Practical Ecommerce

Selling in Europe? Beware strict consumer protection laws

The world is getting smaller, and ecommerce selling is open to competition worldwide. As such, I am beginning to see more U.S. sellers in the U.K., where I live. However, many U.S. sellers seem to be omitting some important items in their conditions of sale.

If you sell to a consumer in the E.U., you have to adhere to the E.U. consumer laws. In the U.K., this is the Distance Selling Regulations. An updated version appeared in 2014. These have put a number of burdens on the retailer; some retailers have created clever tricks to reduce and avoid their legal obligations.

The main thrust of the regulations permits the customer to cancel and return any order for any reason up to two weeks after receiving the goods. Indeed, unless the sale conditions explicitly restrict it, this cancellation period can extend to up to six months. On top of this, the retailer has to refund the full cost of the order. This includes the delivery cost as well as the item cost. The retailer is not allowed to charge a re-stocking fee. Moreover, unless the retailer says otherwise in its terms and conditions of sale, the retailer also has to pay the return postage.

So the first thing any retailer has to do before selling to a consumer in the E.U. is to make sure that its terms and conditions of sale are presented to the customer, and that those terms and conditions (a) restrict the cancellation period, and (b) require the customer to pay for the return cost. The exception is for sellers that choose to have a longer cancellation period or that choose to fund the return postage. Some retailers do this as a marketing ploy.

This is a cost of doing business in the E.U. It has to be built into your prices, like any other cost. The problem some items — such as clothing and accessories — have is a high level of returns. Customers buy several items, try them on, and if they do not like them, return them for a full refund. Retailers lose out every time. At the very least they lose the postage charge.

But I have noticed a growing trend of retailers finding clever tricks to avoid this loss.

First they offer several speeds of posting. Certainly they offer cheap but slow “standard” post. But they heavily promote a more expensive faster service. This is because the regulations allow them to only refund the cheap “standard” post and keep the difference if a customer has used the enhanced service.

Second they offer very cheap extras. For example, I recently ordered a pair of shoes online. The retailer offered a nice key ring for £0.01. So instead of buying a pair of shoes for £39.99, I was buying the shoes and a key ring for £40.00. It’s apparently a great deal.

But, actually, it’s not so great. If I return the shoes, but keep the key ring, the retailer does not have to refund the postage. Only if I return the complete order do I get the postage refunded.

On top of this, some retailers automatically add a “super deal” into the cart. If a customer does not notice, he gets it anyway.

I can see why they do this. The return rate for clothing is high; retailers are losing money. Such tricks reduce these losses. Retailers have considerable experience in the market and are using this experience to remain profitable. New sellers would be wise to look at this, to mitigate losses.

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  1. Peter Knudsen May 22, 2015 Reply

    There are many important issues for a US webshop selling to the EU to be aware of and it can have serious financial consequenses not to comply with the EU regulation especially after last year’s revision of the rules, but some of the tricks you mention are actually a bit too creative. If a webshop just ads a free “super deal” the webshop would definetely still have to return the sending costs if the consumer returns the product for which he has paid. Anything else would without doubt be in violation of EU rules, so this is not a clever trick, but an illegal trick :-) The same thing would most likely be the case if you could add a product for only £0.01 since this would probably be considered an attempt to bypass the law. However, the possibility to offer faster shipping at extra cost is in compliance with EU law and in this situation the webshop would not have to refund the extra cost (but still the cost for the standard shipping).

    • Richard Stubbings May 23, 2015 Reply

      The “super deals” are not free. Companies like Sports Direct add a Mug to the basket for £1.00 automatically. Unwary customers can miss this and pay the extra pound and get the mug.
      There is no case law either way on the validity of the tricks and no-one can accurately say what the courts would decide if anyone was challenged.

  2. Charlotte May 24, 2015 Reply

    Webshops are allowed to charge return freight:
    http://Www.konsumenteuropa.se

    • Richard Stubbings May 24, 2015 Reply

      Yes they can, BUT ONLY if they say so in their terms and conditions of sale. Fail to notify your customers of this and you cannot charge for return freight.