The empty shops in some towns will attest that the enthusiasm for online shopping continues unabated. It’s not just consumers who like the convenience; traders can reach a much larger audience, reduce rent, rates and staff costs, and run an ‘open all hours’ operation. But there are drawbacks: the lack of face-to-face contact means that there is considerable scope for unethical (or illegal) behaviour and this is reflected in the law governing online trading.
Given the legal obligations of an online retailer, one might be forgiven for thinking that the law is unreasonably skewed towards the consumer. However, consumer law by implication also helps to protect honest retailers, assisting in the creation of a positive environment in which to trade.
Consumer protection: protecting you and your customers
Standard regulations govern all contractual relationships between consumers and online retailers. They are intended to promote a level playing field so that retailers do not enjoy more favourable terms at the expense of consumers.
The following are some of the key legislations retailers should be aware of:
Sale of Goods Act: Goods sold must be of reasonable quality, fit for their intended purpose and match any descriptions given by the retailer. The consumer has the right to reject the goods and request a refund, repair or replacement if the retailer does not meet these requirements.
Unfair Terms in Consumer Contracts Regulations: All terms and conditions must be fair, accessible and expressed in clear English. Unfair cancellation terms, unfair terms which limit or exclude the retailer’s liability for delays or failure to perform, and terms allowing the retailer to change the price at a whim may all be deemed unfair.
Consumer Protection from Unfair Trading Regulations: Retailers must not indulge in aggressive and misleading sales practices. The regulations also cover a ‘blacklist’ of 31 banned practices that will be deemed unfair in all circumstances.
E-commerce: regulating online trading
Selling goods online is governed by the Consumer Contracts Regulations (which replaced the Distance Selling Regulations) and which address the specific issues of an arm’s length customer/trader relationship. There are certain key pieces of information which must be clearly stated on the website including:
- a full description of the goods or service
- unambiguous pricing information
- delivery costs and returns policy in the event of cancellation
- cancellation rights including the right to cancel up to 14 days after purchase
- the address, phone number and email address of the seller
The right to cancel within 14 days must be clearly highlighted on the website: failure to do so can result in the consumer having up to a year to cancel the contract (with certain obvious exclusions). It is a criminal offence not to inform consumers of their cancellation rights.
From October 2015, retailers who sell goods, services and now digital content must comply with the Consumer Rights Act 2015. This requires them to meet certain quality standards, for example, if a downloaded game has a bug, then the retailer must repair the bug, provide a replacement download or, in some circumstances, reduce the price of the game.
Protecting customer information
One of the defining aspects of online trading is the holding (whether temporarily or permanently) of personal and financial data. The Data Protection Act governs how data can, and cannot, be used by retailers, and related third parties, and there are impending changes to data protection law expected within the next two years. Under current data protection legislation, it is important that:
Customers must agree to their information being used for marketing purposes via marketing consent wording and tick boxes, i.e. ‘opting-in’ and ‘opting out’ of receiving news and offers from the retailer and third parties.
Customers must be able to ‘unsubscribe’ from any marketing communications where they have ‘opted in’.
Retailers conform to the eight data protection principles governing the use and management of customer data.
Be clear, honest and straightforward
In order to stay within the rules of online retailing, there are four key points to bear in mind: (i) all information relating to the product, the seller’s identity and contact details, the cancellation and returns policy, and pricing must be unambiguous; (ii) terms and conditions must be fair and written in good, clear English; (iii) the eight data protection principles must be followed; and (iv) any retailer collecting data for online marketing must obey the law around consent and ‘opting-in’ or ‘opting out’.
Retailers should find that they already adhere to the relevant consumer protection legislation through good practice. However, with the overhaul of consumer and data protection law fast approaching, retailers must be proactive and compliant prior to the introduction of new legislation. If the key requirements are built into the website design from the outset, and maintained thereafter, then online retailers are unlikely to fall foul of the law and should reap the benefits of increased consumer confidence.