Couriers, lost parcels and unfair terms

the_lunatic_is_in_my_head

To copy over from the eBay forum thread:

I'm not a fan of the way the courier industry works, particularly with regards to "cover" and indeed general customer service when things go wrong and I do think there should be greater regulation, if that is in part achieved by their cover being classed as insurance giving the customer the right of complaining to the ombudsman happy days.

However

https://news.resolver.co.uk/package-delivery-insurance-are-you-covered/

Is parcel cover regulated by the Financial Conduct Authority (FCA)?

The FCA’s remit is set by legislation. In 2007, new legislation was introduced that takes parcel delivery firms out of scope of the FCA’s regulation with regard to insurance for the items they transport. 

The relevant legislation concerns ‘freight forwarders’ (companies whose principal business is arranging or carrying out the transportation of goods). These companies are not carrying on a regulated activity where they:

hold an insurance policy for the loss of, or damage to, goods which they transport; and

make available to their customers the right to claim directly against the insurer in respect of loss or damage to those goods.

As a result, delivery companies are unlikely to be performing a regulated activity when they sell parcel delivery cover. This also means that complaints cannot be taken to the Financial Ombudsman Service.

You'd need a test case on that finding against the couriers, the warranty case is clearly different due to the above technicality of the legislation.  

AstonomyDomine

I hadn't seen that. Thanks I will have a look. 

However, whether or not it needs to be regulated, it is still contrary to section 57 of the consumer rights act and is a secondary contract within the meaning of section 72

AstonomyDomine

And also although I haven't looked at it, it occurs to me that in this case the transport companies may be selling an insurance product which is provided by some other body and that is regulated.
So it may be that simply as a reseller of an existing regulated insurance product, they don't need to be regulated themselves.

If that is the case then maybe it is different for the parcel delivery companies because they are providing their own insurance. They are not providing some third-party insurance.

AstonomyDomine

Yes but there would be a reason why couriers would not use the term and that is because they don't want to regulate and they want to do everything they can to avoid their protection schemes being considered as insurance.

I have made the point elsewhere that simply calling it something else doesn't mean it's not insurance. 

If it was always as easy as changing the label in order to avoid regulation or legislation then no company could be held accountable for anything. They would simply say that they had called it something else other than " a spade"

born_again

AstonomyDomine said:

Yes but there would be a reason why couriers would not use the term and that is because they don't want to regulate and they want to do everything they can to avoid their protection schemes being considered as insurance.

I have made the point elsewhere that simply calling it something else doesn't mean it's not insurance. 

If it was always as easy as changing the label in order to avoid regulation or legislation then no company could be held accountable for anything. They would simply say that they had called it something else other than " a spade"

As per @the_lunatic_is_in_my_head Insurance is a regulated product. Couriers do not offer this product. They offer compensation instead.
Compensation is not insurance.
They are not changing the label, just the same as many other companies offer protection on products are not insurance. These companies do not want to have to pay for regulation & all the internal procedures that are required by selling insurance.

MSE in their infinite wisdom mention insurance when they should not be, which as a journalistic website you would expect that they have checked that they are factually correct. 🤷‍♀️

the_lunatic_is_in_my_head

AstonomyDomine said:

I hadn't seen that. Thanks I will have a look. 

However, whether or not it needs to be regulated, it is still contrary to section 57 of the consumer rights act and is a secondary contract within the meaning of section 72

The judgement in the OP is pretty clear.

Services must be carried out with due care and skill which is an implied term in a consumer contract with a trader.

The requirements surrounding unfair terms prohibit excluding this liability.

The court found such a term was unfair as it set out to exclude that liability.

In such an instance the contract still stands but with the unfair term void.

As a result the consumer may either:

1) seek a remedy of a price reduction (up to 100%) or a repeat performance as entitled under the CRA
2) alternatively seek damages under common law due to a breach of the contract as it now stands with the unfair term removed. 

I don't believe the consumer may claim both as that would amount to a windfall and given the value of the item is likely more than the courier fee claiming damages is no doubt more often the most fruitful avenue. 

Personally I don't think that's disputable, I think the courier companies have normalised a certain aspect of their industry which is simply "wrong" due to the above and in the example in the OP the court thought such as well. 
 
The issue is that such decisions don't create a precedent and a case would need to go to a higher court for that to occur. Perhaps courier companies avoid this by paying out/not appealing decisions as a change would significantly harm their industry.

However it's important to look at the private parking ticket case where an argument of legitimate interest was presented which effectively overruled the requirement for terms requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation to be classed as unfair (at least that is my understanding of it). 

Were such a case on the courier liability issue to be taken to a higher court to be decided one way or the other one thing is for sure, the courier companies would go to great expense to use any legal argument to legitimise the actions of their industry in order to win and I don't think anyone here is qualified enough to know the exacts of all possible examples of law they could rely upon to do so.

At best we can say that under the CRA it's likely the courier is liable for the value of the contents lost regardless of whether you pay extra for cover or not, presumably that requires you to be honest when booking by stating the correct value and, if asked, the correct definition of the contents so the booking system can flag any prohibited items that shouldn't be sent and as such decline the booking. 

AstonomyDomine

born_again said:

Compensation is not insurance.
They are not changing the label, just the same as many other companies offer protection on products are not insurance. These companies do not want to have to pay for regulation & all the internal procedures that are required by selling insurance.

MSE in their infinite wisdom mention insurance when they should not be, which as a journalistic website you would expect that they have checked that they are factually correct. 🤷‍♀️

you are wrong – they probably have changed the label.

I believe that MSE have double check this by seeking other opinions and also by running it through their legal team.

In terms of the characteristics of insurance – have you looked at the 1904 case?

I think in exactly the same way that extended warranties are insurance as well

AstonomyDomine

the_lunatic_is_in_my_head said:

AstonomyDomine said:

I hadn't seen that. Thanks I will have a look. 

However, whether or not it needs to be regulated, it is still contrary to section 57 of the consumer rights act and is a secondary contract within the meaning of section 72

The judgement in the OP is pretty clear.

Services must be carried out with due care and skill which is an implied term in a consumer contract with a trader.

The requirements surrounding unfair terms prohibit excluding this liability.

The court found such a term was unfair as it set out to exclude that liability.

In such an instance the contract still stands but with the unfair term void.

As a result the consumer may either:

1) seek a remedy of a price reduction (up to 100%) or a repeat performance as entitled under the CRA
2) alternatively seek damages under common law due to a breach of the contract as it now stands with the unfair term removed. 

I don't believe the consumer may claim both as that would amount to a windfall and given the value of the item is likely more than the courier fee claiming damages is no doubt more often the most fruitful avenue. 

Personally I don't think that's disputable, I think the courier companies have normalised a certain aspect of their industry which is simply "wrong" due to the above and in the example in the OP the court thought such as well. 
 
The issue is that such decisions don't create a precedent and a case would need to go to a higher court for that to occur. Perhaps courier companies avoid this by paying out/not appealing decisions as a change would significantly harm their industry.

However it's important to look at the private parking ticket case where an argument of legitimate interest was presented which effectively overruled the requirement for terms requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation to be classed as unfair (at least that is my understanding of it). 

Were such a case on the courier liability issue to be taken to a higher court to be decided one way or the other one thing is for sure, the courier companies would go to great expense to use any legal argument to legitimise the actions of their industry in order to win and I don't think anyone here is qualified enough to know the exacts of all possible examples of law they could rely upon to do so.

At best we can say that under the CRA it's likely the courier is liable for the value of the contents lost regardless of whether you pay extra for cover or not, presumably that requires you to be honest when booking by stating the correct value and, if asked, the correct definition of the contents so the booking system can flag any prohibited items that shouldn't be sent and as such decline the booking. 

I think you have summed it up extremely well and in particular, your view that

 I think the courier companies have normalised a certain aspect of their industry which is simply "wrong" due to the above and in the example in the OP the court thought such as well. 

is bang on.

FYi - "windfall" as you use it is actually called in law – "betterment"

AstonomyDomine

born_again said:

AstonomyDomine said:

I'm afraid you are probably wrong. The protection insurance that they also probably is  " insurance" And in that case they would be committing an offence of selling an unregulated insurance product

May seem pedantic.
But if insurance wording is used, then it can be taken it is a regulated policy. 
They (MSE) need to stop using the term.
Even couriers do not use the term..

Of course they don't use those words – it is definitely in their interest not to.

We aren't in a state of such wokery that if you simply choose to identify a product is something then it becomes that thing.

"But officer, I wasn't speeding in my car because this is not a car. I'm self-identifying it as a shopping trolley."
All right son, mind how you go then but take a bit more care in future, eh?"

born_again

AstonomyDomine said:

born_again said:

Compensation is not insurance.
They are not changing the label, just the same as many other companies offer protection on products are not insurance. These companies do not want to have to pay for regulation & all the internal procedures that are required by selling insurance.

MSE in their infinite wisdom mention insurance when they should not be, which as a journalistic website you would expect that they have checked that they are factually correct. 🤷‍♀️

you are wrong – they probably have changed the label.

I believe that MSE have double check this by seeking other opinions and also by running it through their legal team.

In terms of the characteristics of insurance – have you looked at the 1904 case?

I think in exactly the same way that extended warranties are insurance as well

Perhaps in that case you are better reporting all the couriers to FCA for not being registered to offer a regulated product. If that is what you think they are selling.
Despite the below.

https://news.resolver.co.uk/package-delivery-insurance-are-you-covered/

Is parcel cover regulated by the Financial Conduct Authority (FCA)?

The FCA’s remit is set by legislation. In 2007, new legislation was introduced that takes parcel delivery firms out of scope of the FCA’s regulation with regard to insurance for the items they transport.