DTI 'cooling off' regulations are an unwelcome Christmas gift to dot.com retailers

By Nigel Cope

As Britain's e-commerce companies prepare for the Christmas season, they find themselves facing a fresh problem. The new Distance Selling regulations come into force tomorrow and they threaten to put dot.com retailers and some of their "old economy" rivals in a flat spin.

As Britain's e-commerce companies prepare for the Christmas season, they find themselves facing a fresh problem. The new Distance Selling regulations come into force tomorrow and they threaten to put dot.com retailers and some of their "old economy" rivals in a flat spin.

These new regulations cover transactions where the supplier and consumer do not have face-to-face contact. This includes mail order and phone purchases but also internet orders.

The new rules, which have been issued by the Department of Trade and Industry, are intended to protect consumers from pushy salesmen and provide protection from credit card fraud. But some of the measures are causing alarm in the dot.com world. One is the introduction of a "cooling off" period of seven working days during which the consumer can withdraw from the contract. Legal experts have drawn attention to the clause that consumers are only required to treat the goods with "reasonable care". Lawyers say there are no guidelines as to what constitutes reasonable care, laying sellers open to situations where customers could buy an item, use it, and then send it back without penalty.

This is causing particular concern among internet retailers of higher ticket items such as cars and white goods such as fridges and freezers. In theory a buyer could order a car, drive it around for a week and then have it collected again. Handling returned goods is already a major expense, but if the goods are not in a fit condition for resale the e-commerce retailer will be severely out of pocket.

Dixons, the retailer, will be seeking clarification as to what constitutes "reasonable care." It foresees legal challenges if further clarity is not achieved. Ford has put a condition on its website stating that if a customer drives more than 100 miles then the contract cannot be cancelled. Tins.co.uk, the online car site is in discussions with the DTI.

The DTI says the rules are intended to give consumers the chance to see the products and still have the right to return them. The DTI adds that a supplier can claim the loss of value from a used item from the customer if it feels "reasonable care" has not been taken. The definition of the term will be left to the courts to decide. Suppliers can also ask customers to pay for the return of goods. The legal firm Reynolds Porter Chamberlain says dot.coms and other remote suppliers will have to start incorporating the extra costs of these regulations. Reynolds expects to see a flurry of test cases as suppliers seek greater clarity.

The regulations do not apply to financial services or audio or video recordings which have been unsealed by the consumer. They also do not apply to goods "which by their very nature cannot be returned or are liable to deteriorate or expire rapidly". That would include groceries. But where does it leave others? For example could a mischievous consumer order some Christmas decorations just before Christmas Day, use them over the festive period and then return them seven working days afterwards without charge as long as they have been looked after nicely? Merry Christmas.

On the subject of Christmas, websites don't come much more festive than the splendidly named www.santa-claus.com. This is the site's third Christmas and Wednesday sees the launch its "SantaCalls" service which enables parents to book a call from a Cyber Santa to their children. For £5 the parents can book a time for a call to be made to any landline in the world. Parents can specify the age and gender of the child enabling the message to be adapted accordingly. Santa-claus.com hired Richard Carrington, who used to play the vicar in The Archers, to do the messages last year and he has been signed up again. Last year 1,500 calls were booked in two weeks. This year 10,000 are forecast, with 50p of each fee going to charity.

Santa-claus.com has also registered the domain names, santa.co.uk, christmas.co.uk and fatherchristmas.net. The site was set up by Stephen Bottomley, a former musician with a Beatles cover band. It started out as a "Christmas experience" site with information on Christmas traditions as well as festive jokes and recipes. This year it is planning to sell goods for the first time with a selection of gifts, confectionery, perfumes and traditional toys and games. The site claims to do no advertising and to have survived on a budget of £250,000. But this modest backing has not stopped it from recruiting some heavyweight directors including Hugh Brown, head of mergers and acquisitions at PricewaterhouseCoopers.

n.cope@independent.co.uk