E-commerce Law Consumer Protection

This lecture will examine legislation protecting consumers. We will look specifically at: –Consumer Protection (Distance Selling) regulations 2000 –Sale of Goods Act 1979 –Consumer Credit Act 1974

Do consumers buy online? Not as much as they could. There are two identified reasons for this. 1. Fear of card fraud 2. Fear of failure on part of trader.

Consumer Protection Europe recognised these reasons some time ago. They issued a Directive across all member states

Consumer Protection In the UK this resulted in the: Consumer Protection (Distance Selling) Regulations 2000 This was passed by Statutory Instrument 2334

To whom do the regulations apply? The Consumer Protection (distance selling) regulations 2000 applies to businesses selling goods to consumers: On the internet or digital television By mail order (including catalogue shopping) By phone By fax

What do the regulations do? The key features of the regulations are: ~ 1.The consumer must be given clear information about the goods or services 2.The consumer must be sent confirmation after making a purchase.

Key Features 3.A cooling off period of 7 days exists 4.There is an increase in the powers of the Trading Standards and the Office of Fair Trading.

Which contracts are covered by the regulations? The regulations apply to every distance contract. This is defined in section 3 as: ~

Any contract concerning goods or services concluded between a supplier and a consumer under an organised distance sales or service provision scheme run by the supplier who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded.

Organised Distance Service In order to be covered by the regulations, the retailer must engage in organised distance selling. A retailer engaging in one off selling will not be covered. How many one off’s will constitute organised distance selling is not yet clear.

The means of distance communication Schedule 1 of the Regulations contain a list of methods of communication that are covered by the regulations. They cover virtually every method of distance selling currently used

Means of distance communication Addressed and unaddressed printed matter. Letter Press advertising with order form. Catalogue Television Telephone, with or without human intervention. Radio Videophone Videotext Fax

Exempt contracts Certain contracts are exempt from the regulations by virtue of regulation 5. These include: ~

Exempt Contracts Sale of Land (not rental agreements) Financial Services (See Schedule 2) Contracts made with a vending machine. Contracts made using a public phone. Auctions.

Prior clear information The seller of the goods or services must provide clear information that will help the consumer decide whether to buy. Regulation 7 of the regulations requires the following information.

The sellers name and address A comprehensive description of the goods The price inclusive of all taxes Delivery costs where they apply. Payment requirements. Delivery dates The consumers right to cancel How long the price will remain valid.

Regulation 8 states that this information should be given by the seller to the consumer in writing at least when the goods are delivered or the services are started, but preferably before. When must this information be given?

The cooling off period Where goods are supplied a 7 day cooling off period exists for the consumer. (regulation 11) Given the aim of the regulations, the main reason for this is to give consumers an opportunity to examine the goods as they would do if they were buying in a shop.

Extensions to the cooling off period If the information required to be given to the consumer as laid out in regulations 7 and 8, is not supplied to the consumer then the 7 day cooling off period extends to 3 months.

Cooling Off – who pays? Who pays for the delivery charges?

Exceptions to the right to cancel Certain contracts do not carry the right of cancellation – unless the parties have agreed otherwise. (section 13) These are: ~

Where the price of the good depends upon fluctuations in the financial markets. Goods made to the consumer’s specific requirements Perishable goods Audio or visual recordings or computer software if they have been opened. Newspapers or magazines Gaming, betting or lottery services.

Credit Card Fraud Regulation 21 deals with ‘payment card’ fraud. Payment card means: ~ Credit cards Charge cards Debit cards Store cards

Where there has been ‘payment card’ fraud in connection with a contract covered by the regulations, the card issuer must recredit the payment card with the relevant amount. Credit Card Fraud

If there is doubt as to whether there was fraud committed, it is for the card issuer to prove that the use of the card was authorised by the consumer. Credit Card Fraud

What is the effect of a breach of the regulations? A consumer may report a breach of the regulations to the Director General of Fair Trading. Where a breach of the regulations is identified, the Director can ask the court for a mandatory injunction to put right the breach.

Sale of Goods Act The Sale of Goods Act covers all consumer sales of goods. There are 4 sections of the Act which are of major importance.

Sale of Goods Act Section 12 This section ensures that the seller of an item has the right to sell that item.

Sale of Goods Act Section 13 This section deals with sale by description.

Sale of Goods Act Section 14 This deals with goods being of the correct quality.

Consumer Credit Act 1974 Section 75 This section allows a card holder to hold the card issuer responsible for a merchant’s breach of contract or misrepresentation. This is only available to Credit Card holders.

Consumer Credit Act Section 75 does not apply to debits made by sellers outside the UK. Office of Fair Trading v Lloyds TSB Bank [2005] 1 All E.R. 843

Electronic Commerce (EC Directive) Regulations 2002 There are 3 important regulations here: Regulation 6 Regulation 9 Regulation 11 Link