In today’s digital world, many businesses are pivoting to sell products and services online. However, starting and running an online business in the UK requires a strong understanding of the legal framework governing e-commerce. This article explores some of the key legal considerations for an online business trading on a website, including consumer protection and distance selling regulations.
You should note that the rules for online businesses can be complex and vary depending on the nature of your business and its activities. For tailored advice on the specific legal rules your online business needs to follow, contact our commercial law team.
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Why does understanding the legal rules for online trading matter?
Running a business online in the UK means you will be subject to a large regulatory framework, comprising various and often complex legal rules. Compliance with these rules is not just a legal obligation but also vital for building trust and credibility with your customers.
When setting up your business initially, assuming you are trading as a company, you should ensure your business is correctly incorporated and registered with Companies House and the UK Data Protection Regulator if required.
On your website, there is a range of mandatory information you will need to display. For instance, your name, email address, address, company registration and VAT number where applicable.
You may also need to implement various documentation and customer-facing online contracts and policies, such as sales terms as well as privacy terms including a privacy policy.
Failure to comply with your legal obligations can lead to costly legal disputes, damage to your reputation, and in the worst-case fines and even criminal prosecution.
We explore some of the key legal rules common to most online businesses below.
How should your business navigate distance selling rules?
Distance selling, which covers transactions conducted remotely without face-to-face interaction, presents various legal challenges and obligations for businesses.
Distance selling refers to transactions where a business sells goods or services without face-to-face contact, using online platforms, phone, or email. The entire interaction, including the conclusion of the contract, is conducted via distance communication. This includes sales conducted through websites and over the phone.
Key legal rules to follow include the following:
- Consumer Rights Act 2015: This law sets out various rights and remedies for consumers when purchasing goods or services online. For instance, it aims to ensure that products meet certain standards of quality, are fit for purpose, and match their description. For example, consumers are entitled to a refund if goods are faulty.
- Consumer Contracts Regulations 2013: These regulations govern contracts concluded at a distance, including online transactions. They require businesses to provide consumers with clear and comprehensive pre-contract information, including details about the goods or services, pricing, delivery arrangements, and cancellation rights. Consumers also have a statutory cooling-off period of 14 days during which they can cancel their order without penalty unless exceptions apply.
- Electronic Commerce Regulations 2002: These regulations apply to businesses engaged in electronic commerce, imposing requirements on the need for certain information to consumers before and after the conclusion of a contract. Businesses must provide clear and accessible information about their identity, contact details, pricing, and terms and conditions.
Effective distance selling requires strict compliance with these legal requirements and will help your business ensure transparency, fairness, and consumer protection throughout the transaction process.
Some distance selling rules under the Electronic Commerce Regulations 2002 also apply to business-to-business selling via email, text or online. For instance, the requirement to display your business information when selling online.
However, legal advice on the relevant rules for your business is always key as there are certain exceptions to the general rules which apply to distance sales.
Legal considerations and key documents for online businesses
In addition to distance selling regulations, online businesses must navigate a range of other legal obligations.
Some of the key legal issues and considerations for an online business include the following:
- Do you have website terms and conditions?
Your website must have clear terms and conditions to protect your website content and intellectual property. These terms often include provisions such as copyright notices, trademark protection terms, disclaimers, terms regarding the use of user-generated content, and prohibited uses of the website. These terms are vital to protect your business from potential liability from its website visitors and users. - Have you considered a privacy policy and data protection rules?
With increasing customer data privacy concerns, safeguarding customer data is critical. Compliance with the UK GDPR and Data Protection Act 2018 are key for every online business.
Assuming your business acts as a data controller, a comprehensive privacy policy is essential for complying with data protection laws. Businesses must provide detailed privacy policies explaining what personal data is collected, its uses, who it is shared with, retention periods and data subject rights.
Alongside publishing a compliant privacy policy, your website should implement strong security measures to protect customer data and avoid harmful personal data breaches. - Have you published robust e-commerce sales terms?
Clear and comprehensive e-commerce terms are essential when you are selling online. These terms should cover key provisions around the sales of your products or services, including payment terms, delivery times, any return policies, terms limiting your liability and any warranties. These terms require careful thought and consideration, particularly for consumer customers as consumer law is consumer-friendly and offers consumers a range of protection. See more about consumer protection law issues here. You must also ensure that any online e-commerce sales terms are legally binding. For more information on these sales terms, see our article. - Are you aware of electronic marketing and advertising law rules?
The Privacy and Electronic Communications Regulations (PECR) govern electronic marketing activities, including email marketing and the use of cookies. It is vital that any website marketing opt-in forms comply with the PECR requirements.
There are also stringent laws which apply to the advertising of goods or services online. Legal rules prohibit unfair practices such as misleading actions and there are also rules about advertising and marketing claims on a company’s website. - Do you need a cookie policy?
If your website uses cookies, you should publish a PECR compliant cookie policy explaining their use. This includes detailing what cookies are, their use, how long they last form and how users can manage or disable them.
Consent will be needed for your website’s use of any cookies other than non-essential ones. Consent is often collected through a PECR compliant cookie banner. Businesses have been subject to heavy regulatory scrutiny and enforcement action for getting this wrong.
You can find more information on other typical legal documents for an online business here.
What legal steps should your online business take?
Running an online business in the UK comes with various legal obligations that your business will need to carefully review and action. By complying with these vital legal obligations, your business will be well-placed to protect itself and avoid significant legal risks.
However, navigating the legal rules for running an online business in the UK requires a comprehensive understanding of the relevant laws and how they apply to your business. You will need to determine whether your customers are business-to-business (B2B) or business-to-customers (B2C), as this will impact the type of documentation required. The legal rules which apply to your business will depend on various factors. For instance, which customers do you target and how do you use personal information and cookies?
Understanding these rules can be complicated and working with a specialist commercial law solicitors can offer invaluable guidance and help safeguard your online business from risk. This article has covers key guidance, but there are a range of regulations governing online trading and specialist legal advice is highly recommended.
