Everything you need to know about the new Consumer Right Directive

10 minute read
30 July 2014

On 14 June 2014 the new provisions of the EU Directive 2011/83/EU on consumer rights (the Consumer Right Directive, CRD) entered into force. They include several changes which you should be aware of in order to ensure your business remains compliant.

1. Application scope of the German remote purchase law

CRD article 2 no. 7 introduces a new definition of a distance contract which no longer relates to a particular subject-matter. A classification in goods or services is therefore no longer necessary.

For the application of the rules for distance contracts, the current law only requires that a consumer contract is available which was exclusively entered into without the simultaneous physical presence of the trader and the consumer. This definition is implemented in Germany by the new Sec. 312c BGB (German Civil Code).

Consumer contract

Under the new law, contracts concluded by a trader with a consumer, as well as contracts concluded by a third party acting in the name or on behalf of a trader will fall under the term of distance contract. Moreover, so-called "dual use"-contracts must now also be seen as consumer contracts - something which was disputed until now.

"Dual use" contracts serve the private as well as the commercial or independent professional purposes of the customer. The German legislator clarified that the consumer will now be a person who concludes a transaction for mainly non-commercial or independent professional purposes. The existence of a consumer contract shall therefore only be rejected in cases where the commercial purpose is predominating.

Exclusive use of remote communication means

Distance contracts are exclusively concluded under an organised distance sale or service-provision scheme, without simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded.

For the first time, the example catalogue of the CRD includes:

  • text messages,
  • letters,
  • catalogues,
  • phone calls,
  • faxes,
  • e-mails,
  • radio and other telemedia.

Personal communications between consumers and traders which only provide information on the goods or the service, in the time between arrangement and conclusion of the contract, shall be harmless if the contract is negotiated and concluded exclusively by using distance communication. In such cases a distance contract is still given.

2. Changes in the field of information duties

There have been changes in the formal requirements as well as the content scope of information duties. In addition, for the first time there are now specific provisions for mobile commerce.

Formal changes

Information duties now have to be provided earlier in the process. On webpages set-up for e-commerce, traders must now clearly indicate to consumers - by the beginning of the order process at the latest - whether there are delivery restrictions and which means of payment are available.

Previously, it was sufficient for the trader to make a reservation for delivery restrictions and to advise the consumer of the terms of payment in due time before they submitted their contract declaration. It used to be enough to inform the consumer on delivery restrictions for a particular good or service after the contract was concluded. This is no longer permitted.

The consumer must be informed at the beginning of the order process if a particular product or service cannot be delivered due to lack of personnel, stock, or other reasons.

Moreover, the trader is obliged, in accordance with the new law, to provide the consumer with a durable medium in which confirmation and the contract's content are stored. Said durable medium must be given to the consumer within a reasonable deadline after the contract concludes, but at the latest upon delivery of the goods or services. Until now, it was sufficient to do this in written form upon the full completion of the service.

A durable medium enables the receiver to retain or store a personal declaration in a way that is accessible for a time period reasonable for this purpose while the medium is suitable to play the declaration in an unchanged form.

These requirements are currently met by

  • paper form,
  • USB stick,
  • CD-ROM,
  • memory cards,
  • hard disks,
  • e-mails
  • webpages that are personally directed to the consumer and can only be accessed by them, e.g. login-areas.

With respect to financial services, the trader has to advise the consumer, through a durable medium, of the contract terms - including the general terms and conditions as well as all information duties before the consumer submits their contract declaration.

Changes to the content

The information duties regarding distance contracts for financial services are now regulated independently from those regarding other distance contracts.. No changes were made to the content of the information duties regarding distance contracts for financial services. For others, the new law requires the total price of the goods or services including all taxes and charges to be indicated.

In cases where the price cannot be calculated reasonably in advance due to the nature of the goods or services, the manner in which the price is calculated as well as all additional costs relating to freight, delivery or shipping and all other costs must be indicated too. The interpretation of the term "reasonable" is still unclear.

The consumer should be advised that the price depends on certain factors which cannot yet be determined or calculated in detail. In case of doubt, detailed information shall be made which must satisfy the principle of transparency due to the protective purpose of the CRD.

If the trader has not informed the consumer of freight, delivery and shipping and other costs, as is required under the new laws, the trader cannot request those costs from the consumer. Moreover, the trader is now obliged to indicate the delivery date until which the ordered goods or services must be rendered. This performance date must be binding.

There is a new stipulation for the consumer's contractual claim to receive the delivery, or to have the service fulfilled respectively at the latest by this date. Failure of delivery by this date will result in the liability of the trader being in default.

3. Changes in the right of withdrawal

As far as the right of withdrawal is concerned, the legislator no longer differentiates between pre-contractual information and contractual information. The consumer must now be provided with all information prior to contract conclusion. In addition, the right to withdraw can no longer be replaced by a right of return. It is therefore no longer possible to withdraw from the contract by simply returning the goods. An explicit declaration of withdrawal is now required.

A withdrawal, however, must not necessarily be in writing, it can be expressed in different ways. A trader may allow the consumer to complete and then to submit a legally-compliant declaration of withdrawal on the company's webpage, e.g. in an entry form. The legislator has provided a sample withdrawal form which the trader must necessarily make available to the consumer.

Moreover, the legislator has abolished the so-called "everlasting right of withdrawal". The withdrawal period does not begin until the trader has advised the consumer of the conditions, the deadlines and the method to exercise the right of withdrawal, the sample of the withdrawal form as well as the legal consequences of the withdrawal.

However, the right of withdrawal expires, at the latest, 12 months and 14 days after the contract conclusion or after reception of the goods, irrespective of a proper instruction on the right of withdrawal. This limitation, however, does not apply to contracts on financial services. So consumers could still benefit from an "everlasting right of withdrawal" for this kind of service.

What else is new? The legislator has now decoupled the consequences of withdrawal from the cancellation regulations and has established an independent regulation. The services to be received by both sides must be returned within 14 days. This means that the trader has to repay the consumer the complete purchase price including shipping costs within 14 days as well.

However, the trader is entitled to refuse performance as long as he has not received the goods from the consumer or as long as the consumer has not provided evidence that he has sent out the goods. The trader shall use the same means of payment for the repayment as the consumer has used for payment.

The costs for return shipment must be borne by the consumer. The 40-Euro-regulation is now abolished without any substitute. The trader has to inform the consumer thereon. If he does not, he will have to bear the costs for the return shipment. It is permitted for the trader, however, to take over the shipping costs on a voluntarily basis.

The consumer is obliged to compensate the lost value of the goods if this loss is due to handling the goods in a way that was not necessary to examine the nature of their features and their functioning. The consumer should handle the goods in a way that he would be allowed to in a shop. But the trader has to inform the consumer since the claim for compensating the value would lapse otherwise.

The legislator provides an EU-wide sample for a proper instruction on the right of withdrawal as well as a withdrawal form; but the use of them is optional. However, we strongly recommend using this sample text to assure compliance.

4. Other substantial alternations

The trader may agree with the consumer only expressly on a supplementary service against payment. In e-commerce contracts, the trader shall not effect such an agreement for a supplementary service against payment by a default setting.

According to the new law, an agreement is ineffective when the trader charges fees on top of the basic rate from the consumer for calling a phone number intended to answer a consumer's questions or give explanations regarding a contract concluded between the consumer and the trader. Moreover, the trader has to provide the consumer with a payment method which could be used without adding further charges/fees.

We hope that this information is helpful for you. Please contact us if you have any questions.

NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.