Online trading and your business
Your business may be involved in selling goods or services to consumers via a website (including through an Ebay shop), mail order, telesales, interactive TV or text.
If it is, you should have already made sure your procedures are compliant with the laws and regulations of a ‘traditional trader’ together with the additional laws that apply to distance traders (failure to comply could result in increased consumer claims, bad publicity or action by the Office of Fair Trading).
These include the Electronic Commerce (EC Directive) Regulations 2002 and the Consumer Protection (Distance Selling) Regulations 2000 (DSRs). The Regulations apply to all businesses that are supplying products or services to consumers without face-to-face contact and are equally applicable to an e-commerce giant like Amazon as they are to a sole-trader operating vie the Internet from home in Ealing.
Traders must ensure that end users are provided with the full name of your business, its geographical address and contact details, including an email address, to enable direct and rapid communication.
If you belong to a trade organization whose register is open to the public (eg CORGI) you must provide end users with the name of the register and your registration identification. If your online business activities are subject to VAT, you must also publish your VAT number.
Traders have to provide the consumer with practical details, including, a meaningful description and the price of the goods or services, and the arrangements for payment, delivery or performance, as well as delivery costs. If a contract creates a long-term arrangement for the supply of goods or the performance of a service, the minimum period has to be disclosed. The DSRs also give the consumer a right to cancel during a ‘cooling off period’, and this right has to be specifically mentioned in the contract.
Consumers must be informed if the trader proposes to provide substitute goods or services in the event of an order being unavailable, and that in those circumstances, he will not have to pay the cost of returning unwanted substitute goods.
All of this information should be included in websites, in catalogues and on order forms. The trader’s commercial purpose in offering the goods or services also has to be made clear, and this specifically includes telephone sales, where the trader’s intention has to be disclosed at the beginning of the conversation. (No more claims of “I’m not trying to sell you anything”).
The DSRs require the trader to confirm this information in a durable form, which can be by e-mail, and to give further details including arrangements for the return of goods, a geographical address for complaints, and information on the conditions and procedures relating to the exercise of the right to cancel the contract.
Where the trader has complied with the DSRs, the cooling-off period is seven working days from the day after the date of the contract, in the case of services, or from the day after the date of delivery of the goods, but if the trader has fallen short of what is required, the cooling-off period is extended by three months. The supplier must have sent written confirmation of the order no later than the time of delivery of the product or performance of the service. If they did not, then the 7 day cooling off period will not begin until they do, and may be extended by a further 3 months.
Many businesses are still not compliant with the Distance Selling Regulations.
The Distance Selling Hub, provides practical guidance and useful checklists for retailers and business support organisations on the law that governs buying and selling goods and services via the internet, phone, mail order, email, interactive TV or text.
Consumers rights are to be further enhanced next year following the publication of the Consumer Rights Directive.
Some key provisions of the Directive are as follows:
– New Cooling off periods (distance sales, e.g. Internet sales, mobile phone, catalogue sales and doorstep sales): Cooling off period of 14 calender days when consumers can change their mind when making online purchases or purchases away from business premises.
– Pre-contractual information: The Directive obliges the trader to provide the consumer with minimum information requirements (e.g. the main characteristics of the product, geographical address and identity of the trader, the price inclusive of taxes, all additional freight, delivery or postal charges).
– Rules on delivery and passing of risk to the consumer: There will be a maximum of 30 calendar days for the trader to deliver the goods to the consumer.
– Digital Content: Information on digital content will have to be clearer at the point of sale, including about its compatibility with hardware and software and the application of any technical protection measures.
– Ban on tick boxes: Ban on “pre-ticked” boxes on websites. Consumers can no longer be required to “untick” boxes to avoid extra goods and/or services when shopping online.
– Credit/Debit Card Charges: When a given means of payment is used (such as a debit/credit card), traders will be prohibited from charging consumers fees that exceed the cost borne by the trader.
In the light of the expected approval of the Directive, plans were announced recently by the Government Consumer Minister Edward Davey to merge all existing UK consumer protection laws and regulations, together with the requirements of the finalized Consumer Rights Directive, into a single new ‘Consumer Bill of Rights’.
Businesses should take this opportunity to review their sales practices, both online and offline, together with the content of their sales literature and websites, to ensure they are and will be compliant with existing and new legislation.
If you would like an audit of or advice on your e-commerce procedures or business terms and conditions to ensure legal compliance, please contact us.