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Right of Withdrawal: Services and Digital Content Checklist

If you are an e-commerce business selling services or digital content online to EU consumers do your customers enjoy a right of withdrawal?

  Well yes. Customers who are consumers resident in the EU have the right to withdraw from a contract for services and digital content purchased online. This also is the case for goods (read the full article here). This means a consumer in the EU may change their mind for any reason and receive a full refund except in some specific cases.

 So, what is a consumer and digital content?

  • A consumer means a natural person who is acting outside of an economic activity, i.e. they are not performing a business, trade, or professional activity.
  • Digital content means data which is produced and supplied in a digital form including computer programs, games, music, video, or text and it is not provided in a physical form e.g. on a disk or memory stick. If digital content is supplied in a physical form, then it is treated as goods.

 Not all services are eligible for the right of withdrawal. Excluded from the right of withdrawal are financial services, passenger transport, transport of goods, car rental, package travel, time-share holidays, social services, health-care, and gambling. As well reservations for hotels, sporting, cultural and other events where capacity is reserved for the consumer and in which the seller may subsequently find difficult to fill if the consumer would cancel, are excluded.

 To withdraw from the contract the consumer must inform the seller within 14 days from the effective date of the contract for the services or the digital content. No particular form of notification is needed as long as it is a clear statement that the consumer wishes to withdraw. However, it is recommended to put this in writing so that the consumer has a record, as the burden of proof is on the consumer to show they have exercised their right to withdraw.

 If the consumer starts using the services or digital content prior to the end of the withdrawal period they still retain their right to withdraw however the seller may deduct a proportionate amount for their use based on the total price. However:

  • This does not apply for services where the service has been fully performed with the consumer’s prior agreement and the consumer acknowledged that if this occurred they would lose their right to withdraw.
  • This does not apply for digital content, where the performance or access to the digital content has begun with the consumer’s prior consent and the consumer acknowledged that in doing so, they would lose their right of withdrawal.

The above requires careful drafting in the e-commerce business’s terms and conditions and structuring in the acceptance process so that the 2 step requirement of prior agreement and acknowledgment that the right of withdrawal will not apply, is complied with.

 Except as described above, the seller must reimburse all amounts paid for the services or digital content within 14 days of being informed that the consumer is withdrawing from the contract.

 It is very important that the seller informs its consumers about their right of withdrawal, for instance on their website or in their returns policy, because if they don’t:

  • The period to exercise their right of withdrawal is potentially extended for an additional 12 months (on top of the original 14 day period). However, if the seller subsequently provides the information about the right of withdrawal then the period to withdraw is just until extended until 14 days after providing this.
  • The seller cannot make deductions for use of the services and digital content during the withdrawal period if the seller has not told the consumer about their right of withdrawal.
Kelly Logan

Founder and Managing Partner

kelly.logan@loganpartners.com

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