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I'm currently working on a business as a sole trader providing scalable servers to clients, they are billed monthly.

I'm aware the consumer rights act also affects digital goods, so whats to stop people from using my service for 14 days and then asking for a full refund? As these servers cost money to maintain, I have the potential to lose money on this, which could cripple my business if done enough.

Is there a terms of service clause/refund policy or somthing I can use in order to protect myself from losing money due to this? How do other companies get around this?

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  • Other companies get around it by hiring a lawyer to provide them with specific legal advice and write up appropriate contract terms.
    – user4657
    Jan 20, 2020 at 21:56
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    @N.Komodo that’s one of the things to ask your lawyer
    – Dale M ♦
    Jan 20, 2020 at 22:30
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    @N.Komodo you are willing to risk all your assets by operating as a sole trader but you won't take out insurance by paying a lawyer? Your life, your choice.
    – Dale M ♦
    Jan 20, 2020 at 22:57
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    If you can't afford to have a lawyer give advice for your business, you definitely can't afford not to have them.
    – user4657
    Jan 21, 2020 at 0:27
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    1. Are your "clients" consumers (as in members of the public) or businesses or both? 2. A solicitor might give you up to an hour of consultation for free or they might charge you £250-350 for an hour for this, which doesn't seem prohibitive to such a business.
    – Lag
    Jan 21, 2020 at 11:54

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See this UK government site:

https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

It is aimed at consumers. It says that cancellation fees must be fair, and that you (as a consumer) can't expect all your money back.

Now if I order a service today (Jan 26th) to start at March 1st, you'll have to refund me if I cancel before Feb. 10th. But if I order the service today to start today, and I use it, then you can include in the contract that you will charge for every day that the service is used (and cost you money).

And all that is consumer law. Doesn't apply to business customers. For business customers, the signed contract is what counts (except in rather extreme situations).

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Consumers have an absolute right to a 14-day cancel any sale that is made off-premises.

This cannot be contracted out of. It's a cost of doing business; factor it in like every other cost.

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  • I'm almost positive there are exclusions for services already rendered - so if you sign up to a service, use the service for 14 days and then cancel, you don't get a full refund but rather a pro rated one. I will need to look for the regulations on this though.
    – user28517
    Jan 21, 2020 at 2:06
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    @Moo Yep, that seems to be the case, "You have 14 days from entering into a service contract in which you can cancel it. The trader shouldn’t start providing the service before the 14 day cancellation period has ended, unless you have requested this. If you request a service starts straightaway In this instance you will still have the right to cancel, but you must pay for the value of the service that is provided up to the point you cancel." As for consumer rights, in the case of services, it seems to set standards instead of an absolute right to refund. If standards are broken though, refund
    – N. Komodo
    Jan 21, 2020 at 9:20
  • Rules apply. For example, if you buy on steam, you can no longer claim the 14-day cancel rule the moment you start to download. You ave to rely on steam's refund policy then.
    – Trish
    Feb 3, 2020 at 11:48

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