EU Consumer Rights Directive threatens your business

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Thousands of eBay and Amazon sellers could be forced out of business if the proposed amendments to the Consumer Rights Directive are ratified by the European Union. The Directive which is currently being considered by the EU Parliament Internal Market and Consumer Protection Committee, could come into effect as early as 1st January 2013.

The aim of redrafting the Consumer Rights Directive is to simplify legislation and have one harmonized set of regulations across all 27 EU countries. This should enable businesses to avoid the expense of ensuring they comply with local regulations in each EU country they trade in. However the effect of the legislations looks set to make ecommerce trade non-viable for many retailers.

There are two specific clauses which will undoubtedly trouble all online merchants, returns and obligatory cross border EU trading:

Article 17 – Obligations of the consumer in case of withdrawal
The consumer shall only be charged for the direct cost of returning the goods. He shall not be charged for that cost if the trader has agreed in the contract to bear it or the price of the goods to be returned is more than €40.

Up until now Distance Selling Regulations have allowed merchants to refund the original transaction (including outward postage) but insisted that the consumer pick up the postage cost of returning the items. Many would argue that the retailer shouldn’t have to refund outgoing postage costs but currently both the retailer and the consumer pay for one leg of the postage and both lose equally for a cancelled sale.

If the new regulations are passed then if the item cost is over €40 (about £35) then the retailer would be responsible for paying the return postage as well.

Article 22a Right to delivery of goods to or supply of services in another Member State
In the case of a distance contract, the consumer shall be entitled to require the trader to deliver the goods or supply the service in another Member State. The trader shall meet the consumer’s request if this is technically feasible and if the consumer agrees to bear all the related costs. The trader shall in any event state those costs in advance.

Currently retailers can choose whether to sell to the UK only, whether to ship to selected certain EU countries, to ship to all EU countries or perhaps to sell worldwide.

The EU want to take away the right to choose which territories you are willing to supply to. The draft regulations insist that consumers from the entire EU have the right to purchase from you and you have to ship to them if possible, regardless of where in the EU they are based.

This will have drastic effects for many sellers. Unless you routinely ship internationally you may not have an international courier contract. Some of the products you sell may be too heavy for Royal Mail and so you would have to spend time sourcing one-off couriers whenever an EU citizen takes up their right to purchase from you.

Both of these changes taken individually will have significant impacts for many online retailers. However when taken together a seller could end up in the position of being forced to ship to a far flung EU country to a buyer who then changes their mind. If they requested a return and the item cost was over €40 not only have you lost the cost of the outgoing shipping but you also have to pick up the cost for the item to be returned.

Even for sellers who have international Royal Mail or Courier contracts these are generally one-way with discount volume contract prices negotiated for sending items out from the UK. Arranging courier contracts to recover goods from any of the 27 EU countries at a reasonable price will be beyond the resources of most businesses. The alternative will be refunding buyers the rack rate price for whichever shipping method they decide to use to return the unwanted goods.

The IMRG estimates the draft regulations will cost online retailers an additional €10 billion per year in delivery charges, which amounts to a staggering 4% of the estimated worth of the e-commerce industry in 2012. They added “We believe that retailers must remain free to identify the markets that suit their business model, allowing them the opportunity to carry out the necessary work to enable a successful entry into that market. Forcing businesses into markets they do not understand will damage, not stimulate growth”.

There are some sections of the draft regulations which make sense, such as retailers not having to refund additional postage costs if the consumer opted for expedited shipping. However there is little point giving retailers any protection if the regulations force them out of business, or result in price increases to cover the additional cost of complying.

The draft Consumer Rights Directive in it’s present form would, if ratified, change trading on marketplaces as we know it. eBay features such as blocking countries you do not ship to would become illegal across the EU, with sellers forced to ship to and then pay for return shipping costs from countries they didn’t even want to trade with in the first place.

67 Responses

  1. Be a shame if this went through as we’ve been quite successful in the EU over the last 12 months.

    For ourselves no contract is formed at point of payment, only once we have accepted the order, just a simple case of refunding straight away could be one way to avoid problems in countries you don’t want to ship to.

  2. Article 22a throws up some really tricky situations as rules are different for selling in the different European countries.

    Anyone who has offered cosmetics for sale to Germany, for example, will know that their rules are quite different from ours. If it were to be joined with a rider that any sale that is legal and proper in the home country is legal and proper in the whole EU, then it would be a great boon for sellers.

    Overlay the trademark situation and the waters grow even murkier. Imagine I hold a trademark to a brand in the UK, but not DE. I would be required to ship to DE, possibly in contravention of the trademark. On eBay, the DE seller would be able to VeRO-restrict my goods – even if offered on only as that would imply availability in DE. And I would be able to restrict his. Sheesh. This doesn’t feel like breaking down the barriers to trade to me.

    At the moment, Stuff U Sell’s view of international sales on eBay is to maintain a very close scrutiny of the value to the business: in many cases the distractions from being open to VeRO / regulatory foibles (as well as increased DSR / Claims) in different countries outweighs the gross profits from international sales. Against that, I personally am a great believer in free trade and internationalism so I am very reluctant to focus solely on the domestic market which might be more profitable.

    The marketplace can add distinctive value here by engaging the legislature in a way which we cannot, to protect its marketplace and ensure that it become a global marketplace and not a disjoint collection of national marketplaces, where sellers are all too scared to dip a toe across the border.

  3. rules and regulations need to be sensible and workable or they are just ignored and side stepped and just dont matter

  4. I think we should leave the EU. I thought we joined a trading block, not an undemocratice European state. Norway are doing alright, why can’t we be like Norway.

  5. “Norway are doing alright, why can’t we be like Norway,”
    Vikings up here we just gave up the odd spot of
    ransack and pillage for entertainment recently

  6. eBay will have to have a major rethink if this legislation appears on the statute.

    eBay Europe may have to be restrict sellers who list within Europe to those from within the 27 countries of the EU. It would be entirely untenable if there is one set of (softer?) rules for sellers from Asia and America listing in the EU and another set of rules for those from within the EU listing within the EU.

    And where does this leave global TRS standards? eBay by law will not be able to restrict cross border selling within the EU.

    So much for a global marketplace. The impression is this directive is designed to protect the marketplace within Europe from competition from outside Europe. eBay will have to force sellers to make it much clearer which set of legislation applies to purchases made.

  7. I think the DSR’s are to strict as it is. I think that all postage costs should always been born by the buyer (whilst we currently comply fully with DSR’s).

    I also think that more products should be excluded from the list of exceptions.

    I can’t see this being implemented, just another load of EU nonsense that will fade away.

  8. Re; ‘ The trader shall meet the consumer’s request if this is technically feasible and if the consumer agrees to bear all the related costs. The trader shall in any event state those costs in advance’

    Dear Buyer,
    Thank you for asking us to send you this item. The cost will be £125, per kilo in weight, as stated in our T&Cs. Please agree & we will invoice you”.

    [+ maybe, If when your item arrives you keep it, we will refund you £119].

    I cannot see at this point, why this would not be a get out!!…

    Whirly would make a furtune, Ha, or he could take the items himself for say £500 & get a week’s holiday at the same time.
    Seriously though, Sue is right, things like electronics, UK plugged items cannot be used/shipped ‘new’ to other areas of the EU.
    So many items function alright in the UK, but fall foul of other EU state laws.
    There’ll also be alot of lobbying about copyright laws, etc’.

  9. In fairness to the Eurocrats there is some good stuff in the draft regulation… I particularly like “Some consumers exercise their right of withdrawal after having used the goods to an extent more than necessary to ascertain the nature and functioning of the goods. In this case the consumer should be liable for any diminished value of the goods“.

  10. Surely Language should also ber considered. I sell Books 99.99% of my Books are in English. I have sold Books to customers in several EU Countries in the past including such as Italy(regularly Italy is mentioned as a country where deliveries by post are a problem – I’ve never had a problem with my deliveries to Italy). So if I was selling a Book to a Customer in a far flung bit of the EU it is popssible that Language could be a limiting factor but if the customer knew that it was in English and was happy to order I for one would be happy to supply. In regard to the price quoted of about £35 few of my Books are of that price(although it is possible that several bought together could have an order value of greater than £35). So from what I have seen it is not likely to be a major disaster although I would be far happier if we were to regain our Independance from the EU Criminal Conspiracy.

  11. I don’t see much reason for doom and gloom here at all. I already state in my ebay Ts & Cs that I will refund all P&P costs, and my returns rate is very, very much less than 1%. If it drives my competitors who don’t currently offer this to raise their prices, that can only benefit me.

  12. I want you to ship 4 parcels to jersey at a cost of £90 each on Monday, I want a refund on all 4 and them to be collected and returned on Wednesday. How are you going to factor in the £360 loss in to your business? Plus the now 4 graded products.

  13. ps why should i incur the £360 return carriage costs as a customer, when i can implement a small fault on each product and get the seller to collect them. Online trading has enough problems as it is and doesnt need another.

  14. UK Buyers already use the INAD claim to return items, to get around paying the return postage.

  15. I thought distance seller regulations state that the buyer has a 7 day cooling of period from the date of recieving the item due to the fact that they can’t handle the item before purchase like they can in a shop. If they decide they don’t want it I thought it was up to the seller to collect their property back. Or have I read the distance seller regulations wrong?

  16. Just to clear something up.

    Does this apply to sellers of secondhand goods…

    a) if sold by auction through eBay?
    b) if sold as a “buy it now” type sale?
    c) if sold to a buyer outside the EU

  17. I’m still wondering what these businesses are that have so many returns that having to fund return postage would put them out of business?

    If you have that many unhappy customers, this proposed directive is the least of your problems!

  18. Shipping to the EU?

    “if this is technically feasible and if the consumer agrees to bear all the related costs ”

    Computer says “no”, its not technically feasible 🙂

  19. There is one point that nobody has pointed out. Over the years the EU has brought in all sorts of rules on all sorts of subjects. Usually these go to London(in the case of the UK) and our bureaucrats “Gold Plate” them. They take a rule of 10 pages and turn it into a rule of 100 pages with a lot more regulations and red tape. Yet the same original EU rules go to Paris, Rome, Berlin etc and if they don’t like them they just ignore them. So eventually it ends up with the British version being massive and causing a major problem yet the French carry on as if the original EU rules were never passed. I find myself wondering if the proposed rules above are going to fall into this general rule.


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