New law makes it easier to cancel online purchases

The changes are based on the updated EU Directive 2023/2673, the revised Distance Marketing of Financial Services Directive, updates and strengthens consumer protection rules for distance contracts. The Directive revises the existing Consumer Rights Directive by broadening its scope and introducing new requirements for how online purchases and cancellations must be designed and presented to consumers.

One of the most significant new requirements is the introduction of a so-called withdrawal function. Businesses selling goods or services through an online interface, such as a website or app, must provide a clear and easily accessible function allowing consumers to withdraw from their purchase digitally. However, the requirement does not apply to sales made by telephone or door-to-door sales, for example.

The rules apply to businesses within the EU, but also to businesses outside the EU that sell products or services to consumers within the Union.

Background to the decision

As digitalisation continues to develop, an increasing number of financial services are being sold online, including credit, insurance, investments and pension savings products. Contracts for these services are often concluded at a distance, something that became even more common during the COVID-19 pandemic. The EU therefore considered that the regulatory framework needed to be modernised, and the European Commission presented its legislative proposal in May 2022.

The new legislation means that the 2002 Directive will be repealed and that updated rules for financial services concluded at a distance will be incorporated into the broader Consumer Rights Directive. Certain provisions of the Consumer Rights Directive, for example, rules on telephone sales, additional charges, supervision and sanctions, will also apply to financial services sold at a distance.

EU harmonisation

The new Directive changes the way rules are harmonised within the EU. The previous Directive from 2002 was mainly based on minimum harmonisation, which allowed Member States greater flexibility to maintain their own, stricter national rules. The new provisions will instead be incorporated into the Consumer Rights Directive, which is largely based on full harmonisation. This means that Member States will to a greater extent be required to apply the same rules across the EU, although some room remains for adapting terminology, structure and legislative techniques at national level.

As a general rule, consumers will have 14 calendar days to exercise their right of withdrawal without penalty. For private individual pension insurance products, the withdrawal period will be 30 calendar days. If the consumer has not been informed about their right of withdrawal, the withdrawal period may be extended by up to one year and two weeks.