Three Things Thursday

Hello, and welcome to our weekly LinkedIn newsletter!

Every Thursday, we share three valuable insights based on discussions during our Savvy Shay Business Club. This week, we cover important topics like payment processor fees, handling of goods during the cooling off period, and incorporating terms of business. Keep reading to learn more!

And if you want to join our thriving membership and get answers to your burning business questions, head over to suzannedibble.com/savvyshay, right now you can try it out for just ￡1 for your first month... Let's get started!

1. Can I recover payment processor fees if I am refunding a consumer under the 14 day cooling off period?

The answer to this question and the second question will also be useful to know when YOU as an individual are buying consumer goods and want to cancel within 14 days.

Under the Consumer Contracts (Information, Cancellation and Additional Chargers) Regulations 2013 there is an express provision that says that other than deducting an amount for (i) diminution in value due to handling of the goods and (ii) deducting for an enhanced method of postage, you are not allowed to deduct any other amount or charge any kind of administration fee or other fee.

As such you cannot recover payment processor fees if you refund a consumer under the 14 day cooling off period. Payment processors will have varying terms and conditions but many will not refund you the fee on a refund, meaning that you will be out of pocket for this.

With postage, what the provisions mean as to deduction from the refund to the consumer for an enhanced method of postage, is that if for example you have a standard delivery for free but the consumer chose next day delivery at ￡9.99, you could retain the ￡9.99 as that was over and above your usual delivery cost. If your usual delivery cost is ￡2.99 and the consumer chose the ￡9.99 next day delivery, then you could retain the difference between ￡2.99 and ￡9.99, namely ￡7.

As for diminution in value due to handling of the goods, see the answer to the next question!

The relevant provisions in the Consumer Contracts (Information, Cancellation and Additional Chargers) Regulations 2013 are:

34.—(1) The trader must reimburse all payments, other than payments for delivery, received from the consumer, subject to paragraph (10).

(2) The trader must reimburse any payment for delivery received from the consumer, unless the consumer expressly chose a kind of delivery costing more than the least expensive common and generally acceptable kind of delivery offered by the trader.

(3) In that case, the trader must reimburse any payment for delivery received from the consumer up to the amount the consumer would have paid if the consumer had chosen the least expensive common and generally acceptable kind of delivery offered by the trader.

(8) The trader must not impose any fee on the consumer in respect of the reimbursement.

(9) If (in the case of a sales contract) the value of the goods is diminished by any amount as a result of handling of the goods by the consumer beyond what is necessary to establish the nature, characteristics and functioning of the goods, the trader may recover that amount from the consumer, up to the contract price.

(10) An amount that may be recovered under paragraph (9)—

(a)may be deducted from the amount to be reimbursed under paragraph (1);

(b)otherwise, must be paid by the consumer to the trader.

(11) Paragraph (9) does not apply if the trader has failed to provide the consumer with the information on the right to cancel required by paragraph (l) of Schedule 2, in accordance with Part 2.

(12) For the purposes of paragraph (9) handling is beyond what is necessary to establish the nature, characteristics and functioning of the goods if, in particular, it goes beyond the sort of handling that might reasonably be allowed in a shop.

2. A customer has peeled the clingfilm off my stationary pack that they have bought and has creased the envelopes putting them back into the pack but have now cancelled the contract under the 14 day cooling off period. Do I have to refund them for the entire amount as I can’t resell this pack now.

Under the Consumer Contracts (Information, Cancellation and Additional Chargers) Regulations 2013, the position regarding handling of goods is as follows:

“If (in the case of a sales contract) the value of the goods is diminished by any amount as a result of handling of the goods by the consumer beyond what is necessary to establish the nature, characteristics and functioning of the goods, the trader may recover that amount from the consumer, up to the contract price.”

But what does this actually mean?

A trader cannot usually deduct for removal of packaging to inspect the item, but can deduct for damage or wear and tear where the item has not just been checked but used.

So in this example, if the clingfilm had been removed, but the envelopes weren’t creased, it? would not usually be possible to deduct an amount from any refund for handling. However, as the corners of the envelope are all creased, this is likely to enable you to refuse a refund for the entire pack.

Where goods are returned without their original packaging (for example, the box containing an electronic device), it may be possible to justify a deduction for use if the packaging was designed for that product as part of its presentation (not just to protect it during transit).

The BIS CCRs Guidance gives the following examples:

• A toaster returned with crumbs in it is an item in respect of which the trader can make a deduction for use. The consumer does not need to test the toaster since, if the toaster proves to be faulty the consumer has rights under other legislation
• A large toy model kit for assembly is returned without the original bubble wrap and brown box used for delivery and with the model's box with photo and description torn, and the plastic packets containing the plastic bricks inside opened. The trader cannot deduct for the bubble wrap and brown box since it would have been reasonable for the customer to remove these to see the item in the way they would in a shop. However, it would not have been necessary to go further and open the box nor especially to open the sealed packets. The trader is able to reduce the refund to reflect the diminished value.

Recital 47 to the CRD states that:

• The consumer should only handle and inspect the goods in the same manner as they would be allowed to do in a shop and gives the example that a consumer should only try on a garment and should not be allowed to wear it.
• Even where consumers have used the goods in an unacceptable way the consumer should not lose their right to withdraw; the trader's remedy is to make a deduction.

A trader cannot usually deduct for damage caused solely from opening the packaging to access the item, if similar goods are normally displayed in shops in an unpacked condition. However, any protective films applied to the goods should only be removed where strictly necessary to test it. It also adds the following examples as to how the "shop handling" test could be applied:

• Before purchasing audio/video and recording equipment, the consumer would normally be able to test the image or sound quality.
• Trying on a garment in a shop would not involve the removal of the manufacturer's tags.
• The consumer would not normally be able to practically test household appliances, such as kitchen appliances, the actual use of which unavoidably leaves traces.
• The consumer would not be able to configure software on a computer; hence reasonable costs for any resetting of such equipment would also constitute diminished value.

However, the Commission CRD guidance does indicate that returning goods without their original packaging (for example, the box containing an electronic device) could justify a deduction for use if the packaging was designed for that product as part of its presentation (not just to protect it during transit). Deductions for use can also be made for cleaning mattresses that have had their protective films removed and which have to be resold at a (significantly) lower price (as "used").

NOTE however that you cannot make any deduction for use if you have failed to provide the consumer with information on their right to cancel, so make sure you have the right wording in your consumer contracts! If you don’t have that, then look at getting hold of my e-commerce terms that contain all of the right wording to protect you in this regard. Email us at [email protected].

3. My new sales platform doesn’t provide the ability to add a tick box to the order form so I can’t require people to agree to my terms and conditions of sale - what can I do?

In order for your terms of business to be incorporated into the contract between you and your customer, your terms of business need to be drawn to the attention of the customer.

They cannot merely be on a footer to your website where there is the possibility that the customer will not actually see the terms (or indeed sent to the customer after they have paid or such other point that the contract has been formed).

Best practice is to have a tick box at the point where the customer is placing their order that says that the customer agrees to your terms of business, where the customer cannot proceed with the order unless they tick the box.

However if it is not possible to add a tick box, then the next best step is to have a link to the terms of business directly at the point of order (just above the box to click to place the order) with wording such as "by proceeding to place this order, you agree to our terms of business" and then link to your terms of business on a separate webpage.

If you are selling to consumers, you need to email them a PDF copy of your terms of business upon confirmation of the sale. It isn't sufficient to send them a link to your webpage containing your terms of business, as this is not a durable medium and changes could be made to that webpage.

Even when dealing with businesses, it is good practice to print out your? terms of business from your webpage and mark on the top of them the date from which they apply. Then when you make a change to your terms of business, you would add the end date to the previously printed out terms of business and repeat the process for the new terms of business.

This is obviously so that if there is ever any challenge from a customer, you know exactly which version of your terms of business applied at the point that they made the purchase.

And that's it for this week's newsletter!

We hope you found these insights from our Savvy Shay Business Club surgery helpful. Of course, this is just the tip of the iceberg!

PS - if you are looking for your own switched on and commercially savvy in-house legal guru (namely Suzanne Dibble) at a price that is affordable for every business no matter how small, then you may want to check out Suzanne’s Savvy Shay Business Club membership. Right now you can try it out for just ￡1 for your first month -?apply here?to join.

I look forward to seeing you there!

Suzanne Dibble.