With the ease of setting up an online store in the 2020s, it's easy to imagine you can't go wrong by just shipping goods to customers and offering common-sense customer service. It turns out there's quite a lot of laws and regulations which directly effect online sellers and can trip you up if you're not on top of things.
Unless you have a particularly risky or controversial product, you probably don't need to hire a lawyer to explain everything to you. But you do need an overview of the rules that might affect your operations - good news, you're reading it (Part 1!).
This article aims to give a general overview of the two main sets of rules for online sellers operating in the UK: the Consumer Contracts Regulations (2013) and the Consumer Rights Act (2015). Further rules and regulations will be discussed in a later articles.
What I won't cover here tax, as it's such a massive area in its own right, so I'll write separately about that.
Standard caveat: I'm not a lawyer and have no legal training. What I do have is over 12 years experience in ecommerce in the UK and elsewhere, as a brand owner and operator, and more recently as the owner of a 3PL specialising in foreign ecommerce sellers in the UK. On the downside, that means you can't take anything here as legal advice, and you should do your own research to complement reading this article. On the plus side, what I write is readable and born from real life experience.
These were formerly called the ‘Distance Selling Regulations’ but were updated in 2014. The law gives customers a right to cancel any order for goods, starting from the moment the order is placed, until 14 days after they receive those goods (after they receive the last of a batch, if their order consists of multiple goods arriving at different times). The 14 days is the time customers have to decide whether to cancel, and they then have a further 14 days to actually return the items.
Basically, the customer can change their mind for any reason - they don't even have to give you a reason - within these timeframes, and has a right to a refund soon afterwards.
The retailer is obliged to give the customer a refund within 14 days of either receiving the items back, or receiving evidence of the goods being sent, whichever is sooner. Any refund needs to include the cost of standard delivery, assuming this was initially paid by the customer, but not the full cost of an upgraded shipping service even if they paid for one.
Note that in situations like this where the customer has simply changed their mind, you're not obliged to cover the cost the customer paid to return the item, only any standard shipping charge they paid with their original order.
A deduction can be made if the goods have been handled more than would have been necessary if they were being viewed in a physical store.
There are some exceptions to the requirement to accept returns. These include perishable items, personalised items and goods with a seal for health or hygiene reasons where the seal has been broken. We're talking things like underwear here.
The Consumer Contracts Regulations also require anyone selling online to provide certain information. This includes a description of the goods being sold, the total price, how the goods will be paid for, when goods will be provided, information on the returns process and who pays for the return, information on the compatibility of any digital content, and contact details - including a geographic address - for the seller.
All of this makes a user-friendly, information-rich website with helpful delivery information and contact pages as much of a legal necessity as a nice-to-have. Sellers also need to provide ‘confirmation of the contract’: that is, a post-purchase email confirming details of the sale.
Online retailers can only charge customers for items that were actively added to their virtual shopping cart, rather than being automatically added during the shopping process or later, such as a pre-ticked extended warranty box.
Really these regulations are about being a decent, customer-focused online seller. Provide your customers with a user-friendly website rich in information about both you and your product; accept that some people will change their mind for whatever reason about buying your product; and deal with them quickly and fairly if they contact you to do that.
This law mandates that goods must be as described, of satisfactory quality and fit for purpose. And they actually have to arrive with the customer after buying from you.
There’s a default delivery window of 30 days within which to ship goods to the customer, though this can be extended if mutually agreed.
If goods don’t match their description or are deemed to be faulty, the customer has a right to return them for a refund and doesn’t have to pay the cost of shipping for the return. This is different from the customer just changing their mind as described in the section on the Consumer Contracts Regulations, where they're responsible for the costs of return shipping.
The Consumer Rights Act also makes retailers responsible for the condition of goods until the point they’re received by the customer. You might have a claim against a courier company if goods are damaged or lost in transit, but the courier company is off the hook when it comes to responsibility for dealing with the end customer.
That might sound unfair as it's not your fault if you sent out an order in good condition. But from the customer's point of view, it's even more unfair if they don't receive what they paid for.
The law essentially places the burden of sorting things out on you the retailer. Your option is either complete responsibility for providing the customer with what you've promised to give them, or to return the customer to the financial state they would have been in had they not entered the contract of sale with you in the first place.
There are potentially some grey areas in these rules. For example, if a customer enters an incorrect or incomplete delivery address, either in error or through negligence (browser autocomplete functionality makes this surprisingly common, with customers often missing house numbers or first lines of addresses). The customer demands the goods but they've been lost due to the customer entering incorrect information.
Fairness would imply that the customer should take some responsibility here, but the banks and credit card companies - in their willingness to conform to the Consumer Rights Act and protect their own clients - have a habit of siding with the customer should they request a refund, unless you have proof the goods have arrived with the customer. If it gets to this stage, you can expect to pay an administration fee to your payment provider in addition to the pain of the refund and lost goods.
It's best therefore to be proactive here and after trying to work with the customer to locate a misdirected package, you'll probably want to take the hit and resend the goods (having triple-checked the delivery address of course!).
Bear in mind your shipping labels should have your return address on them, so you should hope to receive undelivered goods back from your courier. Eventually.
3PL shipping label software should automatically check the validity of postcodes, but normally doesn't verify things like house numbers or incomplete address first lines. You can pick these types of errors up through visual checks, but it might not be worth the costs of having a formal process for this.
If you're selling higher value goods, you should implement an order checking process that will minimise the chances of address errors occurring. If your average order value is fairly low, you should see losing out on the occasional resent order to be simply the cost of doing business as an online seller.
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That's an overview of the two main sets of laws covering online selling in the UK. These apply to everyone selling online, regardless of size, and you should see them as a baseline level for your customer service to follow. It doesn't hurt to go above and beyond these though if you want to make excellent customer service a selling point of your brand.
In a follow up post, I'll look at additional regulations like GDPR, intellectual property and other product specific rules.
