Earlier this month the Office of Fair Trading wrote to 62 of the top online retailers in the country to let them know their website may not comply with consumer protection law.
The OFT checked 156 websites and found almost 60 per cent of the online stores were not up to scratch. And these are some of the biggest retailers in the country, it's feared that the percentage of small businesses with non-compliant websites could be even higher.
This in itself is not surprising news. It's well known in the industry that many retailers are struggling to come to terms with consumer laws in the UK as well as EU regulations. These are constantly being updated and altered and it can sometimes feel like a full time job just keeping up-to-date with it all. This is obviously difficult for most internet retailers, and impossible for others.
We also know that cross-border selling can be incredibly important to the growth of small UK businesses who want a piece of the European online retail market, worth nearly £170 billion a year. Any retailers looking to sell in foreign markets will have to deal with the added wrinkles of international, EU and local laws.
All online retailers should be aware of exactly what their responsibilities are, but shouldn't let regulations get the better of them. There are a few simple things to be aware of that will help your online retail business thrive, and ensure you don't get any nasty letters from the Office of Fair Trading.
Cross border selling is very much a case of the customer getting the best of both worlds. If nothing is agreed prior to a purchase, the law that governs the sale is the law applicable in the country where the consumer has residence. For example, if your website was based in Birmingham, England, and sold something to a German based consumer the sale and consumer regulation will be covered by German law.
So, the consumer's cooling off period (the time he has to cancel the sale) will be 14 days, which is the German legal minimum, rather than seven working days, which is the cooling off period in the UK.
Even if there is an agreement on the applicable law, a consumer cannot be deprived local legal protection in his own country. Therefore the laws of the country where the consumer is residing will apply to the transaction if the law of the supplier's country is less favourable. Conversely if the retailer's country had more favourable laws, the consumer can choose to be covered by those instead. If you're in the UK and buy from a German website, you could in theory insist on a 14 day cooling off period.
Naturally it's absolutely vital that any retailers are full aware of these facts, and the issues that can arise, if they plan on selling to foreign markets.
Compliance with consumer protection laws is essential to build up trust in online retailing - and trust means more visitors, fewer abandoned baskets and greater revenues. What retailers must remember is that consumer protection laws are different throughout Europe, for example cancellation periods vary widely. Since cross-border commerce is becoming more and more important for online retailers, the European Commission is working with the private sector to create a standardised EU trustmark for online shops, which will help all retailers operate throughout Europe.
What can go wrong?
As you can probably imagine there's a lot more to be worried about than sternly worded written correspondence. If online retailers fail to comply with their legal obligations to consumers, enforcers such as the Office of Fair Trading have the power to apply to the courts for an enforcement order to stop retailers from breaching legislation that harms consumers. If the retailer does not comply with the enforcement order this could lead to a fine or imprisonment. This is, of course, absolute worst case scenario but it is a serious issue.
If you're not sure if your online shop complies then get an external audit and accreditation to ensure your website is compliant with local consumer laws and regulations across Europe. By seeking help of this kind retailers will avoid getting unpleasant warnings from the likes of the Office of Fair Trading and, importantly, consumers will be able to trust in the service the website offers - regardless of their location.