As at the end of February 2025, internet sales comprised 26% of all retail sales in the UK. As the online market grows, businesses are tempted by what they see as the reduced cost of selling online. It is true that having to bind yourself to a lease and other set up costs and being tied into operating hours can be expensive and painful, but business is business, and organisations remain obligated to comply with a variety of laws.
When selling products online, business owners face similar risks to their “brick and mortar” counterparts and additional unique considerations.
Consumer protection
Consumer protection legislation including the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and the Consumer Rights Act 2015 provides specific protections for consumers making use of online retailers.
These include the following:
- Consumers’ right to cancel: With some exceptions, consumers who have purchased goods online are provided with a cooling-off period of 14 days after delivery of these goods during which they can change their mind about the product, return it and still receive a full refund. This is in addition to the consumer’s right to reject for defective or faulty goods. This means that online retailers need to manage their finances so that they are, in fact, able to refund a consumer where they exercise their rights in terms of this cooling off period.
- Description: A business must clearly set out the information listed in schedule 2 to the Regulations in advance of a consumer purchasing a product online. The required information is extensive and it there to make sure that the consumer knows exactly what they are buying, from whom they are buying and what rights they have once they have bought the product. Examples of this information includes, a description of the product, the purchase price and any additional delivery costs, the identity of the seller, the consumer’s cancellation rights, customer service details and what the retailer’s compliant procedures are.
- Remedies available: Just like their competitors who operate from physical premises, if the product is defective or faulty, not fit for purpose or damaged, consumers are entitled to cancel the sale within 30 days of receiving the goods and claim a refund (known as the short-term right to reject). Alternatively, within these 30 days a consumer may require the retailer to repair or replace the product. Once the consumer receives the repaired or replaced item, they again have a statutory right to reject the goods, subject to different timelines (known as the final right to reject).
Where business do not comply with the consumer legislation they could, at best, face angry customers and reputational damage and, at worst, investigation and possible measures imposed by the regulator.
From a practical perspective, online retailers need to understand that they can’t just wash their hands of a sale once the money is in the bank, and it is this failure to make financial plans that sees many online retailers flounder.
Product safety
A retailer has a responsibility to its customers to ensure that the products it sells, are safe and fit for purpose. The law places, amongst other things, the following obligations on retailers:
- Under the Consumer Protection Act 1987, businesses can be held liable for damage caused by a defective product. Consumers do not have to prove fault for strict liability to arise. Instead, they would have to prove that the product was defective and that such defect has caused damage.
- Furthermore, the courts have held that businesses owe a duty of care to consumers to ensure that the products sold are safe and will not cause any harm. Liability arises when a business fails to meet the standard of care expected and such failure causes harm.
A business found liable to have failed to comply with its product safety obligations could face compensation claims, in certain cases legal costs and serious harm to its reputation.
Sales platforms and compliance obligations
When using existing online marketplace platforms to sell products, businesses must comply with the terms and conditions of that platform. These terms and conditions may change – often with very little notice – which may result in unforeseen costs or delays. What’s more, using an established platform doesn’t absolve businesses from being subject to UK GDPR and the Data Protection Act 2018. Depending on the structure of the selling arrangement, these retailers are almost certainly data controllers and/or data processors. Data protection legislation requires business to maintain a privacy policy, ensure a secure storage and processing of any data and provide and comply with data subject rights. Any failure to comply would result in, at the very least, fines and legal action by the Information Commissioner’s Office. The penalties for non-compliance are both civil and criminal – an extremely significant risk to businesses, their directors and management personnel.
The factors highlighted in this article are in addition to general obligations such as supply chain integrity (in other words ensuring that the businesses that supply retailers do not engage in anti-competitive behaviour, bribery or any other legislation which the UK enforces to ensure that businesses operate fairly, ethically and lawfully).
Retail is an exciting and rewarding industry. There is so much room for innovation and ways to create happy clients who become walking advertisements for your products. Like all aspects of business, careful consideration of the legal framework businesses needs to adhere to is important. Our commercial team is just that – a team made up of commercial experts who have run businesses, worked inhouse and supported organisations throughout the business cycle. We’d love to hear more about your business and how we can help you meet your goals.
The information provided in this article is provided for general information purposes only, and does not provide definitive advice. It does not amount to legal or other professional advice and so you should not rely on any information contained here as if it were such advice.
Wright Hassall does not accept any responsibility for any loss which may arise from reliance on any information published here. Definitive advice can only be given with full knowledge of all relevant facts. If you need such advice please contact a member of our professional staff.
The information published across our Knowledge Base is correct at the time of going to press.
