There has been a steady growth in the variety and volume of goods and services that are available online to both businesses and consumers, and online selling is increasingly seen as a major way for all businesses to save costs and deliver value to the consumer. Almost inevitably, as the practice of online selling proliferates so does the amount of legislation governing it.
There are two distinct types of legislation that affect online retailers.
Firstly, traditional consumer protection regulations apply to all consumer sales made online. These regulations are well established, but it is important to remember that they apply to online retailers as much as they do to traditional ones. Secondly, there are regulations designed specifically to deal with problems and issues facing retailers online.
Traditional consumer protection regulations
These protect purchasers and consumers whether they are buying the goods over the counter of a shop or over the Internet. For instance:
These regulations are new and were brought into force largely to protect consumers' rights when they buy products either over the Internet or by telephone. They largely derive from EU Directives, and include the E-commerce Regulations, the Distance Selling Regulations and the Electronic Signatures Regulations. These are the regulations that control the actual online sales.
Although the traditional consumer regulations are important for all sales processes, this section focuses on certain of the online regulations and how they affect the various stages of the online sales process.
The various regulations share a central theme: companies should not hide themselves from purchasers, and should provide as much information to purchasers as possible. The intention is that a buyer should know exactly who is selling the goods.
The E-commerce Regulations require that all commercial websites make the following information directly and permanently available to consumers via the website:
The E-commerce Regulations also require that all prices must be clear and unambiguous, and websites must state whether the prices are inclusive of taxes and delivery costs.
When it comes to actually going through the contractual process, the requirements for information increase once again and the consumers must be told:
All of this information must be provided before the purchaser selects the product and starts the contractual process. It should be possible to convey it early on in the sale, without deterring users with an unwieldy sales process. The most common route is to bundle as many of these details into the terms and conditions as possible, and ensure that consumers are appropriately directed to read them.
These regulations set out the information that must be provided to a consumer prior to the conclusion of the contract.
The information must be provided in a clear and comprehensible manner, which is appropriate to the means of distance communication used. This means that the information can be set out on a web page, provided that the information is brought to the attention of the consumers before the contract is entered into.
The information to be provided relates to:
The Electronic Signature Regulations apply to any contract and not just those entered into with consumers.
Signatures are not actually necessary for the conclusion of every contract, but they can have three essential functions when online contracts are considered:
Depending on exactly what is being sold, the method of collecting the electronic signature will vary. In most cases, the function required of the electronic signature is the third one listed above – indicating that the purchaser is making an offer to contract. However, for more complex products being sold online, for instance financial services products, the role of the signature may become more important for one or both of the first two reasons.