Starting an online business? What you need to know.

The unprecedented COVID-19 pandemic has been devastating for millions but has brought with it an opportunity for businesses to consider establishing an online business across a number of sectors. Whilst these are both challenging yet exciting times, it is important that traders who are looking to either start or continue trading online are clear on their legal obligations.

When selling to individual consumers (rather than businesses) via an online shop you must comply with the relevant consumer regulations which include the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (“the Consumer Contracts Regulations 2013”), E-Commerce Regulations 2002 (“E-Commerce Regulations 2002”), and the Consumer Rights Act 2015 (“the Consumer Rights Act”).

The obligations on businesses selling online include the information given to parties before and after an order is placed, the right for consumers to cancel and the quality of the good and services.

Obligations on businesses before an order is placed

Cancellation Rights

When selling online, a business must inform a consumer of their rights to cancel and withdraw from the sale during the cancellation period which lasts for 14 calendar days. The cancellation period entitles a consumer to change their mind about a purchase, cancel the contract and obtain a refund including any standard delivery cost that has been paid to the business. This right to cancel is separate to the consumer’s right to return goods if they are faulty. If a business fails to tell a consumer about their right to cancel, the consumer can cancel at any time in the next 12 months after the purchase. If a business tells a consumer about their right to cancel during these 12 months, a consumer then has 14 days to cancel from when they were told about their cancellation rights. Business professionals should note that a consumer will have no right to cancel during the cancellation period where goods supplied are clearly personalised or made to the consumer’s specification. Further, a business must supply the consumer with a model cancellation form. However, businesses should be aware that whist they are obliged to provide such a model cancellation form, a consumer is not required to use it when cancelling and may cancel the contract by making any other unequivocal statement to the business confirming cancellation.

Returns policy

A business must inform consumers before an online sale if the consumer must bear the postage costs of returning goods following a cancellation during the cancellation period.

Time of payment

A business must make it clear to a consumer at what stage they are entering into the contract with an obligation to pay by using a click button e.g. “Pay Now” or something similarly unambiguous.

Other Information

Other information that a business must provide to the consumer prior to an online sale include:

A clear display on how consumers can pay including delivery options and costs.
The steps available to consumers to correct errors in their order.
The languages available for consumers who intend to place an order.
The business email address.
The business VAT number (if your business is registered for VAT).
A description of the goods, services, or digital content.

Obligations on businesses after an order is placed

Once an online order has been placed, a business must confirm the contract as soon as possible and no later than when the goods are delivered. A business should also be sure to provide a copy of the contract on paper, by email or other format which the consumer can save for future reference. Finally, a business must deliver the goods within 30 days, unless you have agreed otherwise with the consumer.

The Consumer Rights Act makes it clear that goods must be fit for purpose and of satisfactory quality. If goods are found to be faulty, you must give a full refund up to 30 days after the item was purchased. If goods prove faulty up to six months after purchase and they cannot be repaired or replaced, they are entitled to receive a refund.

Should you require any assistance in relation to your legal obligations when selling at a distance, consider taking legal advice. For any more information, contact Pranav Bhanot at Meaby&Co Solicitors (pbhanot@meaby.co.uk).