process of auction).

Separate regulations control the sale of financial services at a distance.

In addition, some parts of the Regulations do not apply to:

  • contracts for the supply of food, beverages or other goods intended for everyday consumption supplied to the consumer’s residence or to his workplace by regular roundsmen (e.g. a milkman, but not a supermarket); and
  • contracts for the provision of accommodation, transport, catering or leisure services, where the supplier undertakes, when the contract is concluded, to provide these services on a specific date or within a specific period.

The exemption is in respect of the provisions relating to:

  • information given to the consumer prior to the conclusion of the contract;
  • written confirmation;
  • cancellation rights;
  • recovery of money paid by the consumer;
  • return of goods by the consumer after cancellation;
  • goods given in part exchange; and
  • mandatory performance of the contract within 30 days.

Each of these provisions is discussed in more detail below.

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What are the requirements of the Regulations?

The Regulations require a supplier to:

  1. Give consumers certain information prior to conclusion of the contract.
  2. Give consumers confirmation in writing or in another durable medium which is available and accessible to the consumer (email is acceptable, but providing the information on a website is not), of the prior information and also provide consumers with additional information (e.g. in respect of cancellation rights). The term “in writing” is used as a convenient shorthand and references in this article to confirming information “in writing” should be read as including “or in another durable medium which is available and accessible to the consumer”.
  3. Repay sums paid by consumers within a certain time period.
  4. Perform the contract within a certain time period.

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Prior information

A distance contract will not be enforceable against a consumer unless the supplier has provided to the consumer in good time prior to the conclusion of the contract the following information:

  1. the identity of the supplier and (where the contract requires payment in advance) the supplier’s address;
  2. a description of the main characteristics of the goods or services;
  3. the price of the goods or services, including all taxes;
  4. delivery costs, where appropriate;
  5. the arrangements for payment;
  6. the arrangements for delivery or performance of the service, e.g. when the customer can expect delivery of the goods or performance of the services;
  7. the existence of a right of the seven day cooling off period;
  8. if the consumer is to use a premium rate telephone number, the cost of the call must be specified before charges are incurred for the telephone call;
  9. how long the price or any special offer remains valid;
  10. the minimum duration of the contract in the case of a contract to supply goods or services continuously (e.g. in a contract for a mobile phone or for cable TV services), or recurrently (e.g. in a contract with a monthly book club);
  11. whether or not substitute goods or services may be provided in the event of those ordered by the customer being unavailable; and
  12. notification that the supplier will meet the costs of the consumer of returning any substitute goods he or she does not want.

This prior information must be provided in a clear and comprehensible manner which is appropriate to the means of distance communication used (e.g. if the customer has contacted the supplier by email, it may be reasonable for the supplier to provide the prior information by email).

If a business cold calls consumers by telephone, there are special rules regarding any distance contract concluded during the course of the conversation. The contract will not be enforceable unless, at the beginning of the conversation, the supplier has made its identity and the commercial purpose of the telephone call explicitly clear.

In the case of a dispute, the supplier must prove that the information was provided in accordance with the Regulations. However, this requirement should not cause too many difficulties as it can be built into the telescript quite easily and, in any case, most suppliers operating over the phone would have to provide such information in order to comply with data protection legislation.

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Written confirmation and additional information

Suppliers must provide the consumer with confirmation of the prior information otherwise they will not be able to enforce the distance contract. This confirmation must be in writing, e.g. by email.

In addition to confirming the prior information, the supplier must also provide the following information to consumers in writing:

  • a statement that the consumer has a right to cancel the contract if he wishes and how this right can be exercised;
  • details of the cancellation process to enable the consumer to cancel the contract, including the provision of the name and address of the person to whom the consumer should send the notice;
  • whether the consumer or the supplier is responsible for the cost of returning the goods to the supplier if the consumer cancels;
  • in the case of contracts for the supply of services, information on the consequences of agreeing to performance of a service starting before the end of the usual seven working day cancellation period (see “Exceptions to the right to cancel” below);
  • the geographical address of the place of business of the supplier to which the consumer may address any complaints;
  • information on any after-sales services and guarantees; and
  • the conditions for cancelling the contract, where it is of an unspecified duration or a duration exceeding one year.

This information must be given to the consumer either:-

  • prior to the conclusion of the contract, or
  • in good time before or during the performance of the contract and, in contracts for the sale of goods, at the latest at the time of delivery of the goods where goods not for delivery to third parties are concerned. This means that where consumer A orders goods to be despatched to consumer B, the information must be given to consumer A prior to the conclusion of the contract.

The supplier in a contract for the supply of services shall not be subject to the obligations to provide written confirmation and additional information where those services are supplied on only one occasion and are invoiced by the operator of the means of distance communication.

However, the supplier must take all necessary steps to ensure that the consumer in such a one-off contract is able to obtain the supplier’s geographical address and the place of business to which the consumer may address any complaints.

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Right to cancel

Under the Regulations a consumer can cancel a distance contract at any time during the “cancellation period” by notifying this intention to the supplier in writing. A contract which is cancelled must be treated as if it had never been entered into by the consumer. For example, if the consumer has entered into a credit agreement in order to purchase the goods, that agreement must also be cancelled at the same time as the distance contract.

In both contracts for the sale of goods and contracts for the supply of services the cancellation period referred to above begins with the day on which the contract is concluded. However, the duration of the cancellation period varies depending on the stage at which the written confirmation and additional information is provided. The following is an outline of the various cancellation periods that may arise:

Cancellation periods for goods

  • where written confirmation and additional information is provided beforeor at the time ofdelivery of the goods, the cancellation period is seven working days beginning with the day after the day on which the goods are delivered;
  • where the written confirmation and additional information is provided after the goods are delivered but within aperiod of three months beginning with the day after the day on which the goods are delivered, the cancellation period will end after seven working days beginning with the day after the day on which the written confirmation and additional information is provided;

Example: the written confirmation and additional information is provided to a new customer three weeks after he placed an order. The cancellation period will be seven working days from the day after the date the written confirmation was provided.

  • where the obligation to give written confirmation and additional information is not fulfilled within three months beginning with the day after the day on which the goods are delivered, the cancellation period ends after three months and seven working days from the day after the day on which the goods are delivered.

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Cancellation period for services

  • where the written confirmation and additional information is provided on or before conclusion of the contract for services, the cancellation period is seven working days beginning with the day after the day on which the contract for services is concluded;
  • where the written confirmation and additional information is provided after the contract for services is concluded but within aperiod of three months beginning with the day after the day on which the contract is concluded , the cancellation period will end after seven working days beginning with the day after the day on which the written confirmation and additional information is provided;
  • where the supplier has the consumer’s consent to begin performance of the services before the usual seven working day cancellation period expires and the written confirmation and additional information is provided before performance of the services begins, the cancellation period ends when the performance of the services begins;
  • where the supplier has the consumer’s consent to begin performance of the services before the usual seven working day cancellation period expires but the written confirmation and additional information is not provided on or before the day on which performance of the services begins but is provided in good time during the performance of the contract, the cancellation period will end after seven working days beginning with the day after the day on which the written confirmation and additional information is provided (provided the right of cancellation is still useful) or when performance is completed (whichever is sooner);
  • where the obligation to give written confirmation and additional information is not fulfilled within three months beginning with the day after the day on which the contract for services is concluded, the cancellation period is the period of three months and seven working days from the day after the day on which the contract is concluded, regardless of whether performance of the services has begun or has been completed.

It is, of course, open for suppliers to offer longer cancellation periods under their own contract terms, provided they do not mislead consumers about the rights they have under the Regulations or other legislation, e.g. the Sale of Goods Act 1979 and the Supply of Goods and Services Act 1982.

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Exceptions to the right to cancel

Unless the parties have agreed otherwise, the consumer will not have the right to cancel in respect of certain distance contracts. This applies to the following contracts:

  • for the provision of services, if the performance of the contract has begun with the consumer’s consent before the end of the usual cancellation period and the supplier has provided the written confirmation and additional information before commencing performance of the services (including information that the cancellation rights will end as soon as performance of the contract begins);
  • Note that the draft DTI guidance states that preparatory work to providing a service (such as setting up an account) cannot be equated to the carrying out of a service. This may impact on the right of businesses to say that the provision of a service has begun and therefore cannot be cancelled.
  • for the supply of goods or services which are priced according to fluctuations in the financial market and cannot be controlled by the supplier;
  • for the supply of goods which by means of their nature cannot be returned (e.g. personalised goods) or are likely to deteriorate or expire rapidly (e.g. dairy products);
  • for the supply of audio or video recordings or computer software which were unsealed by the consumer;
  • for the supply of newspapers, periodicals or magazines; or
  • for gaming and lottery services.

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Recovery of money paid by consumer

On the cancellation of a contract, any sum paid by the consumer must be repaid as soon as possible and, in any case, within thirty days of cancellation. The full price paid for the goods including the cost of delivery must therefore be refunded. A supplier may (except where goods are returned because they are faulty) impose a reasonable charge to cover postage costs incurred by the supplier where it bears the cost of the consumer returning the goods provided this is clear in the contract and the consumer gets notice of this in advance as part of the written confirmation relating to the right to cancel.

Where the supplier wishes to send substitute goods (e.g. where the original goods ordered are not in stock, but similar goods are available), the supplier must not only have provided for the possibility of sending substitute goods in its contract so that the consumer was informed that this could be a possibility but, in the case of the consumer cancelling the contract and returning the goods, the supplier must bear the cost of such return.

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Return of goods by consumer after cancellation

If the consumer has, before cancelling the distance contract, acquired possession of the goods, the consumer will be under a duty to restore those goods to the supplier and, in the meanwhile, to retain possession of the goods and take reasonable care of them. This duty to take reasonable care ends if the consumer delivers or sends the goods at his own expense although the consumer is under no obligation to do so except at his own premises and in pursuance of a written request by the supplier.

Note that failure by a consumer to return goods will not permit the supplier to delay in making a refund. Similarly, if a consumer returns damaged goods he or she does not necessarily lose the right to cancel. The supplier can only rely on the right of action against the consumer for breaching the statutory duty to take reasonable care of the goods.

If, within 21 days following cancellation of the distance contract, the supplier requests the consumer to return the goods and the consumer unreasonably refuses or unreasonably fails to comply with the request, the consumer’s obligation to retain possession and take reasonable care of the goods continues until he delivers the goods to the supplier.

If the supplier fails to request the return of the goods within 21 days following cancellation of the distance contract, the consumer’s obligation to take reasonable care of the goods ceases at the end of the 21 day period.

Where the supplier is holding any sum as security, the consumer is not under an obligation to return the goods after cancellation until the supplier discharges any duty on him to release the security under the Regulations.

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Goods given in part-exchange

In a situation where the supplier had agreed to take goods in part-exchange and those goods have been delivered to him, if the consumer cancels, the supplier must return the part-exchange goods in a condition substantially as good as they were delivered within ten days of the cancellation, otherwise the consumer is entitled to a sum equal to the part-exchange allowance.

If no part-exchange allowance was agreed, the sum shall be what would be reasonable to allow for the part-exchange goods if no notice of cancellation had been served.

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Performance of the contract

Unless the parties agree otherwise, the supplier must perform the contract within thirty days from the day after the consumer sent his order to the supplier.

If the supplier is unable to perform the contract within this period, he must inform the consumer and repay any sum paid as soon as possible (and in any event within 30 days), although it is open to the supplier and the consumer to agree a revised date for delivery.

A contract which is not performed within the 30 day period shall be treated as if the consumer never entered into it, but the consumer will still have remedies for non-performance.

If a longer period than 30 days is required then this must be clearly stated in the supplier’s terms and conditions and the prior information. The supplier may perform the contract by substitute goods or services of equivalent quality and price if the contract provided for this possibility and the supplier gave the consumer the prior information in the appropriate way.

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Payment by card

Where fraudulent use has been made of a consumer’s payment card in respect of a distance contract then the consumer will be entitled to cancel any payment which has been made as a result of such fraudulent use.

Note that the Regulations refer to “payment card” and not simply credit card. This means that debit cards, charge cards and store cards will be afforded protection under the Regulations as well as credit cards.

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Inertia selling / unsolicited goods

A person who, having sent in the course of business unsolicited goods to a person with a view to the recipient acquiring them but who has neither agreed to acquire or return the goods, makes a demand for payment or threatens legal proceedings to get payment will be guilty of an offence. The recipient of such unsolicited goods may use, deal with or dispose as if they were an unconditional gift.

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No contracting-out

Any term in a distance selling contract which is inconsistent with the protection of the consumer as set out above shall be automatically void.

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Consequences of breach

If a supplier is in breach of the restrictions on the use of means of distance communication, he can be sued for compensation by a consumer who has suffered damage as a result of the breach.

The power to consider complaints and seek court orders for compliance with the Regulations rests with the Director General of Fair Trading.

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Guidance from the DTI and Office of Fair Trading

The DTI and OFT have produced a comprehensive guidance note that is intended to inform businesses of their duties under the Regulations. The guidance helps to clarify certain areas of the Regulations, and provides practical advice to distance sellers on their obligations.

The key areas include:

  • Guidance on consumers’ rights of cancellation and time limits for cancelling orders;
  • Practical advice on when refunds can and cannot be lawfully refused and what should and should not be refunded;
  • Information on how consumers are expected to exercise rights to cancel in practice; and
  • Information on the relationship between the E-commerce Regulations and the Regulations, and how the interaction between these two pieces of legislation affecting e-tailers is to be resolved.

The guidance also contains specific advice for various types of supplier, including online auctions, online supermarkets, online booking agencies, computer sellers, music and software retailers and sellers of downloads.

See: A guide for businesses on distance selling, by the OFT and DTI (48-page / 126KB PDF)

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Summary

The most important provisions of the new Regulations are that consumers are now entitled to:

  • Receive clear information about goods and services before deciding to buy;
  • Confirmation of this information in writing;
  • A cooling off period of seven working days in which the consumer can withdraw from the contract; and
  • Protection from credit card fraud.