Striking gold for compliance: the legal know-how for ecommerce
By Naveen Aricatt, UK legal expert at Trusted Shops
One of the great things about ecommerce is that it abolishes nearly all geographical boundaries. Customers spread across the globe can access the same online shop across a range of devices – pay for an item in one country and receive it in another. Even if their home is on the other side of the world.
Yet, what can often create confusion is the legal implications for retailers when operating across multiple markets. Not only retailers established in an EU member state must comply with EU regulations. There are also agreements between the EU and third countries that require those foreign businesses targeting European consumers to observe EU regulations, like it is the case with Switzerland for example.
Olympic fail for the IOC
In the run up to the Summer Games, Trusted Shops identified the cracks in legal compliance when it conducted an audit of the prestigious online store of the International Olympics Committee (IOC). It found that at present it is in compliance with only a fifth of criteria for EU consumer protection laws, thus failing to meet 80 per cent of rules pertaining to data protection, pricing, delivery and cancellation.
These shortcomings should serve as a serious warning. In a world where negative feedback can be easily documented across social media platforms and online forums, brands are open to widespread criticism if they fail to provide adequate customer service.
To keep up with the legal nuances across markets and ensure compliance, working with third parties and legal consultants can be particularly helpful. This starts with understanding what rules apply and how retailers can adhere to them without interrupting service. Data protection, cancellation policies, pricing and delivery options are just some of the key areas that need to be corrected.
In order to record and collect browsing activity and arbitrary customer information, EU laws stipulate that retailers must obtain the consent of the consumer. Given that the IOC failed to do this, it was in breach of this law, contributing to its shortcomings within the recent audit.
The right to cancel
Despite the harmonisation of EU legislation two years ago, many UK retailers still fail to provide consumers with the correct right to cancel information. Much like the case of the IOC, retailers often enforce inadmissible restrictions and fail to provide sufficient information about cancellation rights. The best way to avoid this confusion is to include the adapted instructions for cancellations outlined in the Consumer Contracts Regulations (in the general terms and conditions) or by providing a link to the detailed cancellation policy in the footer of the webpage.
The price tag
For retailers operating in multiple markets, the correct and complete pricing information needs to be stated, including gross prices (which are inclusive of any additional charges) When dealing with foreign currencies other than the euro the grounds for currency exchange rates need to be clearly explained. The IOC only gave prices in Swiss Francs– which could easily lead to confusion for European customers.
Online retailers must be transparent about delivery options, including suggested timelines and locations. They must also refrain from applying any terms that are intended to be ‘non-binding’. For example, the IOC reserved the right not to deliver goods if they were ‘unavailable’, despite an indication of their availability on its website. It also failed to provide details of where it can deliver goods to, therefore breaching delivery guidelines.
The ordering process
Customers must be made aware that when they submit an order by clicking the buy button, they are entering into a contract with an obligation to pay. The correct labelling of the buy button is crucial, otherwise the online deal is void. The IOC’s buy button was not named correctly and thus failed to provide this information, making no mention of any valid contract being concluded with the consumer.
Compliance means customers
Today’s consumers expect instant gratification and convenience when they shop. Preventing them from making and receiving purchases due to insufficient pricing information or confusing delivery guidelines can easily deter custom.
Complying with the law is about more than just avoiding a fine – it’s the difference between winning and losing consumer trust and future-proofing long-term sales. In the age of social proof, brand reputation is critical in not only attracting new customers, but retaining those who already exist and ensuring that each sale happens without a hitch.