eBusiness and the law: what you need to know
2nd Nov 2012 | 09:20
Is your online business trading legally?
The Distance Selling Regulations are the core legal framework that all e-commerce businesses must comply with, and a breach of them could involve your business in costly legal proceedings and heavy fines. So it's important that you understand and adhere to them from the start.
The Distance Selling Regulations (DSR) 2000 apply to any business that sells goods or services without the buyer being physically present. Today this will mean online businesses, but the regulations also still apply to your business if it sells to the public using any of these channels:
- Mail order catalogues
- Interactive TV
- Text message
Anyone that buys goods or services within the EU will have their rights protected by the DSR. Note that the DSR only apply to businesses that sell to the public and not to other businesses. The DSR also does not apply to financial services as these are covered by the Financial Services (Distance Marketing) Regulations 2004 and, where relevant, the Consumer Credit Act 1974.
How to comply with the Distance Selling Regulations
In essence the DSRs are all about clarity and protecting the rights of consumers that they already enjoy when buying goods or services in the high street. When your business makes a sale, a contract is created.
The DRSs include details of the pre-contractual agreement that exists from the start of the sale process, and also the post-contractual period after the sale has been agreed.
The Office of Fair Trading states that your business must ensure that:
- Your website or other sales mechanism such as a catalogue includes detailed contact information about your business.
- The goods or services your business is offering for sale should be described in detail.
- The full price of the goods or services should be shown and include any taxes.
- Delivery costs should be shown in full.
- How payment can be made should be given, and if payment is required in advance, the full address of your business must be given.
- Information about your customer's right to cancel should be given in detail.
- Customer orders should be confirmed in writing or via another means that your customer can keep for their records such as an email or text message.
- If delivery is to be over 30 days, this should be clearly stated in the delivery details.
- The minimum duration of the contract where goods or services are to be provided permanently or recurrently, for example, if you are supplying a mobile phone or satellite TV contract or a cloud-based service paid on a monthly basis.
One of the most important aspects of the DSRs your business must understand is the time limits that apply for the cancellation of orders. These are different depending on whether your business is selling goods or services.
- Seven working days (not including weekends or bank holidays) after the day on which they receive the goods, provided you give the consumer the required written information, no later than the time the goods are delivered.
- When the written information is not provided at the time of delivery, the time limit is seven working days from the day after the day on which the consumer received the written information, and within three months of the goods being delivered.
- Three months and seven days from the day after the day the consumer receives the goods, if you do not give the required written information at all (or give it after the three month period mentioned above).
- Seven days from the day after the contract was concluded, if you give the consumer the required written information on or before the day the contract is concluded.
- Seven working days after the information was received but within three months (beginning the day after the contract was concluded), if the information was received after the contract was concluded.
Different rules apply to services where the consumer agrees that the service starts before the usual cancellation period expires. These are:
- Where you have supplied the required durable information before the service starts and the consumer agrees to the service starting before the end of the usual cancellation period, their cancellation rights will end when performance of the service starts
- If the consumer agrees that the service can start before the usual cancellation period ends, but you do not provide the required written information until after the service has started but in time for it still to be useful, cancellation rights will last for seven working days after the day the consumer receives the information. But if you finish providing the service within seven working days after the day the consumer receives the required durable information, cancellation rights will end on the day of completion.
- If you do not provide the required durable information at all, your consumer's right to cancel ends after three months and seven working days counting from the day after the day on which the contract was concluded. This applies whether or not the consumer agrees that you can start the service before the cancellation period ends.
Complying with the E-commerce Regulations 2002
In addition to the DSR your business may also have to comply with the E-commerce Regulations 2002 that governs how your business should sell goods or services online. The basic elements of the E-commerce Regulations include:
- Ensuring your website clearly displays your business name, full address and contact information including an email address that is monitored.
- Details of any directory where your business is listed such as Companies House.
- If your business sells a service your website should state whether your business is regulated by any authority, or whether your business is a member of any professional bodies.
- Your business' VAT number if you have one must be prominently displayed on your website.
- Clear pricing should be given including any taxes that are applied and the delivery costs if these apply.
The E-commerce Regulations and the DSRs overlap in certain areas. Your business should look closely at all the regulations that could apply and ensure that all the provisions of these directives are met in full. Failure to do so can mean heavy fines.