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E-commerce has transformed how we do business, accounting for 19% of global retail sales in 2021. With projections approaching 25% by 2026, the e-commerce market reached a remarkable value of $5.7 trillion dollars worldwide in 2022.
Nevertheless, this vast commercial domain operates within a comprehensive set of regulations. In an era where transactions occur online, it's crucial to understand the protections afforded to both consumers and businesses.
Nearly three decades have passed since the inaugural e-commerce transaction in 1994, a momentous event involving the online sale of Sting's Ten Summoner's Tales CD for $12.48.
Since then, industry giants like Amazon have emerged, revolutionising how goods are delivered, even planning the use drone fleets to reach customers. Simultaneously, countless small, medium, and even tiny enterprises have ventured into online selling, leveraging e-commerce platforms to sell their products and services.
The COVID-19 pandemic further accelerated the growth of e-commerce, with online shopping becoming an increasingly convenient and preferred option for consumers.
As the popularity of e-commerce continues to grow, the need for robust legal regulations has become paramount to address fraud-related concerns and meet customer expectations.
In this article, we delve into some of the key laws governing e-commerce in the UK, providing small business owners with the essential knowledge they need to navigate the intricacies of this dynamic landscape.
Consumer protection
Ensuring the rights and protection of consumers is of paramount importance in the world of e-commerce.
In the United Kingdom, the Consumer Rights Act of 2015 serves as a robust safeguard for consumers, regardless of whether their transactions occur online or offline. It requires that products are of reasonable quality, match their description, and are fit for purpose (e.g. the scissors can cut paper), amongst other things.
When it comes to services, they’re expected to meet a reasonable standard. If there’s a breach in the service provided, consumers have the right to different remedies based on the nature of the breach.
These remedies can include receiving a refund, returning the product, repairing or replacing it, obtaining a discount, or receiving general compensation. The specific remedy will depend on the circumstances and severity of the breach.
Refunds should generally be honoured within 14 days of the agreement to refund.
The Act also provides that unfair terms are not binding on consumers and provides that liability cannot be excluded, for example, where goods are not of satisfactory quality or a service is not of a reasonable standard (or in the language of the Act performed with reasonable skill and care).
Consumer contracts
When it comes to consumer contracts, the Consumer Contracts Regulations of 2013 play a significant role in safeguarding consumers' rights.
One crucial aspect covered by these regulations is the cancellation rights granted to consumers. Typically, consumers have a window of 14 days to exercise their right to cancel a contract, starting from the delivery of the goods or the agreement on the service contract.
Surcharges
It’s important to note that imposing surcharges for the use of debit cards, credit cards, or payment services such as Stripe or PayPal is prohibited by the Consumer Rights (Payment Surcharges) Regulations.
This regulation ensures that consumers are not subjected to additional charges solely based on their chosen payment method.
Data protection and privacy
When customers provide their data during an e-commerce transaction, including cardholder information and contact details, you must protect the personal data in line with the UK GDPR and Data Protection Act.
This includes processing, storing and transferring personal data. Ensuring compliance with data protection laws is fundamental in e-commerce.
Data breaches, which can be caused by cybercriminals, may be reportable to the Information Commissioner’s Office or ICO within 72 hours of discovery by the business.
Electronic contracts
The Electronic Communications Act prescribes that electronic signatures are legally recognised and admissible as evidence of the signature's authenticity in legal proceedings.
This means that electronic signatures hold the same legal weight as traditional signatures when it comes to verifying the identity and intent of the signatory.
Where a contract is concluded electronically (usually when payment confirmation is given), the website must explain, amongst other things, the necessary steps to terminate the agreement and the option to amend the order before purchase. Terms and conditions should also be available, and the order should be acknowledged promptly. This is provided under The Electronic Commerce Regulations discussed in the next section.
Advertising and marketing
In the world of e-commerce, advertising and marketing play a critical role in attracting customers. Here are a few of the laws that you need to be aware of if you’re planning to advertise your products or services:
The Electronic Commerce Regulations
These Regulations continue to apply post-Brexit. The Regulations apply to purchases by consumers and also businesses. They require a vendor to include detailed information on their website and regulate the sales process.
Vendors must include the following information:
- Business or trading name
- Address
- Email address
- Any supervisory bodies
- The company’s number on Companies House
- The VAT number (if registered for VAT)
The Regulations control those who transmit or store electronic data or provide access to a communications network, such that those unsuspecting businesses also fall within the sphere of e-commerce.
Ensuring compliance with the Regulations and the laws in this article requires a full review and advice from a law firm.
The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013
This Regulation makes a repeat appearance in this article as it also imposes additional informational burdens on consumer contracts, whether on or offline. These include providing the supplier’s address; the price, including any extra costs; cancellation rights; after-sales service or guarantees, etc.
Privacy and Electronic Communications Regulations 2003 (PECR)
Marketing, solicited and unsolicited, is regulated by this regulation. It requires that customer consent is obtained in order to send marketing communications electronically. Marketing telephone calls must mention who is calling and the reason for the call.
The general advice in marketing is to be truthful, clear, and not misleading.
Other laws that could apply to your business
- You should be mindful of the Consumer Protection from Unfair Trading Regulations 2008. This illegalises unfair trading practices, prohibits misleading statements or omissions, and blacklists certain commercial practices.
- If you’re selling products, you should consider the Consumer Protection Act 1987, which imposes requirements on product safety.
- Misleading advertising is also prohibited by The Business Protection from Misleading Marketing Regulations 2008. This protects traders misled by the advertising and where the advertising injures a competitor (e.g. by stealing customers).
- The Unfair Contract Terms Act 1977 (“UCTA”) imposes restraints on excluding or limiting liability in business to business contracts.
Complaints
Complaints in the context of e-commerce operations are regulated by The Provision of Services Regulations 2009. This requires that contact details for complaints are provided. Complaints must be dealt with as quickly as possible, and businesses must apply their “best efforts” to find a solution for the customer.
Wrapping up
Compliance with e-commerce regulations begins with ensuring that your website includes all the information the law mandates. These regulations cover various aspects such as the quality of goods and services, advertising practices, trading standards, the complaints process, and consumer rights for redress.
Additionally, contract and tort law applies to e-commerce transactions, expanding liability and insurance risks beyond specific laws.
For businesses in the UK, it's advisable to clearly state in your website's terms and conditions that English law governs your operations, with jurisdiction granted to English courts. This helps resolve disputes with international shoppers who may argue for the application of the laws in their relevant countries.
When navigating e-commerce regulations, it's essential to have a solid understanding of the laws and a comprehensive checklist of requirements. Seeking legal advice is a wise decision to ensure that your online business meets all legal obligations.
LawBite's experienced lawyers can guide you through the complexities of e-commerce regulations, helping you understand your rights and responsibilities. Working with LawBite, you can confidently navigate the legal landscape, minimise risks, and focus on the growth and success of your online business.
About the author
Roderick Farningham is an experienced commercial and financial disputes lawyer at LawBite. He was named a “rising star” over three years by Thomson Reuters.
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