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Amazon's fourth-quarter move into profit is proof, if needed, that consumers are ready to buy on the Internet. The take-off of the business-to-consumer (B2C) market has, however, highlighted the need to clarify, at an international level, where consumer rights and e-tailer responsibilities begin and end.
The European Commission has prepared legislation to level the playing field, and some directives that come into force this year will affect both Internet retailers and service suppliers.
Changes will influence several key business operations. The E-commerce Directive will define how decisions are made about which country's laws apply to particular transactions, and could influence where companies choose to locate their business centres. Such choices will also be affected by the Brussels Regulation, which will give consumers in one country rights to take action under their own state's law over transactions with a company based in another EU state.
Copyright law will change to improve protections for intellectual property and regulate ownership of online events. Steps to further protect consumers' rights will be introduced under a directive on the sale of goods.
Online trading in financial services will be subject to more stringent controls, giving buyers similar protection to those buying face-to-face. And privacy laws will be tightened up to protect consumers from unsolicited e-mail marketing shots.
The e-marketplace is changing. Some time and effort will have to be expended to make sure systems comply with the new regulations. Computer Weekly asked Simon Rendell, of law firm Osborne Clarke, to detail the effects of some of the key pieces of legislation you need to know about.
Directive on Legal Aspects of Information Society _Services (the Electronic Commerce Directive)
This directive is expected to be implemented into UK legislation during the summer of 2002 with the aim of ensuring the free movement of information society services in the EU. Its effects are far-reaching and, among other things, it encourages member states to promote self-regulation and codes of conduct for e-commerce.
It clarifies the rules about which member states' laws apply to an online transaction and from now on, the control of a service provider will fall within the jurisdiction of the member state where it effectively pursues its economic activity.
A service provider which has servers located worldwide will be deemed to be operating in the country in which it carries out its activities at a fixed establishment for an indefinite period. This could affect where service providers choose to locate their business, with the relative stringency of national legislation around the EU being taken more into account.
Web sites may now need to be reviewed in the light of a number of new obligations that have come into force. The information displayed on Web sites must now include information about the company providing the service (name, address, contact details, where registered, any applicable authorisation scheme, professional titles and VAT number) as well as clear and unambiguous pricing policies.
Service providers must also ensure that they set out all necessary, clear steps on their Web sites to ensure that consumers have no doubt when a contract is actually concluded online and, for the first time, receipt of orders must be acknowledged.
Regulation on Jurisdiction and Enforcement of Judgements (the Brussels Regulation)
This regulation is expected to have direct effect across Europe on 1 March. It applies to disputes arising from cross-border consumer contracts within the EU and provides a framework to determine which country has jurisdiction.
The effect of the regulation is that if a company sells to consumers in other EU states (except Denmark) or if its Web site can be considered to be aimed at such a market, an aggrieved consumer in another EU country can take legal action in their home court and any judgement given will be enforceable in the UK.
The impact of this legislation is that B2C companies may find themselves liable to the judgements of other member states whose laws may carry heavier penalties than those of the UK so it is all the more important for companies to ensure that their business practice abides by EU law as this will limit the risk of infringement.
Financial Services Distance Selling Directive
The Department of Trade & Industry expects this directive to come into force during spring or early summer of 2002. The directive covers all types of distance contracts and it requires companies selling financial services to provide consumers with certain information prior to the conclusion of a contract, such as the general terms and conditions that apply. All such information must be communicated to the consumer either in writing or a form of durable medium before the contract is concluded.
Directive on Sale of Goods and Associated Guarantees
Although the UK missed the initial deadline of January 2002 for the implementation of this directive, it is expected to be implemented in the autumn. The UK must now ensure a higher level of consumer protection for certain aspects of the sale of consumer goods and associated guarantees.
The main impacts of the directive are that it provides EU-wide minimum standards to be met by warranties and also allows for a two-year period in which a consumer, who purchases goods with defects present at the date of delivery from the supplier, may be entitled to a repair, replacement, price reduction or refund.
Draft Directive on Personal Data and Protection of Privacy re: Electronic Communications
It is predicted that this directive will come into _force late in 2002. This legislation will have a great impact on those who conduct marketing activities via e-mail.
The European Commission proposes to make it the responsibility of individual member states to determine whether unsolicited e-mail for marketing purposes should be allowed only with the prior consent of subscribers or whether subscribers should have the right to insist on being removed from mailing lists.
Any legislation will require a vast review of the marketing techniques and information storage systems used by many companies.
Directive on the Harmonisation of Certain Aspects _of Copyright and Related Rights in the Information Society
This directive must be implemented in UK national law before 22 December. It harmonises the main rights relevant to the uses of copyright material in e-commerce, concentrating on rights concerning copying and electronic transmissions (such as digital broadcasting and "on-demand" services). Technological measures used to safeguard rights or identify material (such as copy protection systems or digital watermarks) will also be protected by this legislation.
Member states and the European Union will then be able to ratify the 1996 World Intellectual Property Organisation treaties in the copyright field by implementing a number of obligations arising from these treaties.
The impact of this directive is that major adjustments are necessary to update the current legislation and this will include the introduction of performers' exclusive rights to control "on-demand" transmissions of recordings of their performances over the Internet; more comprehensive legal protection for technological systems and the introduction of protection for electronic rights management information.