Business Law & Compliance
Legal advice for selling online to Europe
7 min read
10 September 2013
Compliance with consumer protection laws is essential to building up trust in online retailing – and trust means more visitors, fewer abandoned baskets and greater revenues.
Yet consumer protection laws are different throughout Europe. They also seem to be constantly updated making it tricky for e-retailers to keep up.
So, if you’re a small business wanting to sell online and distribute across the EU, and who wouldn’t – the market is worth €36bn this year – what rules and regulations do you need to adhere to?
Below are a few simple things to be aware of. They could help ensure you don’t receive letters from the Office of Fair Trading and stay on the right side of both UK and EU regulations.
Cross-border laws and cooling off periods
Cross border selling is very much a case of the customer getting the best of all worlds. The law of each member state is based on European directives. For example, the Distance Selling Regulations is a set of laws in the UK created to govern distance selling, but while legal regulations in EU countries are similar, there are differences that retailers need to be mindful of.
If nothing is agreed prior to a purchase, the regulation that governs the sale is the law applicable in the country where the consumer is resident. For example, if your website was based in Birmingham, England, and sold something to someone in Germany, the sale and consumer regulation will be covered by German law.
This is important in terms of consumers’ rights to cancel. All EU retailers need to offer this right, however, and the cooling off period (the time the customer has to cancel the sale) differs from country to country. So, the German consumer’s cooling off period 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 a retailer sets out different laws that will govern the contract (for example, puts a shorter cooling off period in the ‘terms and conditions’) a consumer cannot be deprived local legal protection in his own country. Therefore, the laws of the country where the consumer is resident will apply to the transaction if the law of the supplier’s country is less favourable.
Conversely, if the retailer’s country has 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 if nothing else has been agreed on.
It’s also worth noting that the right to cancel cannot be restricted by onerous clauses. This means that if a consumer wants to return goods, he is entitled to a full refund. Many retailers include clauses that exclude the cost of sending the goods to the customer from the refund. But this is not permissible.
In the UK and most European countries, only the direct cost of returning the goods to the retailer may be imposed on the consumer. There are even countries like Germany where the consumer has to bear the cost of returning the item only up to a return amount of 40 EUR or like Finland where retailers cannot impose any cost of returning goods on the consumer. Similarly, no standard deduction or surcharges for exercising the right to cancel may be imposed on the consumer.
Another important aspect for e-retailers is data protection. Retailers can use customer data for any purpose related to processing the order but if they want to forward customer data to third parties they need to get the customer’s consent. This applies if you want to share customer data with your partners so that they can send a newsletter to your clients.
How can you make sure you comply?
All retailers need to make sure that they fulfill their legal obligation. You should ensure that your online shop complies with the most relevant ecommerce laws by getting an external audit and accreditation from trusted third parties to show your website is compliant with local consumer laws and regulations.
If your business processes personal data it is worth checking in with the Information Commissioner’s Office (ICO) as there are free tools that any retailer can use to conduct a quick self-assessment on the website.
It’s also worth visiting government or private institutions like the Office of Fair Trading website, and its Distance Selling hub, where you’ll be able to find practical information and checklists to help ensure your online store is legally compliant.
In the European Union, the responsible bodies are consulting on the promotion of cross-border commerce. The two central pillars of the promotional package are: a universal standard for providers of trustmarks and the unification of consumer protection laws.
The new EU Directive on Consumer Rights will come into force in all EU member states in July 2014. The uniform trustmark standard and unification of consumer rights are intended to make it easier for EU citizens to shop securely online in any state in the EU.
In the meantime online retailers should be aware of exactly what their responsibilities are if they plan on selling to foreign markets but shouldn’t let regulations get the better of them.
Phillip Smith is UK country Manager of Trusted Shops.