Under Article 22a of the forthcoming EU Consumer Rights Directive, web-based independent traders could soon be obliged to sell their products to almost every country in Europe. And under Article 17 of the Directive, businesses would be forced to pay the postage costs if a customer decides to return goods worth more than 35, within up to two weeks of a purchase being made.
Not-for-profit small business support organisation the Forum of Private Business believes that even taken individually, each article could have a seriously detrimental impact on smaller companies selling over the internet. However, when combined, the effect of the two articles together could be devastating. The Forum is concerned that selling to all EU nations would be highly impractical for small to medium-sized enterprises (SMEs) in the ecommerce industry for many reasons, including problems processing payment, avoiding falling victim to fraudsters and complying with additional local regulations in other European countries.
Being forced to pay the postage costs for the return of any order worth more than 35 if a customer demands it, from anywhere in the EU, would be a further highly onerous burden. Another proposal to give consumers the right to return goods bought online within 14 days of receiving them, also contained within the Directive, could amplify the problems caused by Articles 17 and 22a, making reliable cash flow predictions more difficult. As with the current seven-day 'cooling off' period, this would apply even if the goods were in no way defective and were sold exactly as described.
Forum chief executive Phil Orford said: "While we welcome the Consumer Rights Directive's overall aim of harmonising and simplifying retail regulations across the EU, several of the proposals it contains are extremely ill-advised and, implemented together, could create a 'perfect storm' for independent web-based retailers.
"Being obliged to sell to every single country in the EU may not be a problem for multi-national companies, but it could spell the death knell for countless SMEs in the ecommerce industry. Many independent online retailers only have the expertise and the infrastructure to sell to the domestic market, or to a select few overseas countries, and some have built themselves up around one particular product which they are only licensed to sell in a certain national market.
"And if these traders are also faced with the possibility of paying for the return of anything they ship out from anywhere in the EU, simply because a customer changes his or her mind and decides they don't want something any more after thinking about it for two weeks, the UK's thriving ecommerce sector could be in serious trouble."
Orford added: "Forcing businesses to serve consumers in all member states and then introducing a rule which requires them to pay the shipping costs on refunded goods, to markets which they did not want to ship to in the first place, is highly unfair. We are calling on the EU to see sense and make sure these particular parts of the Directive are dropped."
The Directive is currently being considered by the EU Parliament Internal Market and Consumer Protection Committee. It could come into effect as early as January 2013. The Forum is currently in the process of lobbying MEPs and relevant Government ministers on the issue. It is also highlighting the views of one of its members, Hayley Chalmers, who recently set up online retail business Short Couture. Chalmers believes the proposals are severely misguided and said that, if implemented, they could put many small online traders like herself out of business.
She said: "Thousands of businesses exist only because of the existence and wonders of the internet. If we make it too onerous and expensive for them to trade, we'll kill these businesses. These proposed changes have to be stopped. It is yet another completely pointless, expensive, unenforceable, unworkable piece of red tape."
The Forum is campaigning against unnecessary and over-complicated red tape affecting SMEs through its new campaign, Get Britain Trading. It also helps its members comply with both European and UK-specific legislation through a range of services including a comprehensive print and online Employment Guide, a Health and Safety Guide package and 24-hour legal helpline.