Commercial Law Update: New Rules When Selling to Consumers
02 March 2016
The European Union Alternative Dispute Resolution for Consumer Dispute Regulations 2015 (“ADR Regulations"), in force since September 2015, and the European Union (Online Dispute Resolution for Consumer Disputes) Resolutions 2015 (“Online Regulations”), which came into effect on 9 January 2016, require businesses to change some of their practices when dealing with consumers.
What are the changes?
The Online Regulations make significant changes. The two main changes are:
(1) The creation of the Online Dispute Resolution Platform (“ODR platform”). The ODR platform is an online platform for consumers and traders within the EU to resolve disputes regarding cross border e-commerce business transactions. When a complaint is lodged through the ODR platform, an alternative dispute resolution body will act as a referee between the two parties in an attempt to resolve the dispute. Its objective is to allow consumers and traders to settle their online disputes at the click of a mouse without the need to go to court.
(2) New information requirements. Traders must now:
- Inform consumers about the existence of the ODR platform and the option to use the platform to resolve disputes.
- Provide an electronic link to the ODR platform on their website or in an email if the offer is made by email. This link must be easily accessible to consumers.
- Provide consumers with an email address for their business.
Under the ADR Regulations, traders (for offline and online sales) must:
- Inform consumers of an ADR (alternative dispute resolution) agency within the trader’s European Member State. This information must be included on the trader’s website and in its terms and conditions. This information must be provided in a clear, comprehensible and easily accessible way.
- Tell a consumer whether or not they will work with the ADR agency to settle a dispute. Traders are obliged to provide this information to consumers in writing, by email or another way that enables the consumer to store the information so that it can be accessible at a later date.
Who do the new rules apply to?
The Online Regulations specifically apply to traders established, and consumers resident, in the EU engaging in online sales or services. The ADR Regulations apply to all traders (online and offline) of goods and services that are established in the EU and to consumers resident in the EU.
The definition of traders in both regulations is broad. It includes individuals, private or publically owned business acting for purposes related to their trade, business, craft or profession and also extends to covering their agents.
Are there sanctions for non-compliance?
Failure to provide consumers with the required information under both the ADR Regulations and Online Regulations is an offence. Breaches attract penalties of up to €5,000, 12 months’ imprisonment or both on summary conviction.
- consider whether the regulations apply to them;
- update their websites, apps, terms and conditions and offer emails to ensure compliance with the new information and technical requirements; and
- become familiar with the ODR platform, new grievance processes and the ADR entities available to them so that they are informed of the changes and are able to respond to customers queries.
For more information, please contact a member of our Commercial team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.