A raft of safeguards have been introduced to protect Internet shoppers. Peijun Xia explains the details to keep etailers on the right side of the law
Almost one third of online traders are unaware of the laws relating to Internet shopping, according to an Office of Fair Trading report in June. It also found that most Internet shoppers do not know their rights to cancel and obtain a refund on the outward bound cost of delivery.
Internet shopping is the most common type of ecommerce which includes transactions via means such as the Internet, email and SMS. More and more companies conduct business online as geographic location is not an obstacle plus overheads and administrative costs are reduced.
Ecommerce can be both direct and indirect. Direct ecommerce is where services or goods can be delivered online, such as music downloads. Indirect ecommerce is where goods and services are ordered online but delivered offline, for example by post.
The potential benefits for businesses and consumers are evident in terms of cost savings and convenience. But it has also brought challenges and uncertainty to the formation and enforcement of contracts and more important, to the protection of consumer interests.
With a view to protect consumers and promote ecommerce, the EU has adopted an array of Directives including the 1995 Data Protection Directive; the 1997 Distance Selling Directive; the 1999 Electronic Signatures Directive; the 2000 ECommerce Directive and the 2002 Privacy and Electronic Communications Directive. The UK’s legal framework governing ecommerce is a direct result of implementing the EU Directives.
Obviously, ecommerce businesses must comply with laws governing traditional physical world transactions such as the Sale of Goods Act 1979; Supply of Goods and Services Act 1982; The Unfair Contract Terms Act 1977; The Unfair Terms and Consumer Contracts Regulations 1999 and The Consumer Protection Act 1987, etc.
But they must also comply with regulations governing online trading, including:
* The Consumer Protection (Distance Selling) Regulations 2000 as amended by the Consumer Protection (Distance Selling) (Amendment) Regulations 2005 – commonly known as Distance Selling Regulations;
* The Electronic Commerce (EC Directive) Regulations 2002 (the Ecommerce Regulations);
* Electronic Signatures Regulations 2002.
Not surprisingly, many businesses are a little hazy on ecommerce laws .
The regulations were brought into force in the UK in August 2002 and govern the provision of `information society service’, which is defined as `any service normally provided for remuneration at a distance, by means of electronic equipment for the processing and storage of data, at the individual request of a recipient of the service’.
Put simply, they cover not only online selling and advertising services but also services carried out by email and SMS. It also applies to transmitting or storing electronic content or providing access to a telecommunications network.
The Regulations lay down the requirements for the minimum information that commercial websites and other providers of `information society service’ must provide to customers; additional information to be provided when businesses contract online; as well as exemptions for mere conduit, caching and hosting.
A `country of origin’ rule means a UK based business need only comply with UK laws irrespective of where their customers are based. However, this is subject to a number of exceptions. Notably, it does not apply to some consumer contracts governed by the `Brussels Regulation’ and `Rome Convention’ – but they’re another story in their own right.
The extent to which the consumer contracts exception would apply is still not clear; businesses wishing to sell online to consumers of other EU countries are recommended by the DTI to comply with that consumers’ country’s laws. But this rule may lead to an UK based business having advantages over its EU counterparts when selling online to businesses of the other EU country, for example, to businesses based in Germany where they are subject to more stringent laws regulating online trading and marketing.
Regulation 6 rules that all business websites, whether or not trading online, must list the following general information:
* Business name;
* Business address, which must be a geographic address, ie street number, etc. A PO Box address is not likely to be sufficient, but a registered office address would;
* Other contact details such as email address and phone number;
* Its registration number and registered office address if a company;
* Its place of registration if a company or a LLP. Please note this is a requirement under regulations brought into force on 1 January 2007;
* VAT number if the business is VAT registered;
* Details of any trade and professional body or scheme with which the business is registered and the registration number if applicable.
The required information does not need to be on every page of the website but it must be `easily, directly and permanently accessible’. Thus, it is advised that the website displays the information on the `about us’, `contact us’, or `disclaimer and legal information’ page.
Full prices must be listed on the website and they must be clear and indicate whether or not they are inclusive of tax and delivery costs.
The information must also be included in any commercial communication carried out by email, SMS text message or interactive TV.
The following additional information must be provided to customers prior to online orders being placed:
* The technical steps involved in completing the transaction;
* Whether the contract will be stored by the traders and whether it will be permanently accessible;
* The technical means to correct input errors made prior to placing the orders;
* The languages offered to conclude the contract;
* Links to relevant codes of conduct that the businesses subscribe;
* Any terms and conditions should be provided in a way that enables the customers to store and reproduce them.
There are other information requirements in Distance Selling Regulations which businesses trading online must comply with if they sell to consumers.
An email acknowledgement should be sent without undue delay once a customer places an order electronically; the email should confirm that the order has been received and when it will be processed. Care should be taken to ensure that the order is `acknowledged’ not `accepted’. This will ensure that the seller does not become a victim of any pricing errors as no contract is formed until the actual delivery of the order.
The Regulations also require that any commercial electronic communication must be clearly identifiable in terms of its nature and origin. This applies directly to unsolicited email marketing. Any such email must state who has sent it and includes any promotional offer. For example, `this example is sent on behalf of…’
Rules applicable to email marketing are in The Privacy and Electronic Communications (EC Directive) Regulations 2003. These make it illegal to send an email to an individual subscriber without their consent.
Although the Regulations have been in force for a number of years, not every business involved in online trading is compliant. Lack of compliance could result in enforcement actions through the court, potentially resulting in the websites being closed down. Every online businesses should carry out a thorough check of their online presence to ensure compliance.