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Time to comply
Friday, 07 August 2015 09:01

Selling products and services on-line? Rebecca Kelly, specialist lawyer in intellectual property at hlw Keeble Hawson gives some top tips to comply with new regulations

In the countdown to Christmas, companies risk fines of up to £5,000 if they fail to comply with new regulations governing how online businesses sell goods, which bring the UK in line with the rest of Europe.

While the EU Consumer Rights Directive* - designed to ensure that consumers across all 27 member states have the same rights - strengthens and clarifies consumer rights, it requires many online traders to review websites, systems, processes - and staff training.

Here are some tips to help avoid falling foul of the law:

Make your website fit for purpose
If amending your website, to comply with the new regulations, engage a trusted supplier who understands the new directive and its implications for your e-commerce website to design, run and maintain it. Draw up a legal contract detailing all the specifications you require, specify fault response and fix times - and agree completion timescales.
Ensure you own your website and that all the intellectual property rights are transferred across from the provider to you so if you become dissatisfied with your supplier, you can replace them with a new one.

Include your terms and conditions
Include the terms and conditions relevant to your goods and services along with basic contact information on your website. If you fail to do this a ‘stop now order' can be applied for to prevent the website from operating. Enforcement authorities include local weights and measures authorities the Department of Enterprise, Trade and Investment in Northern Ireland or the Competition and Markets Authority in the UK.

For items sold and delivered outside of the UK, the terms and conditions should state which countries you sell to and include the relevant legal requirements applicable to that country.

Customers must be able to see terms and conditions clearly once they have confirmed their intention to purchase, either by inserting a hyperlink, or ensuring they open in a separate window. Once viewed, the customer should confirm they accept terms and conditions before the sale can be concluded. It is vital that you spell out to customers that making an order will trigger an obligation to pay.

What to do after an order has been placed

Once the customer has bought an item, you are legally required to send an email to acknowledge, but not accept their order. It is important to acknowledge and accept an online order in separate emails: the Regulations require you to acknowledge an electronic order promptly. However, before you accept an order (and enter into a legally binding contract), ensure you have the necessary stock to fulfil the order. Having checked the order details such as price and quantity are correct, send the email accepting the order.

To comply with the new regulations customers must be able to save a copy of the terms and conditions in a durable medium. Therefore, your terms and conditions should be contained in a PDF or as text in an email so the customer can retain a copy. Alternatively you can advise customers to print a copy when they place their order, and before accepting your terms and conditions.

Obtain consent before taking payments
Before taking any additional payment for extra goods such as travel insurance, warranty cover, guarantees - obtain a customer's consent. You can no longer use ‘pre ticked' boxes, which used to be commonplace on e-commerce sites. The customer must actively choose - by ticking a box - to purchase additional items.

Do not add in excessive payment surcharges - often imposed for using debit or credit cards - and only pass on the actual costs you incur for using these payment methods.

What to do if an order is cancelled

Customers now have 14 calendar days to cancel their order instead of the previous seven day ‘cooling off' period.
If the email detailing your terms and conditions is sent after the items have been delivered the customer has 14 days from receipt of the email to cancel the order. The exceptions to this rule relate to items such as bespoke goods or perishable items with a short shelf life. Ensure your terms and conditions specify that the goods must be returned if the sale is cancelled. Then, if the customer fails to return the goods, the cost of the goods can be charged to them - even if you have already given a refund.

Meeting delivery requirements
Once an order has been placed, the new rules stipulate you must send them to the customer within 30 days. If you are unable to do this, you must notify the customer, who can agree to accept a longer delivery period. If the customer does not agree to this, you have to give them a refund. If you are a wholesaler selling goods to another business, you should deliver them within a reasonable time. What constitutes a reasonable period is subjective and depends on the item being sold and how it is manufactured, amongst other things. If it is bespoke, then you must endeavour to deliver in 30 days, and, as above, notify the customer, in advance, if delivery will take longer.

You are also required to highlight delivery charges before the sale is processed, otherwise the customer's cooling off period will be extended to 14 calendar days after the customer receives the correct delivery information from you.

Dealing with refunds and returns
If the item you have sold is damaged, you are legally obliged to give a full refund, including any delivery charges. You have to take the customer's word that the damage occurred in transit and reimburse them any costs they have incurred to return the item. Refunds to customers who have cancelled orders or returned goods should be made within 14 days.

Ensure your staff know the new laws
Finally, it is vital that employees are trained on the new rules and fully understand the implications of any errors. If you have any doubts about the legality of your e-commerce trading - including whether your website is compliant with the new directive - seek professional advice or help.

Footnote:
* Some sectors including gambling, sale of certain foods, residential letting and financial services are excluded from the compulsory changes (for more details see Paragraph 6 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 ("the Regulations") available at www.opsi.gov.uk).

 

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