- Written by
- Saverio Salandra, Partner
Ecommerce is a fast-moving medium for retailers and, whether you have an established online presence or are just starting out, a periodic review of changes in the law and trading regulations can help ensure your business runs smoothly.
‘There are numerous regulations which an online retailer needs to comply with, and we are seeing new rules introduced with increasing frequency’, comments Dr Saverio Salandra, head of Corporate and Commercial. ‘Ecommerce has seen a huge uplift in the past year. So, it is a good idea to keep yourself abreast of legislative changes and ensure they are adequately reflected in your documents and processes.’
Each online store is set up differently and targets different audiences, but for the purposes of trading within the United Kingdom, here are some examples of key areas which you should ensure are up to date:
• Legitimate entity – this sounds basic, but it is both a legal requirement and commercially sensible to ensure your store provides clarity about who customers are buying from. This is especially important to protect against counterfeit brands and fraud. Check your business name, registered office and contact details are up to date. Updating your details will also be necessary if your legal status has changed, for example from sole trader status to a limited company.
• The Consumer (Information, Cancellation and Additional Charges) Regulations 2013 – As a distance seller, there is a statutory list of information you must provide to your consumers, such as a detailed and accurate description of your products, and clear and transparent pricing including delivery charges. It may be tempting to make up your own cancellation policy, but consumers have statutory rights which include a right to cancel within a certain period and there are rules around how to return faulty goods, request replacements and returning cancelled goods. Your returns policies need to comply with the law, and you need to ensure that you are able to handle the processes operationally. For example, if you use a logistics firm for your order fulfillment, they also need to be aware of how to handle returns or order cancellations.
• Using a SaaS platform – It is very common for ecommerce retailers to springboard their business off a platform like Wix or Shopify. It is equally common for retailers to use the platform’s ‘standard’ terms and conditions and policies for their own ecommerce store. Those standard terms and conditions are generic and will not be bespoke to your products or your business. It is very important to have your own set of terms and conditions and related policies. These platforms also often have a limited number of third-party providers (such as mailshot providers or payment processors) which their sites can integrate with. It is prudent to conduct your due diligence on these partners and their policies, terms and conditions.
• Third party functionality and compliance – If you are using a third-party payment processor, then most likely they will have installed plugins to promote compliance with the Payment Card Security Standards. Similarly, if you are using cloud-based software for the storage of personal data or tracking plugins and pixels from social media sites, they should also comply with privacy and GDPR policies. That said, it is always advisable to request these, review them and seek advice from your solicitor so you can understand the risks. Remember that the customer is buying the products from you, not your third-party provider, so they may hold you accountable for any failings in your service supply chain.
• Content check – As you build your site or add new products or even geographic locations, it is worthwhile reviewing and checking your content. Can you still justify the claims you make about your products? Do you still have permission to use all the images on your website? Some image licences only last for a fixed period.
• Advertising and trading standards – Do you have the certifications or accreditations to support those claims? Statements that support your marketing may actually be prohibited by certain laws. For example, if you have a food product that you claim is high in protein, there has to be a certain amount of protein in the product for you to actually say that. It would also be a good idea to check you are compliant with any other applicable legislation relating to advertising and pricing such as the Consumer Protection from Unfair Trading Regulations 2008.
Recent changes in 2021 – VAT and Brexit
A couple of key changes have recently come into effect since Brexit. Consider whether you need to take any action to continue to be compliant.
The first is the loss of protection from the EU eCommerce Directive. This directive allowed online businesses to operate across the European Economic Area (EEA) while only being required to comply with the laws of the country in which they were established. Now you need to comply with local laws on online shipping and may need to obtain prior authorisation in some scenarios. Unsurprisingly, many smaller ecommerce businesses chose to restrict their operations to within the United Kingdom. However, for those with a large market share within the EEA or looking to expand into the EEA, keeping abreast of the legislation requirements and developments in your target markets will be crucial to operating without disruption.
Recent changes to VAT charges on imported goods being sold direct to consumers have also come into effect as of January 2021. While this is likely to impact online marketplace providers more, some ecommerce businesses could be affected, and specialist advice should be sought on your obligations.
Protecting your brand
The nature of online business is that you are always open to reputational risk if your ideas are copied, or your brand is somehow brought into disrepute.
There is also merit in registering your logo or product designs to ensure protection for your intellectual property.
How we can help
Our commercial team can assist you in ensuring you have considered, addressed and implemented all the required legal, compliance and practical steps for your ecommerce business.
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