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IT consumers on line for clearer contracts

PN 140/03     4 November 2003

The OFT is consulting on new draft guidance for consumer IT goods suppliers who operate distance selling schemes.

Download draft guidance IT consumer contracts made at a distance (pdf 819 kb).

The draft guidance is aimed at consumer IT businesses that deal with customers at a distance, such as via mail order, the internet and other home shopping methods. In particular, the OFT wishes to ensure that businesses comply with the Consumer Protection (Distance Selling) Regulations (DSRs) which give consumers rights when purchasing goods and services where there has been no face-to-face contact with the supplier; and the Unfair Terms in Consumer Contracts Regulations (UTCCRs), making sure that businesses use fair and clear standard contract terms that comply with the law.

The draft guidance has been designed specifically for the IT sector after an OFT study of the market for consumer IT goods found that there were instances of unfair terms in consumer contracts. In particular, problems were found with terms misleading consumer about their statutory rights and also with guarantee/warranty terms being lost in the small print of the agreement.

The draft guidance explains the requirements of the DSRs and UTCCRs. It includes examples of terms which do not comply with these regulations. Areas covered include: making the contract, price and additional charges, performance and delivery, variation of contract, cancellation terms, product warranties and consumer rights. 

 John Vickers, OFT Chairman, said:

'The market for consumer IT goods is worth over £2 billion a year and consumers need to be confident that their rights are protected. The draft guidance is intended to provide suppliers with a clear idea of the law on fairness of contracts and distance selling. We want it to be user-friendly and we welcome comments.'

The deadline for the consultation is 30 January 2004 - more details can be found in the consultations area of our website.

NOTES

1.  The Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs) superseding the UTCCRs 1994, apply to standard contract terms used with consumers. The UTCCRs protect consumers against unfair standard terms in contracts they make with traders. The OFT, together with certain other bodies, can take legal action to prevent the use of potentially unfair terms. A term is likely to be considered unfair if it causes a significant imbalance in the parties' rights and obligations under the contract, to the detriment of consumers. The regulations say that a consumer is not bound by a standard term in a contract with a trader if that term is unfair. Ultimately, only a court can decide whether a term is unfair.

2. The Consumer Protection (Distance Selling) Regulations 2000, commonly referred to as the Distance Selling Regulations (DSRs) came into force on 31 October 2000 giving new rights to consumers in the area of home shopping (where there is no face to face contact such online sales, mail order, telesales). Under the regulations consumers have additional rights including rights to: clear information, a seven day cooling off period and further protection against fraudulent use of a credit card. The regulations provide that consumers who receive unsolicited goods or services have no obligations to pay for them.

3. The DSRs apply to almost all types of distance shopping but there are exceptions: business to business contracts, certain financial services, auctions, contracts for the sale of land, and vending machines. Some parts of the regulations do not apply to: deliveries of food and beverages for everyday consumption, contracts for transport, accommodation, catering or leisure services provided on specific dates or within specified periods, and timeshare and package holidays.

4. The OFT launched its investigation into consumer IT goods and services on 3 October 2001.

5. The outcome of the consumer IT goods and services market study was published in December 2002 (see PN 85/02).

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