Selling online opens up new opportunities and allows you to reach customers from all over the world. But working online doesn't mean you can forget the law or consumer protection rights. Businesses operating in the UK need to follow a number of rules and regulations when selling to online customers. In this article, we will talk about online and distance selling in the UK, what rules and regulations apply, and what you need to do to remain compliant.
What is distance selling?
Online or distance selling is a type of business transaction where the buyer and seller do not physically meet each other, but still exchange goods. The goods may be digital or physical products, such as electronics or food. Businesses can sell online via their website or by using third party e-commerce website like Amazon, Etsy or Ebay.
What information must be shared with consumers before they make a purchase?
Certain information must be presented to consumers, before they consider making online purchases. As a business owner or a marketer, you are responsible for providing the necessary details, and disclosing facts about your business and products such as how much they cost and how long it will take for them to be delivered. The information must be provided to customers in a format which they can save for future reference (e.g. email, paper, pdf, etc.). The full list of information online sellers must provide is listed below:
- your business name, contact details and address
- a description of your goods or services
- the price, including all taxes
- how a customer can pay
- delivery arrangements, costs and how long goods will take to arrive
- the minimum length of their contract and billing period
- conditions for ending contracts
- how they can cancel and when they lose the right to cancel
- if they will still need to pay reasonable costs for using a service after they cancel
- a standard cancellation form, if they can cancel
- conditions for money given as a deposit or financial guarantees
- what digital content does (for example, the language it's in or how to update software)
- the cost of using phone lines or other communication to complete the contract where it will cost more than the basic rate
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What must a seller do after an order has been placed?
Once an online seller has accepted a purchase on their website, they must fulfil the order. If there are multiple items that are part of the order, the seller should prepare all items for shipping together. Orders must be delivered to customers within 30 days unless agreed otherwise. A customer's contract must also be provided to them by the time the order has been delivered.
Can a customer cancel an order?
There comes a time where customers want to cancel an order. It may be because they have changed their mind, lost interest or just decided the item wasn't for them. A customer has the right to cancel their order without providing an explanation 14 days after the order has been delivered. However, these rules do not apply to online goods (e.g. downloadable or streamable content and software) and in this case the online seller must communicate to the customer beforehand that they do not have the right to cancel within 14 days. If the presence or absence of a cancellation right is not communicated clearly to customers then they automatically have the right to cancel within 12 months of the order being delivered.
Which online goods and services are exempt from these rules?
These distance selling rules don't apply to the following goods and services:
- goods and services worth £42 or less
- NHS prescriptions and treatment (free and paid for)
- financial services, for example pensions, mortgages, credit
- the construction of new buildings (but not extensions)
- food and drink supplied regularly (like milkmen)
- package holidays, timeshares and holiday clubs
- contracts to let a property the customer will live in, for example renting a house or flat (although they do apply to estate agents’ marketing services)
- goods bought from a vending machine
- using a payphone or paying to use an internet connection (for example, at an internet café)
- bus, train, flight and other tickets for passenger travel
What other rules must an online seller be aware of?
Businesses that have a turnover greater than £85,000 must register for VAT. VAT (Value Added Tax) is a sales tax that is charged to customers in the UK. VAT registered businesses must submit VAT returns electronically on a monthly or quarterly basis to HMRC under the Making Tax Digital initiative.