e retailers cannot reduce refund for consumer use

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http://www.out-law.com/page-9822

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Re: e retailers cannot reduce refund for consumer use

E-tailers can't reclaim value of use of returned goods, says ECJ advisor


OUT-LAW News, 24/02/2009

Online retailers cannot reclaim some of the purchase price of goods even if they are returned after a long time and have given the user some benefit, an advocate general of the European Court of Justice (ECJ) has said.

Buyers can return goods and get a full refund in the first one to two weeks of ownership of goods, said advocate general Verica Trstenjak. That right can last for months if the seller does not send the buyer the right paperwork correctly outlining a buyer's right to withdraw from a contract.
Advocates general issue opinions to give advice to the ECJ and the opinions are followed in around 80% of cases.
Trstenjak said that a seller's demand for compensation for use of goods would qualify as 'charges' on top of the cost of returning them. Retailers are barred from imposing charges and penalties on people returning goods.
"The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods," says Article 6 of the Distance Selling Directive.
The Directive aims to put someone buying on the internet or through a catalogue or on the phone in the same position as someone buying in a shop. Distance buyers cannot try clothes on or test a purchase, so a particular right of return is contained in the Distance Selling Directive.
"For any distance contract the consumer shall have a period of at least seven working days in which to withdraw from the contract without penalty and without giving any reason," says the Directive.
A German distance retailer tried to charge the buyer of a second-hand laptop for the eight months of use she had had from it. She took a court case over the charge and the German courts have asked the ECJ if Germany is allowed to have a law allowing the charge for use.
The advocate general has said not only that the levy counts as a 'charge' under the EU law and is therefore not allowed, but that even if the ECJ itself disagrees on that point, it should not be in the discretion of EU countries to write national laws allowing for such levies.
The right of withdrawal need only last seven days under the Distance Selling Directive, but if the retailer does not inform the customer of the right properly then it lasts until seven days after that information is provided for up to three months.
German law says that that right does not expire until the notice of the right of withdrawal is provided to the customer, which is why the German woman could still exercise it after eight months.
The retailer said that the woman had got eight months of use out of the €278 second hand laptop before the screen stopped working. It calculated that the use was worth €316.80, which is the cost of renting a similar laptop for the same period.
Advocate general Trstenjak considered whether the compensation demanded was a charge or a penalty as described in the Directive, and therefore not allowed.
She said that the compensation was not a penalty under the Directive, but it was a charge.
"The duty to provide compensation would therefore be the price paid for withdrawal [from the contract]," she said. "The obligation to pay compensation is thus imposed because of the exercise of the right of withdrawal, contrary to Article 6(1) of the Directive."
"I take the view that in the context of [the Distance Selling Directive] compensation for use can be subsumed under a broad concept of charges…[and] an obligation to pay it cannot be imposed on the consumer because it is not included in the direct cost of returning the goods," she said.
Trstenjak said that even if the ECJ disagreed with her on whether compensation was a charge, it should still reject the retailer's claim. It looked at whether it was within the rights of EU member states to create laws allowing for compensation for use of goods before their return.
She said that she recognised retailers' concerns that some people might take advantage of the Directive's protections, but that this was no excuse to erode everybody's rights.
"The fear of abuse by individuals may not generally result in the protection of rights guaranteed under Community law being restricted for everyone," she said. "For that reason alone, a provision such as the one at issue cannot fall within the discretion of Member States."
"I consider that a provision of national law, such as the rule at issue in the main proceedings, which provides that, in the case of a revocation by a consumer within the revocation period, a seller may claim compensation for the value of the use of the consumer goods delivered also does not fall within the regulatory discretion of the Member States," she said.

See:

• The opinion
• The UK's Distance Selling Regulations, an OUT-LAW guide