Cooling off periods: why are they important to small businesses?

Committing to new goods and services is a big decision for customers, and it’s important that businesses offer a clear outline as to what they can do should they want to cancel or return a purchase.

Cooling off periods are an important part of this offering, and are protected and set out by Consumer Contracts Regulations in the UK. A 14-day cooling off period is a legal requirement for most businesses under these regulations.

This article will explore what a cooling off period is, when they are and aren’t applicable, and how to implement them at your business.

What is a cooling off period?

A cooling off period is a short timeframe in which customers who have bought goods or services online, over the phone, or through a mail order can change their mind and get a refund or cancel. Under UK law, a customer can change their mind about their purchase for any reason – some examples may include finding a better deal, not wanting the product or service anymore, or simply changing their mind.

Under the Consumer Contracts Regulations, the minimum cooling off period for goods and services is 14 days, but businesses are free to offer longer cooling off periods to their customers if they choose. However, it’s important to note that cooling off periods don’t apply to purchases or services agreed from private individuals, or when done in person, such as in a shop.

Do 14-day cooling off periods apply to everything?

It’s a customer’s legal right to change their mind about goods or services bought during a cooling off period in most circumstances. For the legal 14-day cooling off period to be applicable, customers must meet two conditions:

1. The contract for the purchase must have been finalised at distance – simply meaning it must not have been completed in person. Examples include goods or services bought online or over the telephone.
2. The customer must have made the purchase as a consumer, not as a business.

These two factors are what makes a cooling off period different from a returns policy, which often enables returns within 28 to 30 days, and can be applied to purchases made in person.

How do 14-day cooling off periods work in the UK?

How the 14-day cooling off period works differs for goods versus services. For goods purchased at a distance, the period starts from the date the customer takes ownership of the product – essentially, when the item is delivered.

On the other side, the cooling off period for services purchased at a distance starts the day after the customer completes their purchase.

To cancel during the cooling off period, the customer must notify the seller that they wish to do so – this is ideally done via email, so there is a written trail for both parties to refer to.

The second best option is via telephone, but it’s a good idea for the seller to send the customer written confirmation to clarify that a cancellation has been activated.

Examples of 14-day cooling off period policies

There are lots of examples of 14-day cooling off periods that apply to most people’s everyday lives. Let’s look at the most common scenarios.

Aviva

Aviva offers insurance for crucial things like business, cars and property. Aviva’s cooling off period is 14 days from the date you purchase your policy or receive your documents – whichever comes later.

Admiral

Admiral is another leading insurance provider. During their 14-day cooling off period, you can cancel your new insurance policy with no questions asked. For life insurance policies with Admiral, the cooling off period is usually 30 days.

Like Aviva, the cooling off period starts from when you receive the paperwork or when the cover begins – whichever comes second.

Sky

Sky offers an enhanced cooling off period of 31 days. However, if you’re in the Republic of Ireland, the cooling off period is 14 days.

This means most customers have the right to cancel their order for TV services and any related equipment for any time up to 31 days from the delivery, installation, or when confirmation is received in writing of the relevant terms and conditions for that product – whichever comes last.

EE

EE has a 14-day cooling off period. If you would like to cancel your new contract during this period, customers can text RETURN to 150 from any EE phone to return the device. Upon the return of the phone, your plan will change to your old plan (if it was with EE) and the device credit agreement will be cancelled.

DFS

If you purchase products via the DFS website and have not seen them in a store prior to purchase, you are entitled to cancel your contract up to 14 days after delivery.

You will be entitled to a full refund of the price paid for the products, plus standard delivery costs – but customers should be careful, as DFS says it is entitled to reduce the amount of any refund to reflect any reduction in the item’s value that they deem has been caused by the customer.

DFS’s cooling off period doesn’t apply to bespoke made items, unsealed mattresses, self-assembly items that have been damaged by the customer, and purchases made in-store where the item was inspected before the purchase.

When does a cooling off period not apply?

There are some scenarios in which cooling off periods don’t apply. If a customer came into your business to arrange the service or view an item before purchasing, they won’t get this cooling off period.

Cooling off periods also don’t apply to certain services, namely:

• Catering for an event
• Hotel accommodation
• Theatre or cinema tickets
• Courier services
• Renting a car

Although it isn’t a legal requirement, many retail businesses offer customers a 28 or 30-day returns policy for some items, like clothes or trinkets. The items must be in perfect condition for them to be eligible for return – but this policy is separate to the legal cooling off period obligation.

Cooling off periods also don’t apply to business to business (B2B) agreements, because these aren’t covered by consumer rights laws. If you want to cancel a contract with another business, you will likely have to pay a termination fee – that’s if cancellation is even possible before the contract’s end date.

Are there benefits of cooling off periods?

Cooling off periods are beneficial to customers because it gives them extra time to further consider the new commitment and ensure it is right for them.

While it can be disappointing for businesses when customers choose to cancel goods or services, it can also be beneficial to the business – most notably, in the scenario where the customer decides they cannot afford goods or services. This removes the potential future stress of chasing payments and, in extreme scenarios, taking the customer to court.

Read more: Want to start taking payments in person? Check out our guide to the best card machines for small businesses.

Next steps: how to navigate 14-day cooling off periods as a UK business

It’s important that a customer understands your cooling off period policy. Make this clear in any written agreements between the two parties and, where possible, discuss it verbally too. Detail how your cooling off period works, including what you will need from the customer to process the cancellation – for example, having goods returned to you within a certain timeframe.

Remember, the legal minimum cooling off period is 14 days, but you could choose to offer a longer period to give your customers more flexibility. From a marketing perspective, this makes customers feel more valued and less rushed, too.

Kirstie Pickering - business journalist

Kirstie is a freelance journalist writing in the tech, startup and business spaces for publications including Sifted, UKTN and Maddyness UK. She also works closely with agencies to develop content for their startup and scaleup clients.