Catherine Feechan: EU aims to take an axe to frustrating charges

Published on 01/09/2012 19:42

What drives you crazy as a shopper? How about hidden charges, excessive fees for using credit or debit cards or pre-ticked boxes on websites for products you don’t want?

If any of these drive you mad, then there’s good news in store: they are all examples of current practices that will be outlawed by new EU legislation.

The government has recently launched a consultation on the EU Consumer Rights Directive, which is to come into force in the UK by 13 June, 2014. The new regulations will cover many aspects of the buying process, including specific information that sellers must provide, the buyer’s right to withdraw from the contract and the limitation of costs which can be charged to cover the means of payment, such as the fees levied when using credit and debit cards.

The legislation will bring together existing laws by creating one set of rules for consumers, hopefully reducing complexity and confusion.

The European Union has tried to achieve a fair balance between protecting consumers’ interests while at the same time allowing businesses to compete on a level playing field so that they can take full advantage of the EU’s single market, particularly through online retail.

According to the government, the new rules will also benefit businesses by increasing confidence, setting out clearer rules and responsibilities and cutting red tape and compliance costs.

The regulations were created with the modern marketplace very much in mind. In addition to applying to traditional sales – in person, across the counter in shops – these regulations will also apply to distance sales, in particular online transactions where people trade across international borders.

From the consumer’s perspective, the new regulations bring many benefits. Firstly, “excessive” charges for use of credit cards will be prohibited. The Office of Fair Trading has singled out the travel industry for often charging high fees to use credit and debit cards.

Many of us have direct experience of the surcharges that are placed on card payments when booking flights, for example. Under the new rules, these charges will have to be proportionate to the actual costs incurred by the company.

Another consumer gripe in the area of travel booking is pre-ticked boxes on websites which mean that you can end up buying things you didn’t actually want, such as the airline’s own insurance. These will now be prohibited.

Other improvements for consumers include stronger refund rights and increased price transparency through the obligation on traders to disclose the “total cost” of a purchase, as well as any additional fees.

Expensive call rates charged for premium rate helplines which have to be used when contacting retailers about a purchase are another big issue. Under the new rules, once you have bought goods you cannot be charged more than the basic rate for calling a helpline.

The regulations also aim to protect consumers and allow for fair competition in the market. Trading practices used by unscrupulous businesses, such as hidden charges, will be prohibited. This will allow consumers to compare costs clearly and make better buying decisions.

What if traders don’t comply? Under the new rules consumers’ rights should be clearer – for example, the right to terminate a contract where a trader fails to deliver the goods within the required delivery period.

Also, where a trader fails to inform a consumer of their right to cancel a contract, this will be extended from 14 days to one year. Those who buy from door-to-door salesmen will have the right to cancel any purchases within 14 days, twice as long as the current cooling-off period.

This new legislation will be a big step forward – clarity is essential for consumers to get the deal they deserve.

• Catherine Feechan is a partner in corporate law firm Brodies LLP. Additional research by trainee solicitor Kate McKay.