Wednesday, 16 April 2014

order with obligation to pay

Some of you may have noticed that the order forms on our web site now have rather ugly buttons say "order with obligation to pay" instead of "Confirm" or "Place order" or some such.

Why?

Well, it is a new law coming in which replaces the old Distance Selling Directive on 13th June 2014: The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013.

There has been some mention of these regulations as they will effectively get rid of the 0871 or otherwise expensive contact numbers. Section 41 says helpline telephone numbers shall not be more than the basic rate. Though they don't define that.

But there is a requirement buried in section 14 which is rather fun.

It says:

(4) If placing an order entails activating a button or a similar function, the trader must ensure that the button or similar function is labelled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the order entails an obligation to pay the trader. 

Now, that is pretty specific. It says "only" with the words, and says the label on the actual button must say this (or corresponding unambiguous formation).

So web sites that just say "Order" or "Place order" or "Confirm" will not be complying.

Well these regulations have various enforcement for breaches, as most do, and one could expect trading standards or some such to complain if you don't meet the regulations. Fair enough.

Except, it goes on to say:

(5) If the trader has not complied with paragraphs (3) and (4), the consumer is not bound by the contract or order. 

Now this is serious! It is way more serious than any wrap on the knuckles by trading standards or even a fine. It says the consumer is not bound by the contract!

Note that it does not say the contract is void, or can be cancelled by the consumer or any such (cancellation rights are all covered in detail elsewhere). It says the consumer is not bound by the contract. It does not say the trader is not bound. It does not say the consumer has to return goods supplied, or pay for services supplied. It is one sided - consumer not bound.

That is a massive penalty on the trader. And it applies to all UK traders from 13th June 2014. What fun that will be.

19 comments:

  1. This comment has been removed by the author.

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  2. The only 'good thing' is ecommerce traders who don't actually treat the order as 'confirmed' until they receive payment don't really need to make any changes. But if you offer a recurring subscription or have invoicing or anything like that - then be aware.

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    1. Well, and anything that allows payment to be clawed back!

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  3. Cheers Rev, modified my HELM signup pages :) And let a few people know as well!

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  4. So would, for example, "Buy now" count? Or is there enough difference in the meanings of "buy" and "order" that it wouldn't count as a "corresponding unambiguous formulation"?

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    1. Well, that is a point we have been discussing here anyway. The only way to be sure is to use the exact wording in the regs. Anything else is a discussion with a judge!

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  5. Good piece! I wrote about this myself a few months ago (http://lexisweb.co.uk/blog/comet/what-you-need-to-know-about-the-new-website-law/). Really clunky wording ('order with obligation to pay') only serves to confuse together with the onerous 'nuclear' penalty for traders: these seem a tad unfair to me. No wonder lawyers and legislators get a bad name

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  6. I wonder if http://www.legislation.gov.uk/uksi/2013/3134/regulation/12/made negates electronic contracts in all forms - after all, web pages and email can't really be classed as 'durable mediums'

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  7. Have you seen the BIS implementation guidance? Specifically for the order submit button, it says: "The online trader will need to make absolutely clear, through for instance a labelled ‘pay now’ button, where there is an obligation to pay."

    Looking at this for $dayjob, the lawyers are happy with various options including "pay now", "your card will be charged", "your payment will be processed" etc.

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    1. Interesting. That is fine when paying now, but not for things like our services where paying is later by direct debit.

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    2. Indeed, "pay now" may not be clear enough if paying now is only the set up fee and so on but an obligation to pay more later?

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    3. Also, "Pay Now" may not be legal - ISTR for physical goods you're not allowed to charge someone's card until you actually dispatch their order...

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  8. You do realise that RevK and A&A are some of the few people that will take this seriously. I expect no change on most online ordering pages, most companies don't have a clue.

    For example I have many direct debits. A&A are one of a minority that does the right thing and tells me every month that payment is going to be taken. Council tax and electricity/gas appear to be OK because they tell me once up front what they will take every month (until further notice for gas/elec, specific dates for council tax). The water bill might be OK too, they tell me every 6 months what they're going to take. But all the mobile phone contracts don't inform me in advance (and they have to when the amount varies eg, international charges), nor do a couple of others.

    Most places just don't care about getting stuff right or being within the law. They assume consumers don't know any better.

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    1. Mobile phone companies don't need to bother though - if somebody claws back a DD payment because they weren't given enough notice, the company will just cancel the consumer's account and set the debt collectors on them. Given they'll lose their phone, their number and receive a lot of hassle, what consumer is going to complain?

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    2. Well, they would not lose the phone would they!

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    3. Phone service, I meant.

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  9. The Draft Regulations published in August 2013 specifically mentioned only geographic-rate, freephone and standard mobile numbers will comply. However, the wording completely changed in the Final Version published in December 2013 and the regulations themselves no longer define "basic rate".

    This is because Ofcom's "simplifying non-geographic numbers" project is now running about a year late. That project was meant to clear up various anomalies with 0500, 0800, 0808, 0845 and 0870 numbers. As that hasn't yet happened it makes the situation complicated. BIS have therefore published separate Guidance Notes covering the period 13 June 2014 to 26 June 2015. These are pretty clear on the details. BIS have also said that once Ofcom's new system is in place, BIS will review the definition of "basic rate" again.

    For the moment it goes something like this:

    01, 02, 03 numbers are fine.

    Standard 07 mobile numbers are fine - there's no requirement for a small trader to purchase a geographic-rate number.

    Freephone 080 numbers should have a standard 01, 02 or 03 number running in parallel until they become free calls from all mobile phone on 26 June 2015.

    0843, 0844, 0845, 0871, 0872, 0873, 090, 091, 098 are out because the caller incurs an additional Service Charge to the benefit of the called party. Ofcom's new system will make this very clear.

    0870 numbers are out because callers using a mobile phone usually pay more than for calls to 01, 02 and 03 numbers. Ofcom's new system will re-introduce the Service Charge and make 0870 numbers work the same as 0871 numbers.

    Numbers beginning 055, 056, 070 and 076 also do not comply. While 055 and 056 are often cheap from landlines they are often expensive from mobiles.

    Ofcom will be reviewing these latter ranges over the next few years as part of their "simplifying non-geographic numbers" project. Hopefully, 055 and 056 will be moved to 03 and 070 will be moved to 09.

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  10. Odd about 055's, well, odd that mobiles charge more - the rate for 055 is not defined but if you have an 055m data filled at the same as geographic, that should be OK. I'll have to review what mobiles are charging people for them. One hopes in the case of an individual 055 number, if they are not actually being charged more then that is OK. But unlikely to be an issue as the way OFCOM had done 055's is meaning hardly anyone uses them.

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    1. Yes, absolutely. If it can be demonstrated that all major landline and mobile providers charge calls to an 055 number at no more than whatever they charge for calls to 01, 02 and 03 numbers then 055 numbers are fine to use. However, this means 055 numbers will also need to count towards inclusive call packages wherever 01, 02 and 03 numbers are included. This latter point may be their downfall.

      To be fair, while the BIS Guidance is quite detailed, from memory I think it actually makes no specific mention of 055, 056, 070 and 076 numbers. I'm sure 070 and 076 do not comply. The jury may still be out on 055 and 056.

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