An EU investigation into websites selling electronic goods that
revealed more than half were breaking European laws aimed at
protecting consumers highlights the potential cost to online
retailers of failing to comply with online trading laws.
This is the view of Harpreet Sandhu, an Associate in the
Technology Media & Telecoms team at Nottingham law firm
Berryman and an ICT law and commercial contracts specialist.
"The findings of the analysis - carried out by authorities such
as trading standard departments - of 369 websites selling mobiles,
DVD players and games consoles in 28 European countries found 203
of them held misleading information, particularly in relation to
the right to return a product bought on the internet within seven
working days," he says.
The European Commission recently reported that the investigation
was carried out in May 2009 and checked into whether the websites
analysed followed rules on providing clear information about the
trader, the product, the price and customers' rights. 369 websites
across 26 EU member states were checked as they sold electronic
goods such as digital cameras, personal music players and computer
equipment.
Two hundred of the sites were selected based on them being the
biggest in the EU and a further 100 were checked as they had
previously been the subject of consumer complaints.
"In the current economic climate, retailers are looking at ways
of cutting or minimising costs and clearly it's cheaper to sell
online than in a store," comments Harpreet. "However, taking the
step into online trading demands caution to ensure compliance with
all relevant legislation, especially that designed to protect
consumers, specifically the Distance Selling Directive and
E-commerce Directive.
"Failure to comply with these consumer regulations not only
diminishes a retailers online reputation, after all reputation is
king and can easily be tarnished if consumers feel hoodwinked or
let down. Non-compliance can result in fines, and potentially could
lose return customers, both of which have a significant impact on
the bottom line."
"It isn't difficult to get it right," says Harpreet. "With a
little investment of time and money, retailers can ensure their
trading website complies. Ensuring the correct procedures are
followed, correct contact, pricing and delivery information given
and providing information on how to cancel a contract or return
faulty products are all that is required."
The EU investigation particularly highlighted problems
surrounding the terminology and explanation covering consumers'
rights to return a product. Harpreet explains: "Sixty-six percent
of the websites investigated failed to adequately explain that
consumers hadseven working days to return a product bought away
from business premises, for a full refund and without giving a
reason. Others failed to explain the right to have a faulty product
repaired or replaced after sale."
"These kinds of details are in my experience a classic online
sellers' mistake. The regulation surrounding this specific aspect
of online trading is quite clear, and retailers must ensure their
terms and conditions set out that the consumer has the right to
cancel, subject to certain prescribed exceptions, their order and
have all their money back, if the seller is notified in writing
within seven working days of the products being delivered."
Our top tips to compliance:
• Set out your name, business address, email address and
VAT number on your website;
• Ensure the description of the products you sell is
accurate;
• Include VAT in your prices;
• Explain the method of delivery and any delivery
charges;
• Clearly explain the consumer's right to cancel the
contract within 7 working days of receipt of the products - as well
as the procedure for returning the products;
• Set out the validity period for any special offers;
and
• Give details of any after-sales service or product
guarantees.