If you advertise or sell goods and services online there are minimum legal requirements you need to meet (UK’s E-Commerce Regulations 2002):
What are the E-Commerce Regulations 2002?
The Electronic Commerce (EC) Regulations 2002 were designed to improve e-commerce and increase consumer confidence by making clear the rights and obligations of businesses and consumers.
While the regulations were not designed specifically as a consumer protection measure, a sanction called the ‘Stop Now’ Order was introduced after the original regulations came into force. It allows the Office of Fair Trading (OFT) and the Trading Standards Service to take enforcement action against certain
breaches.
How to comply
The requirements contained in the regulations can be divided into three categories: information, commercial communications and electronic contracting requirements.
Information requirements
If you advertise or sell goods or services online you must provide customers with the following information:
• full contact details including geographic address, corporate identity, contact details and the name of
your company
• details of any trade bodies you are a member of
• details of any relevant online business authorisation schemes and their VAT registration number
• your VAT number, if your online activities are subject to VAT
• a clear indication of pricing and whether prices include tax and/or delivery charges
Commercial requirements
If you promote your goods or services via e-mail you must ensure that:
• it is clear that you are communicating in order to promote or advertise a product or service
• you clearly identify what business the e-mail has been sent by, or on behalf of (if you are promoting the goods and services of another company)
• you clearly identify any promotions you have on offer
• you explain who qualifies for any promotional offers
• unsolicited emails can be easily identified without having to open them, e.g. you put “unsolicited” or something similar in the subject line
Contracting online
If your customers can place orders online make sure you:
• provide a description of the steps to go through to complete a contract online
• make it clear at what point in the process customers have committed themselves
• explain if the contract will be filed and if it can be accessed
• show how to correct any inputting mistakes
• list which languages are on offer to complete the contract
• always give receipt of orders made (as soon as possible)
• allow users to view, store and print your terms and conditions
What happens if you don’t comply?
Non-compliance with the E-Commerce Regulations can have serious consequences for a business. Depending on the non-compliance, customers or end-users may:
• cancel their order
• get a court order against you
• sue you for damages for breach of statutory duty (if they can demonstrate that they have suffered a
loss as a result of your failure to comply)
Given certain breaches of the regulations, the OFT and Trading Standards Departments can apply to the courts for a Stop Now Order (under the Enterprise Act 2002) if your failure to comply “harms the collective interest of consumers”.
Limited liability for service providers
The regulations limit the liability of service providers (businesses that provide a service online) that unwittingly carry or store unlawful content supplied by others, providing:
• they are just a host of the information
• they had no prior knowledge of the unlawful content
• they remove the content as soon as it is shown to be unlawful
This limited liability is intended to promote self-regulation amongst service providers. For example, if you provide a directory of information on various companies it is advisable to first check out the credentials of
those companies. But, if it transpired that a company had lied about its credentials you would not be held liable. You would however have to remove the false information immediately.
Whose law applies to cross-border trade?
Generally, businesses will be required to comply by the law of the country in which they are based. So, those established in the UK - regardless of where their customers are based - will be subject to UK national law. But in cross-border cases where the businesses are based in another country - but sell to
UK consumers - the OFT will encourage overseas authorities to take action using their own domestic laws.
How do the E-Commerce Regulations and Distance Selling Regulations differ?
While there are some crossovers between the two - such as the type of information to be provided by businesses - the main differences are in the nature of the transactions they could apply to and the nature of the information required. Put simply, the E-Commerce Regulations could apply in situations where the
Distance Selling Regulations would not.
For more information on the Distance Selling Regulations, visit:
http://www.dti.gov.uk/ccp/topics1/guide/distsell.htm
Summary
Ensure your business complies with all the requirements of the E-Commerce Regulations. This may
mean that you may need to make some textual or structural changes to the medium you use to advertise
or promote your product or service online. By complying you are protecting your business from potentially
damaging consequences.
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