New dawn for online traders under the E-commerce Regulations

With the continuing exponential growth in E-commerce, legislators worldwide have been playing catch-up to provide a workable legal platform which meets the needs of traders and consumers alike.

On 21 August the long-awaited E-Commerce Regulations will come into force in the UK. Following much consultation and discussion the government has finally given the green light to implementing the EU’s 2000 E-Commerce Directive and with it comes a raft of reforms which seek to promote e-business in the European marketplace and help build consumer confidence and protection.

The Regulations will apply to all ‘information society services’ – that is, any service provided for remuneration at a distance by electronic means at the request of a recipient. They address four main areas:

  1. Promoting free movement of services and establishment in European E-commerce via ‘reciprocal recognition’. Pan-European traders need only comply with the laws of the Member State in which they are established – not the laws of all 15 States in which their products or services may be marketed. The policy behind this approach is to counteract trader uncertainty in dealing online. In turn, this should help to reduce costs (through reduced compliance) and broaden the marketability of services.
  2. Subjecting electronic contracts to certain transparency requirements. Traders will be obliged, during the process of placing an order, to inform customers how to conclude the contract and give them ample opportunity to correct mistakes. In addition, traders must give full details as to prices (and VAT) and delivery charges, as well as basic information concerning the business itself – i.e. full contact details, details of membership of any trade organisations etc. Traders are also obliged under the Regulations swiftly to acknowledge receipt of any order placed by a consumer.
  3. Making commercial communications by email (i.e. direct marketing/advertising) clearer and more easily identifiable. The Regulations provide for promotional offers to be identified as such and that any qualifying conditions must be presented clearly and unambiguously. Also, all unsolicited communications (‘spam’ and ‘junk mail’) must be readily identifiable to enable deletion without recipients needing to open them (e.g. having a specific message on their ‘envelope’ etc).
  4. Finally, the Regulations seek to limit the liability of third party intermediaries that play a passive role in the delivery of information services. The Regulations provide protection against criminal and civil liability where the party is a ‘mere conduit’ such as a company owning telephone lines. In addition they protect against the activity of caching where data – such as web pages – is temporarily copied to reduce downloading times, and provide limited protections for service providers such as ISPs, those running chat rooms or bulletin boards and those hosting sites who may store and display website content which is potentially libellous or obscene etc. Such parties will no longer be liable provided they have no actual knowledge of any unlawful activity or they act expeditiously in removing such information if they become aware of it.

The Regulations have been welcomed by consumer, business and advertising organisations – indeed there is little doubt that they will add a degree of certainty to an area of trade that has seen a relatively ‘hands-off’ approach from the government to date. However, all interest groups have been quick to point out that more could be done to benefit them.

What we have here then is likely to be first generation. With the likely changes in e-commerce and the anticipated arrival of full-scale m-commerce and the introduction of 3G technology, we can expect these core principles to evolve as technology becomes ever more sophisticated. For now, however, it’s time for online traders to do some housekeeping and ensure they are compliant.

Bulletins are for general guidance only. Legal advice should be sought before taking action in relation to specific matters. Where reference is made to Court decisions facts referred to are those reported as found by the Court. Please note that past bulletins included in the Archive have not been updated by any subsequent changes in statute or case law.