Do you run an online business?
Are you aware that online retailing is subject to the same laws and regulations as High Street trading? Now these questions might seem rhetorical, yet according to the Office of Fair Trading it would appear that a good number of businesses and retailers who trade online are unaware of basic consumer protection legislation. The OFT has estimated that the number may be as high as 30%. The regulator checked 156 of the UK’s most popular websites and discovered that 62 were not trading in compliance with consumer protection law. Consequently it has issued a warning to anyone involved in the world of internet marketing that they must clean up their acts or face the consequences.
The question that needs to be asked, however, is is this shot across the broadside justified?
Are e-commerce businesses deliberately flouting the rules of consumer protection law? Well, the principle problem that the OFT discovered was that many of the online retailers placed unreasonable restrictions on refunds and added compulsory charges without prior warning at the online checkout. Anyone who’s had the misfortune of trying to book an online flight with a budget airline will recognise that issue right away. So what is the OFT demanding? Well, it wants all those online retailers who have broken the rules to change their websites and comply with the legislation before Christmas.
In this latest study, which incidentally is the largest ever undertaken by the regulator, it checked the sites of the 100 most-used online retailers in the UK, as well as the most popular clothing sites. It discovered that the most common problems found were retailers wrongly telling their customers that for refunds to be payable, all returned goods had to be in their original packaging or in their original condition. The OFT explained that actually such practices could be in breach of the buyer’s right to inspect or assess a product.
Furthermore, nearly two-thirds of all the retailers checked failed to provide an email contact address, as opposed to a web contact, which is also a breach of the E-Commerce regulations. When the regulator delved deeper it discovered that of the 60% of sites that notified buyers there would be compulsory charges, such as delivery, in addition to the up-front price, 24% of those then added extra, unexpected, charges as well. These additional fees included card charges, and booking and luggage fees. On the more positive side, however, the OFT’s survey found that most online retail websites complied with their other obligations under the Distance Selling Regulations.
So what are these consumer protection regulations?
What’s meant by ‘distance selling’ and how can businesses ensure that they are fully compliant? Well, consumers shopping online, by phone or mail order, are covered by these regulations in addition to their regular statutory rights: the rules are there to ensure that all goods bought are fit for purpose. The distance sales rules state that goods should be delivered within 30 days, and that shoppers should be given a 7-day cooling-off period in which they can cancel an order and get a full refund. This period is longer for financial products.
So what has the OFT got in store for online retailers? Well, it appears the regulator would rather the businesses put their house in order voluntarily. It is not generally in favour of direct enforcement action, but has warned that it will invoke such measures if companies do not comply. Speaking to the BBC, Cavendish Elithorn, a senior director at the organisation stated:
“The OFT recognises that most businesses want to play fair with their customers and to comply with the law. We encourage all online retailers to check their websites so customers can be confident their rights are being respected when they shop online.”
The OFT has now written to all of those who may be misleading consumers, and advised them that if they do not change their sites to comply with the law they could be taken to court and face fines.