Online Selling: Know Your Obligations

Online Shopping

Online selling entails certain obligations to the consumer. Online sellers, whether of goods or services, have responsibilities towards the buyer. Being aware of these obligations ensures that you are complying with the law and treating your consumers fairly. This is becoming an increasingly important area as online selling becomes the norm.

We will look at the impact of two legal regulations, their requirements and how they govern your relationship with the consumer. This way, you will be in a better position to ensure your ecommerce site is compliant with the current law.

Ecommerce Regulations

Introduced in 2002, the Ecommerce Regulations apply to anyone providing a service for payment at a distance (including websites) and requiring online sellers to provide specific information at certain points on commercial websites. Their purpose is to make sure that consumers have minimum process standards when buying online and ensures that the consumer has a clear understanding of who they are dealing with online.

To be successful in the online selling business, and develop a good reputation, the minimum information you must provide is your trading and business name, geographical address, an email address (a contact us form alone is not enough), any registration number (e.g. if a business is incorporated provide its company registration number), VAT number (if applicable), details of any regulatory body that regulates you, and any price indication on the website must be clear and unambiguous.

Further to these minimum requirements, the regulations require you to give the following information before orders are placed. The buyer should be informed:

  • of the different technical steps to conclude the contract;
  • of the technical process for identifying and correcting errors before placing an order;
  • whether the final contract will be stored by you and whether the buyer will have access to it;
  • of the languages offered for the conclusion of the contract;
  • whether you are bound by any code of conduct and provide a link to view it.

Where you provide terms and conditions, buyers must be able to store and reproduce them.

If you intend to supply marketing emails, you will need to allow the opportunity for buyers to opt-out. The best time would be when buyers provide their contact details. It is also equally important to note that not all countries allow emails of this type and you should pay particular attention where, so you are not infringing local laws.

Consumer Contracts Regulations – Distance Selling and the Supply of Digital Content Online

More recently, regulations have come into force governing distance selling (including selling from websites), which only apply when you do business with consumers. So if you contract with other businesses the following won’t apply.

The essence of the regulations is to ensure that you as an online seller provide the consumer with essential information so that they are able to identify you and how you trade.

Other than the information required under the ecommerce regulations, there is a substantial amount of information you need to provide depending on the goods and services you sell on your online shopping website.

Examples include:

  • the need to provide the price of goods including taxes, or how these are calculated if a specific price cannot be given;
  • all additional charges must be calculated in advance;
  • the arrangements for payment, delivery, performance and the time by which you undertake to deliver goods or services;
  • and most importantly, where a right to cancel exists, the conditions, time limit and procedures for exercising that right. You must state whether the consumer is to bear the cost of returning the goods in case of cancellation (otherwise you will be responsible for payment for returns).

The regulations also require specific information to be communicated at various points in the buying process. At the start of the ordering process, any delivery and payment restrictions that apply must be set. Ensuring that you provide this in your online shopping website’s terms of business will mean that consumers have the opportunity to see this information at any time before ordering.

At the stage of placing orders, consumers should be made aware that ordering involves an obligation to pay and any button to proceed beyond this point must state so clearly. This will include full price information including taxes, delivery charges and all other charges. Consumers would then understand that they will be required to pay for your produce or service at that time and have all the information necessary to make that decision.

Once a purchase is made, confirmation of the purchase must be given within a reasonable time. The confirmation does not need to be acceptance of the purchase but simply an acknowledgment. In online selling, proper wording should be provided so that a legally binding contract is not created at this time, otherwise you may find yourself in a position where you must perform the contract and may be in a difficult situation if you do not have the means to complete the order.

Right to Cancel

The right of cancellation is a strong right for the consumer. For the majority of products and services, consumers must be given the right to cancel and withdraw without incurring liability within 14 days of placing the order. The consequences of breaching the notification requirements of the consumers’ cancellation rights will be that the cancellation period will be extended to 12 months.

The Consumer Contracts regulations also make specific provision for digital downloads. As a retailer, you must not supply digital content during the 14-day cooling-off period unless the consumer has given specific consent. If the consumer has consented to the supply of digital content, once the download starts their right to cancel will be lost.

The two sets of regulations puts an onerous burden on online sellers to provide sufficient information to consumers and to make sure their online shopping website also complies in order to ensure smooth business transactions.

If you need specific advice relating to online selling, please contact us. For further information on how we can help, see our Ecommerce and Website Terms service on our website. 

Tidman Legal is an Edinburgh-based law firm specialising in business and intellectual property law.