Selling goods over the internet, like any other form of selling, is covered by legislation regarding Sale of Goods and Misleading Advertising. In addition, Internet sales in the UK are covered by the Consumer Protection (Distance Selling) Regulations 2000. These regulations also apply to other forms of distance selling such as digital TV, mail order (including catalogues), phone and fax.

The Distance Selling Regulations do not apply to financial services, sales of land, products bought from vending machines and contracts for goods or services concluded at auctions. Nor do they apply to business to business transactions

As an online trader you must provide clear, understandable information before the customer decides to buy about:

• your name and postal address
• a description of the goods or services
• the price including all taxes
• delivery costs where they apply
• arrangements for payment
• arrangements and date for delivery
• the right to cancel the order
• how long the offer or the price remains valid

This should include information on how the right to cancel can be exercised and any details of after sales service and guarantees.

If you are selling goods, this must be provided at the latest by the time the goods are delivered.

If you are selling a service, it must be provided before or in “good time” during the performance of the service. Where the service is open-ended, e.g a mobile phone contract, the customer must be provided with details about how and when they can terminate the contract.

If you do not provide this information, the customer’s right to cancel the order can be extended by 3 months

Fortunately, most e-commerce packages come with the ability to send automatic confirmation emails on reciept of an order – however, you should make sure that this feature is enabled. Bear in mind that much e-commerce software originates in, or is aimed at the US market, so you will need to be able to configure the confirmation emails to meet the legal requirements.

No Contracting Out

You cannot insert into the contract any terms which attempt to remove the customers right under the regulations, e.g. a term like “you must return the goods within 7 days in order to obtain a refund” would have no legal standing.

Cooling off period – the customers right to cancel

Because the customer has not had the chance to physically examine the goods before the sale is made, the distance selling regulations allow a cooling off period of 7 days in which the customer has the unconditional right to cancel the contract. Note this is 7 working days, so excludes Saturdays, Sundays and Bank Holidays (even though your e-commerce site is working 24x7!)

In the case of services, the 7 days begins as soon as the order is made; in the case of sale of goods, it begins when the customer receives the goods.

If you delay in providing the required written confirmation of the order including details of the right to cancel and how to exercise that right, the cooling off period is extended by up to 3 months, and ends 7 days after the customer receives the confirmation. If you fail to provide the information at all, the cooling off period is extended to the full 3 months, plus the 7 days.

If the customer decides to cancel the contract, they must notify you in writing, including fax or email; a telephone call will not do. The date of the cancellation is the date when the notice was sent to you, not when you receive it, so a customer could decide to cancel on the 7th day, even though you may not receive the notice until a day or two later.

Some goods and services are excluded from the right to cancel. These include:

• Food, drinks or other goods for everyday consumption delivered to the consumer’s home or workplace by regular roundsmen. Deliveries by supermarkets of orders made over the internet are not excluded from the right to cancel.
• Accommodation, transport, catering or leisure services where the supplier agrees to provide the service on a specific date or within a specific period.
• Goods or services whose price depends on fluctuations in the financial market which cannot be controlled by the supplier.
• Goods made to the customer’s specifications or clearly personalized.
• Goods which by reason of their nature cannot be returned or are liable to deteriorate or expire rapidly, such as perishable foods.
• Audio or video recordings or computer software if they are unsealed by the consumer.
• Newspapers, periodicals or magazines.
• Gaming, betting or lottery services.

When a consumer cancels the order all money paid must be returned within 30 days of the date the notice of cancellation is given. Normally this will mean re-crediting the consumer’s credit card (or other payment card) account if that was the method of payment used.

If the customer has paid a delivery charge, you must also refund that, unless it is the subject of a separate contract.

You can specify as part of the contract that goods must be returned at the customers expense, however, this must be made clear in the written confirmation

When a customer exercises their right to cancel, ownership of the goods reverts to you; the customer then has a duty to take “reasonable care” of the goods so that they can be sold again as new, and to make them available for collection, or return them if that is specified in the contract. You must inform the custome within 21 days when you will collect the goods from them

If it is the customers duty to return the goods and they do not do so, you are entitled to deduct the cost of collecting them from the amount of the refund, but only the actual cost, whether it be the cost of postage, or the cost of sending a van to collect them.

If the customer unreasonably fails to return the goods or make them available for collection, the duty to take reasonable care of the goods is open ended until they are restored to you – if they do not take care of the goods, you are entitled to claim for the loss in value.