eBusiness and the law: What’s required to run an e-commerce business?

Legislation you need to be aware of if you sell online

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The web can be a wild place to trade in, and a number of businesses that sell online have found to their cost that simple mistakes can escalate into significant business threats in a short period of time.

It is vital that small businesses are aware of their legal obligations and adhere to respective laws. This guide should help you avoid problems and costly mistakes by explaining the legal obligations you have in your business.

Please note that this guide is focused on small business IT. It is strongly recommended that you take formal legal advice if you are undertaking commercial activities on the web. This guide does not constitute legal advice.

Consumer protection laws

These apply to all commercial sales whether they occur over the internet or over the counter in a shop. The Sale of Goods Act, which is probably the best known of these, is designed to ensure that a purchaser receives a certain quality of product and sets out their rights if the product is believed to be sub-standard. If you are offering loans or credit facilities from your web site then you will be subject to the Consumer Credit Act which controls the type of agreement consumers can enter into. It also offers protection to customers buying goods with credit cards.

There are many other pieces of legislation that concern the selling of goods and services.  Some of this may be particular to your trade or business area, so always take advice from a legal practitioner if you are in any doubt.

eBusiness specific laws

In support of the standard consumer protection laws a raft of legislation has been enacted to protect consumers or buyers making purchases across the internet from web sites. It was important that specific legislation was created as many vendors saw the internet as a way of avoiding day to day regulations and laws. It is to the benefit of all small businesses that we have this protection as consumer confidence has increased, which is reflected in the amount of business now being transacted across the web. The EU has been the main force behind these new laws which regulate the on-line selling process. Key to these laws is the fact that a company should not hide behind a website in an attempt to evade their responsibilities.

The E-Commerce Regulations demand that all commercial websites contain the following pieces of information, even if you do not sell services or products from the site:

  • The name, registered address, postal address and email address of the company selling the goods or services. Note that PO BOX numbers are not deemed suitable as an address.
  • The limited company registration and VAT numbers (where applicable)
  • Details of trade or professional association memberships

All pricing information needs to be clear and obvious and it should be clearly stated if the prices are inclusive or exclusive of VAT and any delivery costs.

The Distance Selling Regulations state that the following need to be displayed clearly on a web site prior to a user placing an order:

  • Who you are (i.e. who is the supplier?)
  • Price of your goods or services
  • Description of the goods and services
  • Payment and delivery terms
  • The fact that a purchaser can cancel the order as it has been created under the Distance Selling Regulations

Most sites will wrap this information into their terms and conditions which purchasers need to read before placing an order. Most sites have a tick box that says something like “I have read and agree with the terms and conditions”. Only after ticking the box can an order proceed.

In reality few consumers bother to read these terms which is a shame as they are there to protect the consumer from fraud or illegal activities. These terms and conditions will vary from site to site but it is important that they are accurate as they form your legal “crown jewels”.

Other laws that may affect your site include:

  • The Disability Discrimination Act 1995. This act is designed to ensure that websites are accessible to users with disabilities. The type of disability that may be relevant includes impaired vision and dyslexia
  • The Data Protection Act. This act determines how you can store personal data on your computers.

Source: eBusiness and the law 

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