Online business Toolkit

Watered down EC Directive

Tags:
Regulations,
E-tailers,
Parliament,
Service Provider

John Enser and Clive Gringras, Olswang ZDNet.co.uk

Published: 26 Sep 2002 10:27 BST

The long-awaited Electronic Commerce (EC Directive) Regulations 2002 came into force on 21st August. Additional sanctions for breach of the Regulations will kick in from 23rd October. The final text contains some significant shifts from the draft issued earlier in the year. In particular, some of the sanctions for non-compliance have been watered down in response to lobbying by e-tailers. The DTI has also issued a revised Guide for Business which clarifies and expands upon the provisions of the Regulations. There is also a shorter, user-friendly guide targeted at online businesses.

In March we reported on the DTI's consultation on the draft Regulations. The final version laid before Parliament on 31st July includes a number of departures from that draft. The main compliance issues which businesses need to address are as follows:

New information requirements for all sites: all commercial sites (whether transactional or not) on the web, iTV or mobile platforms must provide certain minimum information about the supplier, its products and services. If the requisite information is not provided to users "easily, directly and permanently", suppliers could face damages claims. In addition, a Trading Standards or consumer body could (from October) apply to the courts for a "Stop Now" Order to force the site owner to amend its site, or face criminal penalties.

Essential information for transactional sites: the basic details about the supplier, its products and services will need to be supplemented by a raft of new information related to the ordering process (including providing details of the technical steps a customer will need to go through to conclude a contract), the contract and whether or not a customer will be able to access the concluded contract. The customer must also be given the means to identify and correct input errors prior to placing the order and the supplier must acknowledge receipt of the order "without undue delay". Where terms and conditions are made available, it must be in such a way as to enable the customers to store and reproduce them. The revised Guide offers some helpful pointers as to what this means. These obligations apply to B2B as well as B2C transactions, although in a B2B context it is possible to contract out of some of them.

The sanctions originally proposed for failure to comply with these requirements appear to have been tempered in response to lobbying by e-tailers. The risk of inadvertently giving customers unlimited cancellation rights has largely been removed. However, website ordering procedures still need careful review. Extended cancellation rights will still arise if retailers fail to give customers the means to identify and correct input errors and a customer would be entitled to cancel the order and obtain a refund. (A retailer could in theory choose go to court to resist this, if it could show that such a remedy was "inappropriate" in the circumstances). Breaches of the other contract - related requirements still carry the risk of "Stop Now" Orders and/or damages claims.

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