As part of our look at the post lockdown picture, this week we are looking at things to consider when pushing an online trading presence and the latest picture from the Office for National Statistics (ONS).
To start the the latest headlines from the ONS are:
- Of the 6,114 businesses in the UK that responded, 77% indicated they were continuing to trade, with little difference between the countries within the UK (with 78% of businesses in England, 78% in Scotland and 76% in Wales continuing to trade). Overall, this is slightly up on previous figures and differed little between the size of businesses when assigning them to one of two groups: those with fewer than 250 employees and those with 250 employees or more.
- Of those businesses that responded, the main sectors reporting temporarily closing or pausing trading were the accommodation and food service activities sector (81%) and the arts, entertainment and recreation sector (80%).
- Professional, scientific and technical activities (97%), information and communication (95%), health and social work activities (94%) and the administrative and support service activities (92%) sectors had the largest proportion of businesses responding to state they continued to trade.
- Of the 4,690 businesses continuing to trade, 58% reported that their turnover had decreased, while 30% reported that their financial performance had not been affected.
- At a country breakdown level, 57% of businesses reported a decrease in turnover in England, compared with 62% in Wales, 59% in Scotland and 57% in Northern Ireland.
- Of those businesses who were continuing to trade, (4,690, businesses), the main sectors to have reported that their turnover decreased by more than 50%, relative to the sample within each industry, were the accommodation and food service activities sector (57%) and the arts, entertainment and recreation sector (51%).
- The main sectors to have reported that their turnover increased and were continuing to trade relative to the sample within each industry were the wholesale and retail trade (9%) and the accommodation and food service activities (7%) sectors. The increase in turnover for those businesses within the accommodation and food service activities sector has mainly been driven by an increase in takeaway services.
- Of businesses continuing to trade, 19% of the workforce had been furloughed in the period 6 April to 19 April 2020.
- 73% of the workforce were still working as normal for the period between 6 April and 19 April 2020.
- Less than 1% of the workforce were made redundant for the period between 6 April and 19 April 2020.
- The most popular government schemes applied for were the Coronavirus Job Retention Scheme and the Deferring VAT Payments Scheme, at 67% and 56% respectively. The impression sees to be that after a slow start, this seems to be trickling through and getting quicker and more effective as the weeks pass.
Looking at the above, it seems self-evident that Coronavirus has changed the way we all live and work. What will be interesting to note is how the world economies change as given the scale of this, the impact on relative economic positioning may not be as pronounced relatively speaking.
Businesses from what we see have responded in a values driven and flexible way with many businesses focusing on pushing their digital agenda and online offering. This is a fast paced and quick changing environment and getting it wrong can have potentially serious consequences (for example, unenforceable contracts, criminal liability, enforcement action from regulatory bodies plus the reputational damage), so it matters to get it right.
We have set out below some key legal issues when selling online to consumers:
Data Protection
Do make sure you comply in whatever you set up with the all the relevant data protection legislation when collecting and processing the personal data of users/consumers. This includes having privacy notices on your site to post details of what personal data is collected, why and who else may have access to it. Failure to comply on this can lead to investigations, fines and bad PR. There are some good resources on the Information Commissioners website (https://ico.org.uk/) and we offer fixed cost packages to help set up sites with the right terms & conditions plus privacy notices.
Information Requirements
On a similar theme, you must provide consumers with certain information before the contract is concluded, including the name and details of the trader, product specifications and delivery and refund information.
Where you are trading by electronic means, you must make sure that the consumer acknowledges that the order includes an obligation to pay. This means making sure that the button or similar function to make the order is clearly labelled to entail an obligation to pay the trader – i.e. the BUY NOW message. Any ambiguity around this could put a contract at risk of being unenforceable.
Please also avoid pre-ticked boxes which result in the consumer being charged for an item which they did not independently select during the ordering process. This was used in the past to include and charge for extras such as extended warranties that the consumer had not asked for.
Delivery and Faulty Goods
As a general rule, a delivery date should be specified before an order is confirmed, or, if no precise date can be given, then an indication of delivery date/period should be provided based on the trader’s anticipated time for delivery. It is important to inform the consumer about the delivery details, because if the delivery date was essential and the trader does not deliver on time, the consumer could gain the right to cancel and get a full refund.
Delivery of goods ordered online should be within 30 days, unless a longer time period has been agreed and you will not be exempt from the usual standards expected from products sold to a consumer at a shop, simply because they are being sold online.
The Consumer Rights Act 2015 continues to apply for the supply of goods and services online and therefore you should be aware of your obligations. and what remedies (refund, repair or replacement), the consumer is able to ask for within the specified time-frames.
Please remember that trying to include terms in consumer contracts which seek to restrict or exclude a consumer’s rights in an unlawful way will not be enforceable and could open up enforcement action.
The Right to Cancel
In general, for online sales, a consumer has a 14 day cooling-off period to cancel a contract without any financial penalty and without needing to give a reason for the decision to cancel.
However, there are different rules depending on the type of product you are selling. For example, goods, services and digital goods have different rules associated with them when exercising the right to cancel.
For sale of goods, the cancellation period ends 14 days after the day on which the goods come into the physical possession of the consumer (or someone nominated to take delivery on their behalf).
For a services contract, or a contract for the supply of digital content which is not supplied on goods or other physical media, the cancellation period ends 14 days after the day on which the contract is entered into.
However, these time frames can change and certain exemptions gained under certain circumstances. For example, a consumer must give their express consent before digital content can be downloaded. If no consent is given, the consumer and trader must wait 14 days before supply/download.
A failure to provide or comply with the right to cancel provisions can invalidate any right to reduce the cooling-off period, any right to seek payment for services provided during this time or even extend the cooling-off period for over a year.
There are exemptions however from the right to cancel. It is worth taking the time to consider whether your product(s) fall within an exemption before giving consumers information about rights, which they are not entitled to and potentially putting your business under unnecessary financial or administrative risk.
And finally
In addition to the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and Consumer Rights Act 2015, there are other laws which also apply when supplying products to consumers online. These include:
- The Consumer ADR Regulations (which grant consumers rights to alternative dispute resolution, including through the European ODR platform)
- The Consumer Protection from Unfair Trading Regulations 2008 (prevents misleading and aggressive practices, such as saying a product is only available for a limited amount of time when it is not – can result in criminal sanctions, including for directors as individuals)
- The Consumer Rights (Payment Surcharges) Regulations 2012 (which introduced a ban on excessive surcharges)
- The Electronic Commerce (EC Directive) Regulations 2002 (which covers certain information requirements, presenting your website, and ensuring orders are promptly acknowledged)
Depending on the terms of our exit from the EU, these may change and if so, will be the subject of a future update.
In the meantime, we are proud to continue to support our clients in transitioning the way they do business and adapt to the changing times.
Stay safe and well.
Roger
