The EU recently published the results of an investigation into the online sale of consumer electronic goods in Europe and discovered that over half of the websites surveyed were breaking laws designed to protect consumers.
EU figures indicate the market for online consumer electronics is vast. In 2007 the estimated value of online retail sales of consumer electronics in Europe was £5.9 billion, and 25% of EU consumers who have ever bought anything online bought an electronic product.
The EU investigation was prompted by the statistic that over a third of all complaints regarding online retail sales handled by the EU concern electronic goods.
A total of 369 websites in all EU member states (except Slovakia) as well as Norway and Iceland were surveyed. The survey focused on websites selling six of the most popular consumer electronic goods – such as mobile phones, DVD players, digital cameras and computer equipment. 200 of the largest and most popular websites selling electronic equipment in the EU were tested alongside other websites which had been subject to previous complaints.
Based on previous complaints received, the investigation focused on three key areas:
1. The trader’s contact information;
2. Clear information about the offer; and
3. Clear information about consumer’s rights.
The survey discovered that 55% of the websites tested breached consumer laws. The most common breaches were:
• Misleading information about consumer rights. Typically consumers were not informed of their right to return the product within 7 days without giving a reason. A common problem arose where websites refused to accept the product back, or if the product was accepted back a credit rather than a cash refund was provided.
• Misleading information about the total price. Hidden extra delivery charges was a common issue, as was only informing the consumer of extra charges at the final stage of payment.
• Missing or incomplete contact details of the trader. Typically a trader’s name, address and email address were absent leaving the consumer with few options in the event of a problem.
All of the offending websites will now be contacted and asked to clarify their position or correct the problems identified. If traders fail to amend their websites accordingly it can ultimately lead to a fine and closure of the offending website.
So what is required to comply with online consumer protection laws?
There are a myriad of laws that trading websites must comply with, and often it will depend on the type of product being sold and the customer (consumer or business). The survey focussed on the following principal consumer protection laws.
1. Distance Selling Directive. This Directive dictates a minimum level of information which online traders must provide. This includes the identify and contact details of the trader, the full price (including taxes) of the product, delivery costs, payment and delivery arrangements and an address for complaints.
Amongst other rights, the consumer has the right to send back the product within a minimum period of 7 working days without giving a reason and without facing a penalty for doing so (except the costs of postage and packaging for the return). In these circumstances, the consumer is entitled to a full refund. Additionally, the trader is required to deliver the products within 30 days of the order being placed.
2. E-Commerce Directive. This Directive sets specific online obligations for traders including making sure that the consumer is provided with certain information about the trader and the online sale process.
3. Unfair Commercial Practice Directive. This Directive imposes a broad obligation on traders to treat consumers fairly. For example, traders must display in a clear and intelligible manner the information consumers need to make an informed choice. Traders are forbidden from misleading consumers through acts or omissions concerning their legal rights (such as failing to inform consumers of the right to have a faulty product replaced or repaired).
The multitude of laws which online traders must comply with are intended to promote online trading through enhancing consumer confidence, however, to the unwitting trader they can often pose serious risks and concerns. Many of these issues can be addressed fairly easily in the online sales process and the terms and conditions of sale. Given this and the risk of enforcement action, online traders should be taking compliance with online laws more seriously.