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Most online traders ignorant of relevant laws

Posted 3 July 2007 at 8:41AM by Simon Dickson in Doing business online

A study published by the Office of Fair Trading says the development of online business has benefits both suppliers and customers; but the OFT found that a surprisingly high proportion of businesses were unaware of the relevant legislation. In some cases, it even found a majority of businesses in certain sectors were in apparent breach of the regulations.

The 176-page report (available as a PDF) shows that awareness of online shoppers' rights is low, among both buyers and sellers, with many business failing to comply with consumer protection laws. But they accept that the lack of a single dedicated source of information, to help firms understand what they have to do, may be a problem.

Businesses told us that guidance on the key legal requirements should be clearer and have a higher profile. While many different sources of advice are currently available, most tend to address separate issues, such as general consumer rights, distance selling obligations, the law on privacy or guidance about online threats and safety. Many organisations said that they would welcome a single clear dedicated source or signpost, to cover all the information needs for internet sellers and shoppers.

Among the specific problems they uncovered:

• 2 per cent of electrical sites, 6 per cent of travel sites and 8 per cent of music sites did not appear to use secure links when collecting consumers' payment card details.
• Most retailers thought they could withhold the cost of outward delivery in the event of a cancellation. And of the electrical retailers who knew there was a right to return goods, nearly half thought they could withhold a restocking or administration fee. In both cases, that's wrong.
• 59 of the 100 electrical retailer sites they checked put at least one condition on consumers' rights to cancel and receive a refund which, depending on the circumstances, may have meant a breach of the regulations.
• A fifth of businesses did not think they had to provide an email address, and a quarter did not think they had to provide a geographical address.
• Two-thirds of businesses said they had never sought advice on their legal obligations.

The annexe to the report offers six tips for businesses:

• Know your obligations.
• Be open and easy to contact.
• Respect consumers' unconditional right to cancel.
• Secure your website.
• Respect consumers' personal information.
• Keep up to date.

OFT chief executive John Fingleton warned that 'if online shopping is to continue to flourish, the awareness and the protection of consumers' rights need to improve.' The report promises to 'develop and implement a strategy employing the most effective and innovative ways actively to raise business and consumer awareness, both directly and by working with third parties.'

Tags: cancellation, consumer protection, consumer rights, ecommerce, oft, refunds

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