UK E-Commerce Regulation

UK E-Commerce Regulation

Introduction: UK E-Commerce Regulation

While there is a raft of consumer and contract law that E-Commerce businesses must be aware of, UK E-Commerce law is mainly covered by the following provisions:

• The Consumer Protection (Distance Selling) Regulations 2000(UK) as amended by the Consumer Protection (Distance Selling) (Amendment) Regulations 2005 (UK)
• The Electronic Commerce (EC Directive) Regulations 2002(UK)
• The Electronic Signatures Regulations 2002(UK)

The Electronic Commerce (EC Directive) Regulations 2002 (UK) (‘ECRs’) apply to businesses that:

• sell goods or services to businesses or consumers on the Internet or by email;
• advertise on the Internet or by email; or
• convey or store electronic content for customers or provide access to a communication network.

Scope of ECRs

Thus the ECRs cover almost every category of commercial websites and any service provided for payment at a distance through electronic means, though it is important to point out that they are not restricted in their application to websites that facilitate buying or selling online. The kind of services covered includes information services. They were introduced to incorporate the EU’s E-Commerce Directive into UK law in order to ensure uniformity on E-Commerce law throughout Europe and provide more certainty for consumers, in order to ensure the free movement of “information society services” across the 27 member countries of the European Union. The definition of ‘based in the UK’ does not exempt those businesses based in the UK but with their servers located outside the UK.

Jurisdiction and Application of the ECRs

The ECRs provide that online selling and advertising is subject to the laws of the UK if the trader is established in the UK and that online services provided from other Member States may not be restricted – which means a member state cannot restrict the provision of services from other EU countries. The ‘country of origin’ rule contain in the ECRs mean that a UK-based business needs to comply only with UK law regardless of where their customers are based.

While there are exceptions to this, particularly for contracts with consumers and the freedom of parties to choose the applicable law, in the absence of explicit provisions to the contrary, UK law applies.

The ECRs require that recipients of online services must be given clear information about the trader, the nature of commercial communications and how to complete an online transaction. The Regulations provide that online service providers are exempt from liability for the content that they convey or store in specified circumstances. Note that the ECRs also apply to services provided through SMS, which has a strict limit on the number of words. To satisfy this requirement, any SMS message must contain a link to a website where required information can be found.

Information Requirements

The ECRs prescribe a minimum amount of information that consumers must be provided with when they enter into online transactions. Where consumers are not provided with the requisite amount of information and detail, the contract between the consumer and the seller may be rendered void and the seller may be found to be in breach of retail law. Sellers or providers must provide the following information when selling services or products through electronic means:

• outline the technical steps that are involved in placing an order
• provide the terms and conditions to the purchaser in a way that brings their attention to these terms and allows them to reproduce and store these terms
• pricing is to be made clear and must include any tax or shipping rates
• name of the service provider, a contact email address (rather than simply a contract form) as well as a physical office address
• orders must be acknowledged via electronic means
• customers must be given an opportunity and information on how to correct any errors relating to the input of information during the order process
• where the organisation is incorporated as a company, the company’s registration number and place of registration must be made available
• where the service provider is a member of any trade or professional association – where they are member to regulated professions – membership details are to be provided. This includes details of any professional body or similar institution with which he or she is registered; his or her professional title and the Member State where that title has been granted; and a reference to the professional rules applicable and a way that the service user can access them (for example, a link to the professional body’s website); and

The information does not need to be reproduced on each page of the website but it must be made easily available and be permanently accessible. The informational requirement is a statutory duty the breach of which may result in a voiding of the contract.

Established Service Providers

The ECRs do not apply to non-commercial interactions or offline elements of online transactions or the offline aspects of online transactions. Regulation 2 of the ECRs defines an established service provider as one which is:

A service provider who is a national of a member state or a company or firm as mentioned in Article 48 of the Treaty and who effectively pursues an economic activity by virtue of which he is a service provider using a fixed establishment in a member state for an indefinite period, but the presence and use of the technical means and technologies required to provide the information society service do not, in themselves, constitute an establishment of the provider; in cases where it cannot be determined from which of a number of places of establishment a given service is provided , that service is to be regarded as provided from the place of establishment where the provider has the centre of his activities relating to that service; references to a service provider being established or to the establishment of a service provider shall be construed accordingly”.

Thus transnational companies with a main base in the UK and subsidiary offices in other countries would fall under the ECRs. Information Society Services (‘ISSs’) is summarised in recital 17 to the E-Commerce Directive as covering:

any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, and at the individual request of a recipient of a service).

As such, ISSs include a wide range of economic activities that take place online for commercial reasons and not personal exchanges via email or non-commercial activities. Taxation, lotteries, gaming and areas otherwise covered by the Data Protection Directive and the Privacy and Electronic Communications Directive (2002/58/EC) concerned with the processing of personal data or the protection of privacy in the electronic communications sector are not covered by the ECRs.

Where the service provider sends a commercial communication via email (advertising), they are subject to specific informational provision requirements. For example, they must ensure that the email is clearly identifiable as a commercial communication. It must also clearly identify the person on whose behalf the commercial transaction is being made. Promotional offers, discounts, premiums, or gifts, as well as any conditions necessary to qualify for these conditions must be made accessible. They must be worded clearly and unambiguously. Promotional competitions or games and applicable conditions should be made accessible and unambiguous.

Contracts Concluded by Electronic Means

In the case of E-Commerce contracts that are concluded by electronic means, the ECRs (Regulation 9(1)) require the following information to be provided in a clear and unambiguous manner:

• different technical steps necessary to finalise the contract to the effect that recipients understand each step of the process, what is involved, and the exact stage at which they will be committed to fulfilling the contract
• whether the service provider or seller will file the finalised contract. This requirement applies only where contracts are made with services provides in Member States with the “filing” legal principle requirement with respect to contracts
• how the purchaser may identify and correct input errors made during the placement of an order
• the languages made available for the finalising of a contract
• links to any codes of conduct to which the business subscribes
• an email acknowledgement of the contract

Where a contract is commenced online but concluded and finalised offline, these informational requirements will not apply.

For electronic orders made and concluded online, sellers need to acknowledge receipt of the order without delay through electronic means and include a step that allows the buyer to identify and rectify any input errors before the order is placed and finalised.

Consequences of Breach

As mentioned above, a breach of the rules could result in an action for damages and/or an invalidation of an online contract. If a breach negatively affects all consumers on a large scale, regulatory bodies empowered to do so may order a Stop Now Order. For example the Office of Fair Trading or another consumer-protection body can apply to the courts for enforcement orders. A failure to observe the Stop Now Order can result in fines and/or imprisonment.

Conclusion

In conclusion, it is useful to remember that while the ECRs are the main provisions that ISPs, E-Commerce businesses and businesses undertaking online marketing need to be aware of there are other consumer law and contract law that regulate the buying and selling process. 

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