Is the Consumer Rights Directive really going to force me out of business?

The Consumer Rights Directive has hit the headlines recently, following the addition of new amendments that would strengthen its powers.

The Directive is intended to make life safer and easier for consumers. But what does it mean for your business?

What is the Consumer Rights Directive?

The Consumer Rights Directive is a proposed new European rule that would bring together a number of disparate, existing rules.

At the minute, European rules on consumer rights are contained in four separate Directives covering unfair contracts, distance selling, doorstep selling, and sales and guarantees respectively. These rules were made in a rather haphazard fashion, and many were written almost three decades ago. The Consumer Rights Directive will, it is hoped, ‘harmonise’ these existing Directives, and give consumers some more clarity about their rights when buying and selling in Europe.

Broadly, the purpose of the proposed Directive is to ensure that customers can be confident about making purchases within Europe, particularly online, and from businesses in other European countries. The Directive will apply to B2C sales – that is, sales made from businesses to consumers, rather than sales made between businesses.

Why are we talking about it now?

The Consumer Rights Directive has become big news again because of a number of amendments that have been made to the proposal. Some business owners have suggested that the amendments place an unfair burden on retailers – and some have claimed that the Directive could even force companies out of business.

Quentin Pain, founder of accounting software company Accountz, has been one of the Directive’s most vocal critics. He said: “The changes proposed to the Consumer Rights Directive are absolutely crazy, and will be extremely harmful to the recovery and growth of online trading.

“These amendments will go a huge way to deterring the growth of start-ups, which in turn will have a huge ripple effect on the entire economy. It’s EU legislation gone mad.”

What are the main requirements?

In its original form, the Directive aimed to create a single legal framework that would set out the rights enjoyed by every European consumer buying from a European trader. The main points of the proposal include:

• An obligation for businesses to provide customers with key information before the conclusion of a contract
• The consumer’s right to a 14-day ‘cooling off period’. This means that the consumer can cancel an order, return the goods and get their money back at any point during the 14 calendar days after they make a purchase online or during the visit of a trader to their home.
• The consumer’s protection against the risk of loss or damage to goods until they receive them. In practical terms this will mean that traders will be liable for that risk – and, probably, that traders will have to pay the cost of postal insurance.
• The consumer’s right to have goods replaced or repaired at any time during the two years after they make the purchase. When this is not possible, a refund must be given.

It is the new amendments to the Directive, however, that have cause the latest round of anger. These include:

• The trader’s obligation to cover the cost of returns when that cost exceeds €40.
• The trader’s obligation to sell to any and every EU country.

That doesn’t sound too unreasonable…

Quite. The purpose of the Directive is certainly not to put firms out of business. Instead, the idea is to make sure that consumers know exactly what they are getting – and that less scrupulous businesses have a firm set of rules against which their actions can be judged.

Much has been made of the proposal that businesses will be obliged to sell into every EU country. But most mail order or online-based businesses already do this; simply by existing online they make themselves accessible to people from around the world.

Certainly, if adopted the Directive will require businesses to think differently about the way they do business within Europe. But it will also provide consumers with an added level of confidence in your business – and this can only be a good thing.