New laws on consumer contracts

Charities and social enterprises should take note that the laws applying to contracts with “consumers” have recently changed. For the purposes of these new laws, an individual will be classed as a “consumer” if they are acting for purposes wholly or mainly outside their trade, business, craft or profession.

The changes, which apply from 13 June 2014, will be particularly relevant to organisations with online shops or which take any other payments online for goods or services or digital content. More information must be provided to consumers, both before and after they have completed their online transaction, and charities must now give consumers at least 14 days to cancel their order (subject to certain exceptions). To this end, there is a specific cancellation form that must be provided to consumers – although consumers do not have to use the specific form to cancel their contract! In addition, the final button clicked by an individual to place their order must be labelled so that it is clear clicking on the button commits the consumer to making a payment. This could require charities to update “Order Now” buttons (for example) so that they instead say “Pay Now” (for example).

Charities should also be aware that the new laws prohibit additional payments (eg, £1 donation) without the consumer’s express consent. This means that those charities whose websites include a pre-ticked box for a donation to be made whenever something else is purchased through their website should update their website to allow consumers to “opt in” to make the donation, rather than having to “opt out”.

We have produced a short diagrammatic summary highlighting the key points to note. The new laws are set out in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. Please do contact us if you would like to discuss whether your terms and conditions and online payment processes now need to be updated in light of these regulations.