Staying Within the Law With Ecommerce

Everyone knows that ecommerce is to do with offering and selling goods via the internet. The seller and his customers never meet face to face at any time therefore all business and payment is conducted remotely, regardless of where people live. Like any form of trading this has the possibility of conjuring up a number of problems with regard to the formation and enforcement of selling ‘contracts’.

The law in this country has put in place a number of legislative initiatives which directly affect all trading which is primarily conducted online and if you don’t know what you are about these laws can appear complex and also they are subject to change.

What you need to know above all though is that as far as ecommerce transactions are concerned, this specific legislation is mainly intended to ensure that online contracts are legally binding. In addition the ways in which internet marketing can be undertaken to promote the services of e-commerce providers are also regulated.

The first proper e-commerce laws came into force in August 2002. They enforce the European Ecommerce Directive into UK law and one of their main aims is to ensure that electronic contracts are legal and enforceable throughout Europe.

This directive basically follows a ‘country of origin’ approach to the law where services are provided across borders within the European Community. The idea is that any online service provider is subject to the law that is applicable in the country where they are based, rather than where their customers reside. Local authorities are then responsible for ensuring complete compliance with the national law.

These strict regulations apply to any company that sells goods to other businesses or consumers on the internet, or by email or text messages. They also apply to a business that advertises on the internet, or by email or text messages as well as conveying or store electronic content for customers, or indeed providing access to any communications network. However they have no jurisdiction with regard to direct marketing by phone or fax.

Ecommerce regulations earmark specific information about your line of trading that you must provide to recipients of online services, and sets down guidelines regarding advertising and promotions. For example, if you produce an online contract, your customer must be able to print and keep a copy of your terms and conditions.

If it is your intention to advertise on the web, by email or by text messages, the regulations stipulate that all “commercial communications” should be obviously recognisable as such and must clearly identify the person who has sent the marketing communication, including with any promotional offer.

The regulations also cover unsolicited communication, known as spam. They require that these communications are identifiable from the subject line of the email, without the need to read the rest of the message. Text messages are not covered for these purposes.

When trading online to ensure that you comply with the general information requirements of these ecommerce regulations and don’t get into trouble with the law you must always make clear your company name, a physical trading address and all other contact details including your email address and, if registered, your VAT registration number.

If your website refers to prices, these must be quite clear and show whether they include tax and delivery costs. This may surprise you but are also legally bound to ensure your website complies with the Companies Act 2006. From 2007 all companies in the UK must clearly state the company registration number, place of registration, registered office address and, if the company is being wound up, that fact, on all of their websites.

Often the best place to put information of this nature is on the About Us page, there is no need for it to appear on every page of your site. This rule also applies to any electronic communications sent out by your company, such as emails.

If your company uses online contracts you must provide your customers with helpful information regarding all technical steps required, whether the completed contract will be filed by you and whether it will be accessible and in addition any relevant codes of conduct to which you subscribe, and information on how these can be checked online.

You must always make sure that your website allows customers to go back and correct any mistakes made in their order before the order is placed and then when a customer has placed an order through your shopping cart software, you should acknowledge receipt immediately.

Do be aware that if you have an online business you should never just ignore these regulations and hope they will go away. There is powerful and effective enforcement of any regulation breaches, which means that if a business breaches the regulations they could face a substantial claim for damages.

Where the breach affects several consumers, a service you could be subject to a ‘stop now’ order that allows the Office of Fair Trading and other consumer protection bodies to apply to the courts for an enforcement order. Failure to comply with an enforcement order is treated as contempt of court, punishable by fines or even imprisonment.

Since December 2003 all ecommerce activities are regulated by the Privacy and Electronic Communications Regulations which supersedes the old Telecommunications (Data Protection and Privacy) Regulations. These new regulations include additional rules which legislate against unsolicited emails or text messages, commonly referred to as spam.

These regulations prohibit sending direct marketing communications by email where the identity of the person who sent it is disguised or concealed. They also prohibit marketing emails that do not provide the recipient with a valid address they can use to request such communications cease. However the Privacy and Electronic Communications Regulations provisions on unsolicited emails do not apply if you are marketing to corporate bodies, though you are still required to include your identity and contact details but, it is common sense and good manners to respect the wishes of any companies that ask you not to email them.

The Privacy and Electronic Communications Regulations also cover the use of ‘cookies’ which are files downloaded from a web server to the website visitor’s computer. The purpose of the regulations is to allow the visitor to choose whether they want cookies on their computer; this involves providing them with information about cookies, and how to disable them should they wish to do so.

Remember that if you buy databases with the aim of marketing your company you must comply with the Data Protection Act, which means that under the Act, businesses generally may not sell personal information held in a database unless the individuals listed were warned that their information may be passed on, and a business that is being sold, or is insolvent, bankrupt or being closed down may only sell its database under certain circumstances. If this applies to you do check with the appropriate bodies first.

The Distance Selling Regulations of 2000 are designed to protect customers who are not physically present with the seller at the time of purchase. They cover purchases made via email and the internet, together with telephone and mail order. Under the regulations, consumers have the right to expect written confirmation of their orders, details in writing about the supplier and the terms of the transaction up to date information about cancellation rights, complaint procedures, after-sales services and guarantees and a delivery within 30 days unless otherwise agreed.

Consumers have a cooling-off period of seven working days in which to cancel the contract, starting from when the goods are received, without having to give a reason. If no details of the cooling-off period have been given by the supplier to the consumer, it is extended to three months. The right to withdraw can be exercised by the consumer even after the goods have been delivered, or the services have been provided. With a few minor exceptions, consumers are entitled to receive a full refund for a cancelled contract within 30 days.

So you see, while setting up and running an online store can be exciting, fulfilling and potentially very lucrative you must always stay within the law if you want your business to be not only successful, but also well trusted and viewed as reliable.