Ensuring Your Business Complies with E-Commerce Regulations

What are the Electronic Commerce (EC Directive) Regulations 2002?

The Electronic Commerce (EC Directive) Regulations 2002 came into force in August 2002 and implement the European Union’s E-Commerce Directive into UK law. The Regulations cover virtually all commercial businesses and organisations, and cover more than just e-commerce.

The purpose of the EU Directive was to achieve clarification and harmonisation of the rules concerning on-line businesses, and to improve consumer confidence throughout the EU. This consumer protection is imperative because of the free movement of trade, goods and services guaranteed by the internal market.

What businesses do the Regulations apply to?

The Regulations refer to an “information society service” which is defined as “any service normally provided for remuneration at a distance, by means of electronic equipment for the processing (including digital compression) and storage of data, at the individual request of a recipient of the service”.

The UK Government has said this is not restricted to selling online or by other electronic or digital means, and includes offering for sale (ie. advertising, online or by other electronic means). This means the following are also covered by the Regulations:

  • Business selling goods or services to businesses or consumers over the internet, or by email or by text messages
  • Businesses advertising on the internet, by email or by text messages
  • Business conveying or storing electronic content for customers, or who access to a communications network

However, direct marketing by telephone, text or fax, etc, is not covered by the Regulations.

If my website is based in the UK, but I sell to other Member States, which legislation?

This depends on your country of origin. Under the basic country of origin principle, if the business and the website is based in the UK, then generally you need only abide by the UK Regulations, even if you sell online into other EU Member States. There are, however, certain qualifications to this principle, most importantly in the case of consumer contracts.

Consumer Contracts

Under EU law, if you sell through a UK based website to consumers, your website must comply with the consumer legislation in each EU Member State to which you sell your products. So if you sell to consumers in Spain, you must comply with Spanish consumer laws – include providing a copy of your terms and conditions in Spanish.

Further exceptions

There are further exceptions to the country of origin principle including:

  • Copyright laws
  • Electronic money (e-money)
  • Unsolicited email (ie. spam)

What requirements do the E-commerce Regulations place on businesses?

Information requirements

The Regulations require the following information to be provided in relation to online selling:

  • The name and email address of the service provider
  • Details of any trade association which the business is part of
  • VAT Number
  • Prices on the website must be clear and unambiguous

UK companies trading online must also comply with the Companies Act 2006, which requirescertain information to be made available on websites:

  • The company’s registered office address
  • Company registration number
  • Place of registration

In relation to email and text message advertising and selling, the following information should be provided:

  • That the communication is a commercial one
  • The name of the person on whose behalf the communication is being sent
  • If the communication is a promotional offer or promotional competition

In relation to text message communications, there is a limit of 160 characters (which often makes it difficult to include all the required information).

Unsolicited commercial communications (ie. spam) must be identifiable by the customer from the subject line of the email, without the need to read the body of the email text.

Contracting online

If you enter into a contract online by electronic means, your customer must be able to print and store a copy of your terms and conditions of sale.

Orders placed online

When consumers place orders online, the Regulations require you to provide the following:

  • Technical steps to follow in order to conclude the contract
  • Whether or not the contract will be filled and how to access it
  • The technical means in order to identify and correct input errors prior to placing the final order
  • The languages offered for the conclusion of the contract
  • If your website is subject to any specific codes of conduct you must provide a link
  • The terms and conditions of sale must be made available on the website
  • Digital receipt of the order must be acknowledged without undue delay (this could take the form of the actual provision of the service)

If necessary, take expert advice from commercial law solicitors who can advise you on the impact of the E-Commerce Regulations on your business operations.