Currently, businesses selling services over the internet, by phone or mail order have to provide customers with key written details before the contract is agreed. For example, a consumer must receive this information before entering into an agreement such as a mobile phone service contract.
From April 2005, however, businesses will be able to deliver this key information at any time from when an order is placed until the service finishes.
It is expected in practice that many businesses will provide consumers with the written information at the point the service starts, for example, when a hire car is delivered. But, if the information is not made available until after provision of the service has started, consumers will be able to cancel an agreement for up to seven days after the information is received.
Other consumer rights will remain unchanged. It remains law that consumers must still be informed of all their consumer rights and relevant information when the order is made. Updated guidance for businesses and consumers will be published by the end of the year.
Announcing the changes, Consumer Minister Gerry Sutcliffe said:
"There is a clear case for updating the rules governing distance selling to help businesses keep pace with a rapidly evolving market place. These changes strike a fair and workable balance for both business and customers."
The changes will particularly benefit the UK car hire and leasing sector which estimates it will to save up to £29 million a year as a result of the rule change.
John Lewis, Director General of the British Vehicle Rental and Leasing Association said:
"The BVRLA is very pleased that the government has been willing to engage with our industry and recognise the burden and cost that delivering hard copy notification prior to a car rental imposes. With notification now to be delivered before or during the rental, costs will be contained with no detriment to consumer protection."
Gavin McGinty, an e-commerce specialist with Masons, the law firm behind OUT-LAW.COM, said:
"The relaxation of the timescales for providing this contract information will come as good news for some businesses. It certainly provides businesses with a greater degree of flexibility as to how and when they can deliver the information. However the changes are a double-edged sword.
"The timescale for provision of the contract information is tied directly to the timescale for the consumer's right to cancel the contract. The result is that the longer you take to send the information, the longer you give the consumer to cancel, even while you are providing the services.
"At the moment the longest possible cancellation period consumers have is three months and seven days, but these changes mean it could last throughout the provision of the services, however long that may be. This could have serious knock-on consequences for a company's stock control and balance sheet. Smart companies, therefore, will send this information out as soon as possible after the order, which makes them seem consumer friendly, but which is also protecting their position."