New rules affect every online firm

Jonathon Little


IT directors in e-commerce, retail, financial services and even call centres and Internet service...

Jonathon Little


IT directors in e-commerce, retail, financial services and even call centres and Internet service providers are going to have to be ready to tweak their systems to comply with new government directives on distance selling.

Any business done by Web site, call centre or mail order will use contracts where the supplier does not meet the customer. As e-commerce grows, more agreements will be of this type. The Government has brought in new regulations for distance contracts with consumers - The Consumer Protection (Distance Selling) Regulations 2000, which apply to many agreements if there is no physical meeting with the customer.

The new rules apply to distance agreements, including Internet "click through" terms, with very few exceptions. These are mainly used in auctions, automated vending and financial services.

Any business making this type of agreement will be directly affected by the new rules. They will also make many companies hosting Internet trading sites change their functionality to ensure that their customers can comply.

Under the new rules, suppliers have significant new obligations, most importantly giving set information to their customers and allowing a "cooling off" period for customers to cancel their agreements and recover any payments made. New protections are given to customers using credit cards.

The regulations set out exactly what must be provided. Set information about the supplier must be given before a distance contract is made (for example, on a Web site or in other publicity material). More detailed information must also be given at the time of the contract or shortly afterwards. If this is not done, the cancellation period given to the customer will be greatly extended.

Suppliers must give this information in a set form. Initial information must be "clear and comprehensible". The second set of details must be supplied in a "durable medium" that is available and accessible to the consumer.

These terms are not defined but will probably be interpreted to fit with the way that the contract was made. For example, where an order is made by e-mail, the information can be sent back the same way and stored on the consumer's hard drive.

However, simply making information available on the company Web site will probably not be enough.

Consumers also have a new right to cancel many types of contracts (but not where the goods are perishable or customised) within seven working days of delivery.

However, where the supplier has not provided all the necessary information these periods are extended up to a maximum of three months plus seven working days. Suppliers can recover any goods delivered, but must refund the consumer's payment within 30 days.

Any company with distance consumer agreements needs to comply with these regulations. All advertising materials must set out the right information and the suppliers will need a system to send further information to the customer (this will keep any cancellation period as short as possible).

Suppliers should also consider how they will deal with returned goods. Back-office systems must track whether any consumer has given any notice to cancel and be able to show what information has been given and when.

Even if a supplier is not entering into these distance agreements it will be affected if it hosts e-commerce sites for third parties. These organisations will need to comply with the rules as clients will look to the hosting company to set up a mechanism to allow them to meet their new duties to their customers.

The regulations are detailed and wide reaching. Any IT director working in the e-commerce arena needs to sit down with their organisation's legal officers and make sure the technology is in place to meet the new legislation.

Jonathon Little, is a partner at e-commerce legal specialist Kemp & Co,

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