Opinion

IT chiefs urged to check sales processes as OFT turns spotlight on distance selling

James Mullock explains the legal requirements affecting online and telephone sales.

In October 2003, the Office of Fair Trading published a consultation paper aimed at the IT sector explaining the legal obligations for businesses selling goods or services to people at a distance, whether over the internet, by phone, fax or SMS.

The paper, which closes for consultation at the end of January, aims to encourage companies that are not meeting minimum legal requirements to change their ways.

As the OFT has the power to publicly require sales processes to be changed and can impose fines on companies which fail to comply, businesses are advised to ensure their systems meet these detailed requirements.

All online sales processes must meet minimum standards under the Electronic Commerce (EC Directive) Regulations 2002. For example, customers must be provided with details of the seller's full name, VAT and company numbers, and its full postal address.

Clear price details (including delivery charges, discounts and applicable taxes) and terms and conditions must be provided, the latter in a form that the buyer can easily store. Receipt of orders must be acknowledged without undue delay.

However, it is contracts that are not made face-to-face with consumers that are most heavily regulated. Among other requirements, clear and precise information about an offer must be made available to potential buyers and orders must be confirmed via a durable medium, such as e-mail.

The OFT has some big name scalps under its belt from other sectors and so its interest in the IT sector should not be taken lightly.

Some of the clauses typically included in consumer IT contracts, which the OFT has identified in its consultation paper as failing to meet required legal standards, may surprise you.

They include: clauses allowing suppliers to vary price, specifications or products without notice; software terms and conditions which must be accepted by a consumer before he/she has been able to access them; and clauses excluding public statements (such as those on websites) from a contract. There are many more.

Whatever the result of the OFT's consultation, if you have not carefully reviewed your sales processes recently, now is the time to do so. A sensible plan for IT directors to follow would be:

First, check all sales literature and your contracts, online and offline, using the OFT's consultation paper as guidance.

Second, consult with legal and business departments about the impact of any potential breaches of trading law and then finalise any changes to sales literature or call centre scripts to ensure they meet the minimum standard of fairness and transparency.

Finally, ensure sales and customer relations departments understand the significance of any changes made.

James Mullock is a partner at law firm Osborne Clarke

The OFT's consultation paper, IT Consumer Contracts Made at a Distance, can be found at 

www.oft.gov.uk/news/publications/leaflet+ordering.htm

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This was first published in January 2004

 

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