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Online Sales: European Parliament approves new rules
PRACTICE AREA GROUP: Technology and Commercial Contracts
On 23 June 2011, following over two years of negotiation, the European Parliament approved the introduction of a proposed Consumer Rights Directive which will set out new European-wide rules in relation to off-premises and distance contracts, such as online contracts. The Consumer Rights Directive will go to the Council of Ministers for approval (which is expected to happen before the end of this year) and Member States will then have a maximum of two years to implement the new rules.
In a press release issued by the Parliament, it states that they “reached a well-balanced deal which meets both calls from consumers and business interests”. The impetus for change arose from a number of factors including the increase in online sales (with 40% of EU consumers buying goods and services online in 2010) and the legislative differences among Member States which negatively impacted cross-border sales. The Parliament claims that the new rules will strengthen protection for online shoppers whilst cutting red tape for small and medium sized businesses.
The Parliament also issued a background document setting out the main changes to be introduced by the Consumer Rights Directive including:
- 14 day cooling-off period (increased from the current period of 7 days) during which consumers can cancel their orders without reason. The price paid by the consumer must be refunded within 14 days of the cancellation. If the seller fails to inform the consumer about this cancellation right, the cooling-off period is extended automatically to one year.
- Certain goods are exempted from the cooling-off period, such as magazines, airline tickets, hotel booking and goods which deteriorate or expire rapidly. Digital goods, such as music, film or software programmes, will also be exempt. In that instance, the sale will be regarded as irreversible from the moment downloading begins.
- Goods ordered at a distance must be delivered to the consumer within 30 days, otherwise the consumer will have the right to cancel the purchase.
- Additional information requirements to be met by the seller before the consumer completes the order.