UK: Strict New Standards for On-line Trading and Advertising

The Electronic Commerce (EC Directive) Regulations 2002 apply to online trade and advertising over the internet, by e-mail or by mobile phone whether the goods or services in question are themselves delivered electronically. The regulations do not apply to goods themselves, the delivery of goods or services not provided online, or to online activities that are not of a commercial nature.

The consultation period on these regulations closed on 2 May 2002 and they are expected to come into force later on this year.

The proposed regulations mean that any business that advertises or sells services on-line risks being shut down unless it complies with the rigorous new standards. The enforcement authorities will be able to apply to the courts for Stop Now Orders to stop infringing web sites from being non-compliant. Companies that breach the regulations could be reported to the Director General of Fair Trading who has the power to issue a Stop Now Order instructing a web site to be taken off line. The courts will also be able to order web sites to publish corrective statements with a view to eliminating the continuing effects of past infringements. Failure to comply with a Stop Now Order will be treated as contempt of court and will be punishable by heavy fines or imprisonment.

The main areas addressed by these regulations are:

1. Identifying and clarifying rules so that both consumers and business have greater confidence about whose laws apply to an online transaction;
2. Ensuring transparency and consistency in the information to be provided by sellers to consumers about themselves, their offerings and how to conclude a contract online;
3. Ensuring consistency in aspects of online commercial communications, such as conditions for unsolicited e-mails; and
4. Limiting the liability of intermediaries who transfer information from supplier to consumer but are not aware of its content.

If a firm sends out an e-mail designed to promote its services, the message will have to make clear that it is a commercial communication and any promotional offers or competitions will need to contain basic information as to the criteria for eligibility and detail all the terms and conditions which apply to it. Also, any unsolicited mail would have to state that it is unsolicited in the subject heading.

Firms which contract with customers on-line would face a number of changes, including the need to acknowledge instructions instantly. Web sites will also have to provide specific information such as the name of the web site owner, the geographic address at which it operates and an e-mail contact address for users and they would be obliged to reply swiftly to all communications received. Where registered in a trade or similar register available to the public, the register in which the web site owner is entered and the registration number or means of identification in that register will also have to be provided. Where the provision of the service is subject to an authorisation scheme, the particulars of the relevant supervisory authority must be provided.

Businesses that contract with consumers on-line will need to acknowledge receipt of an order electronically and without undue delay (although it will not be necessary for receipt of the order to be acknowledged by the same electronic means by which the order was placed), as well as allowing simple means for customers to correct errors prior to placing the order. It must also provide information on the languages offered for inclusion in the contract; the different technical steps required to conclude the contract and whether the contract will be filed and how it will be accessible.

However, the requirements will not apply to contracts concluded exclusively by exchange of e-mail or by equivalent individual communications. Neither do the regulations deal with contract formation itself.

If a web site owner fails to provide the customer with the terms and conditions, fails to acknowledge an order or fails to allow the consumer to correct errors, then the contract will be held to be unenforceable against the consumer.