Any lawyer who works in the e-commerce space will no doubt have been busy over the past few weeks advising businesses on the new rules under the Consumer Rights Directive which applies, amongst other things, to all B2C contracts made at a “distance” (e.g. online or over the phone etc).
The new rules, amongst other things, amend consumers’ cancellation rights for distance contracts. In particular, provided certain conditions are satisfied, consumers will now have a 14 day period (it was previously 7 days), in order to change their mind, return the goods, and receive a refund.
Under Article 6(3) of the old Distance Selling Directive which the Consumer Rights Directive replaced (Reg 13(1)(e) of the old Distance Selling Regs in the UK), there was an exception from the consumer’s right to cancel “for the supply of newspaper, periodicals, or magazines”. This exception made obvious sense given that the value of these types of publications is limited in time (in the case of a newspaper – generally only one day). Therefore, it would be unreasonable for a consumer to be able to cancel and return such goods after a few days and get a refund etc.
However, under Article 16(j) of the Consumer Rights Directive (Reg 28(1)(f) of the Consumer Contracts Regs in the UK), the exception now applies to “the supply of a newspaper, periodical, or magazine with the exception of subscription contracts for the supply of such publications”.
A plain reading of the above seems to imply that (a) the cancellation/refund rights do not apply to the supply of a newspaper, periodical, or magazine, but (b) the cancellation rights do apply to the supply of a newspaper, periodical, or magazine if such supply is made pursuant to a subscription contract.
If the above is correct – this seems totally crazy to me because it means that a consumer who purchases a print newspaper as part of a subscription taken out online (or over the phone etc), can now cancel within the 14 day period, return potentially up to two weeks worth of old newspapers and receive a refund for them! What is the publisher supposed to do with two weeks worth of out of date newspapers?!
I contacted someone at Trading Standards about this and here’s an extract of what I got back:
…my reading of the legislation is that a consumer has the right to cancel a distance or off-premises contract which is a subscription to a newspaper by virtue of Reg 29(b). The consumer may cancel the contract at any time within the cancellation period without incurring any liability except where the value of goods is diminished by consumer handling beyond what is necessary to establish the nature, characteristics and functioning of the goods [Regs 29(c) and 34(9)]. The meaning of this is elaborated in Reg 34(12) where it indicates that this would be equivalent to “beyond the sort of handling that may reasonably be allowed in a shop”. I take this to mean that in the event that the newspaper(s) received before cancellation are returned in pristine condition he could expect a refund but if he has read them through and done the Su Doku probably not…
Not much help from Trading Standards, so I decided to go to BIS. Here’s an extract from what I got back from someone at BIS:
…the regulations (which copy out the Consumer Rights Directive) do not specifically state that, in the case of cancellation of a subscription, a newspaper already delivered must be returned or that it cannot be returned. Although the regulations seek to ensure that where cancellation rights apply, the consumer’s liability is limited, and goods should be able to be returned with minimum penalty, at the same time, as you point out, one-off supply of publications are not subject to cancellation (because presumably the buyer can read and send back)… You will want to take your own view on what the courts might say in the light of the wording of the regulations but if you did settle on [the interpretation that the newspapers can be returned] then the rules around return of goods are likely to apply which means that the consumer (provided they have been told about the costs) would have to pay for the return of the publication and, if it looked used, there could be a deduction for diminished value from any refund.
Not much help from BIS either. I tried to see if there was any discussion of this during the legislative process. There doesn’t seem to be much / anything of use (unless there’s something buried amongst the debates which I haven’t been able to find).
There’s a brief reference to the exception in a 2009 Committee of the Regions report, but nothing of any substance.
The exception was also briefly referred to in the list of proposed amendments published by the Committee on the Internal Market and Consumer Protection in October 2010. Buried deep in this 224 page document is one reference on page 158 to the exception being justified because:
Consumer [sic] should have a possibility to withdraw from the subscription contract. Full harmonization.
No other explanation was included. In particular there was no consideration of the bizarre practical implication of the reworded exception meaning that a consumer could in theory return almost 2 weeks of newspapers back to a publisher and receive a refund.
In its 2011 opinion on the proposed Directive, the Committee on Legal Affairs briefly justified the amended exception as follows:
One of the objectives of the revision of the Consumer Acquis under civil law within the EU, the development and strengthening of consumer protection, also requires the critical analysis and reduction of the myriad of exceptions from the right of withdrawal… these exceptions are always cited in practice as an argument against a right of withdrawal of the consumer and are therefore to their disadvantage.
It’s true that the exceptions disadvantage consumers in as much as they are exceptions to the right of withdrawal. However, the whole point of having the exceptions is that, quoting directly from Recital 49 of the Consumer Rights Directive: “…a right of withdrawal could be inappropriate for example given the nature of particular goods or services“.
In addition to the above, there are of course pages and pages of European Parliamentary debates on the Directive. However, as far as I can see, whilst there are plenty of statements around the importance of maximising consumer protection, there are no considerations around the practical implications of narrowing the well established newspaper exception.
My view is that the amendment to the exception is probably a failure by the legislature (whilst attempting legitimately to increase consumer protection) to fully appreciate the actual practical implications that the addition of a few words to a statutory exception can have.