In spite of the challenges recent years have presented, a new wave of digital entrepreneurs has emerged in the UK. Emerging technologies, accessible platforms, virtual office services and company formation agents like Rapid Formations have made running a business remotely more achievable than ever. In fact, figures suggest that as many as one in five Brits have started a side hustle since March 2020.
From data protection and GDPR to website terms, consumer rights – including cancellation and return policies – and delivery policies, there are laws that every online business owner must follow.
In this article, we’ll unpack the UK online business legal requirements you must be aware of and share key tools to ensure compliance.
Key takeaways
- Clearly display terms and conditions to protect your business and inform customers of their obligations.
- Ensure transparent pricing, including all fees, to foster trust and prevent customer disputes during checkout.
- Comply with GDPR by obtaining explicit consent and protecting customer data with strong security measures.
While the internet has made starting a business much more accessible, there are still consumer laws and legal obligations that apply to you as an online business owner, and it’s vital to familiarise yourself with them before embarking on your online venture.
In this post, we’ll take a look at the fundamental obligations you need to be aware of when running a business online in the UK. Let’s get started.
What ecommerce regulations apply to UK online businesses?
The “ecommerce regulations” in the UK refer to a combination of consumer protection laws, data privacy requirements, and online trading standards that apply to any business selling goods or services online.
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These include the Consumer Rights Act 2015, GDPR and the Data Protection Act 2018, the Consumer Contracts Regulations 2013, and the Electronic Commerce Regulations 2002. Together, these laws form the legal foundation UK businesses must comply with when operating online.
Transparency and contractual requirements
Transparency is crucial when running any business, and it’s even more important online, where customers aren’t receiving information face-to-face. You must provide clear and accurate details about yourself and your products or services, so that consumers can make an informed decision when purchasing from you.
What company information do you need to display on your website?
Whether you’re selling products through your own website, an online marketplace, or social media, your identity as a business should always be clear, so customers know exactly who they are purchasing from.
As a limited company, you are legally obliged to state your:
- Full company name
- Company registration number
- The registered office address
- VAT number (if applicable)
You should also include contact details, such as an email address and telephone number.
Having this information displayed helps assure customers you’re a real company and allows them to make contact with you directly should they have any concerns, queries, or disputes.
This information is typically positioned in your website’s footer for visibility. Check companies like Vodafone or Ticketmaster, whose homepage states ‘By continuing past this page, you agree to our terms of use’ to see best practices in action. Alternatively, this information may be stated in the seller’s description or contact details on an alternative marketplace or platform.
You can also include this information in your terms and conditions and on your contact page, reinforcing professional credibility.
Why do you need clear terms and conditions on your website?
A terms and conditions policy, also known as terms of service or terms of use, is a legal document designed to protect your company, website, and your customers. It governs the use of your website and the purchase of your goods or services, informing consumers of their legal obligations when using your business.
While terms and conditions are not required by law, they can help protect your company in the event of a legal dispute. It’s therefore strongly advisable to have a policy in place that is readily available to customers.
For your policy to be legally binding, it must be brought to the consumer’s attention during the buying process. State your terms in clear and simple wording that’s easy for everyone to understand. It should be a requirement for customers to view and agree to these terms before proceeding with their purchase. Consider integrating a tick box during the buying process and including a link to a dedicated webpage that houses your terms in full.
To help you word your terms, take advantage of a free online policy generator available on sites like Termly and Shopify. However, we still recommend you consult a legal expert. It’s essential to keep your terms updated with any changes or new information concerning your business for them to remain effective.
3 steps to ensure legal contract formation online
Contract formation refers to the process of establishing legally binding agreements with customers or clients. Forming a contract online essentially follows the same process as it would offline, including the following key stages:
- A clear offer (normally a product or service page)
- Acceptance by the customer (checkout confirmation)
- Consideration (payment by the customer)
Online businesses will need to present clear and specific terms and conditions on their website or platform, demonstrate customers’ acceptance of those terms through actions such as purchases or account creation, and show mutual agreement between the parties involved.
What does this look like in action?
Say a customer takes one or more of the following actions:
- Visits an online clothing store
- Views a product page (the offer)
- Agrees to the displayed terms and conditions
- Places the order by clicking ‘Buy Now’ (acceptance)
- Completes payment (consideration) that triggers an automated confirmation email with the contract details
Once an offer is accepted, you must honour the contract. In the unlikely event that you’re unable to deliver the goods or services agreed upon, due to error or unforeseen circumstances, you must take swift action to rectify this and prevent it from happening again.
Contract formation can be complex, but the key is to communicate clearly throughout the buying journey.
To meet legal and contractual obligations online, all UK businesses must present clear company information, provide accessible and understandable terms and conditions, and ensure valid contract formation through transparent and user-friendly processes.
How to legally present your products and prices online
Selling goods or services online means more than just writing enticing copy; you’re legally required to display specific information about your products, prices, payment, and delivery terms. Let’s break down exactly what you need to show your customers to stay compliant and build trust.
What must be stated in product descriptions?
It’s likely that you already have the necessary details about your goods or services on your website as part of your product promotion. However, it’s essential that the key information can be easily identified and that any features or details not immediately apparent, such as those from a photograph, are clearly stated.
What pricing information is needed?
Your pricing information must also be clearly displayed for all products for sale on your website. This includes shipping fees, VAT, and any other taxes.
Orders and payments: What’s required?
It’s crucial that a buyer explicitly acknowledges their obligation to pay when placing an order on your website.
This can be achieved by implementing clickable buttons with clear wording, such as ‘Pay Now’ or ‘Buy Now’. It may sound obvious, but neglecting these steps or not using transparent wording may result in the consumer not being legally obliged to make payment.
You should also specify the methods by which customers can make their payments. This may include a range of methods such as credit card, debit card, or PayPal.
Delivery obligations for online businesses. When it comes to delivery, always strive to deliver goods and services within the specified timeframe mentioned during the ordering process. This includes processing the order promptly and ensuring efficient shipping or service provision.
Secondly, communicate the available shipping methods and associated costs to customers. Remember to provide transparency regarding any additional fees, such as handling charges or taxes, to avoid any surprises during the checkout process.
Finally, specify any postcodes or locations where delivery is not possible and bring this to the customer’s attention before they commit to payment.
Overall, online UK businesses must ensure that they provide transparent product descriptions, clear pricing (including all applicable fees), straightforward ordering and payment processes, and reliable delivery details to meet their legal obligations and build customer trust.
How to adhere to UK consumer rights and handle disputes
Consumers have rights that are protected by the Consumer Rights Act 2015. This includes:
- The right to receive goods or services of satisfactory quality
- The right to a refund or replacement for faulty goods
- Protection against unfair contract terms.
If a dispute arises with a customer, ensure you have a clear and accessible complaints procedure in place. Consider alternative dispute resolution methods (i.e. resolving complaints outside of court) to resolve issues before they escalate to legal action, such as mediation or arbitration.
How to handle cancellations and returns
Any consumer who has purchased from you online has the legal right to cancel the contract and claim a refund, without reason or justification, within 14 calendar days of receiving the goods. This gives the consumer a chance to examine the goods as they would in a physical environment, such as a shop.
The 14-day cancellation period begins the day the customer receives their goods. If the order is split into multiple deliveries, this timeframe starts from the day the last order is received.
Example of a cancellation in action
A customer orders a bed from an online furniture store on 1 January 2026. It arrives in two separate parcels – one on 4 January and the second on 12 January. The customer then decides the bed is not suitable and cancels the order on 17 January. They return both parts and receive a full refund, as the cancellation falls within 14 days of receiving the final delivery (even though it’s more than 14 days after the purchasing date and the date the first parcel arrived).
Unless you have previously informed them, the consumer does not have to pay for the return of the goods.
To cancel their order, the consumer can notify you either by using a model cancellation form, if you have provided them with one, or by making a statement of cancellation to you. The second option can be done verbally (i.e. over the phone) or in writing.
If you fail to indicate the right of cancellation on your website, then this can result in the cancellation period being extended by up to 12 months after the 14-day period has expired. So, make sure your returns and cancellation policy is clearly displayed before checkout to minimise disputes and avoid unexpected returns long after a sale has been completed. This can disrupt inventory planning, affect cash flow, and lead to financial uncertainty.
Note that not all goods are eligible for cancellation. Certain products or services, such as alcohol, medicine, or accommodation, may be exempt from this right. See this full list of Contracts with no right to cancel for more information.
UK online businesses must uphold consumer rights by:
- Providing clear cancellation and returns policies
- Honouring statutory protections under the Consumer Rights Act 2015
- Having a fair complaints process to manage disputes effectively.
Together, these practices help you stay legally compliant while building long-term trust with your customers.
Data protection and privacy
As an online business, you’ll likely collect and process personal data from your customers. As such, it’s essential to comply with the General Data Protection Regulation (GDPR) and the Data Protection Act 2018.
These laws govern the collection, storage, use, and sharing of personal data.
How to ensure GDPR compliance as a UK online business
Under GDPR, customers’ personal data must be handled legally, fairly, and securely. This includes:
- Collecting only the data that is necessary
- Clearly stating the purpose for collecting the data (for instance, order fulfilment, customer support, or marketing)
- Gaining informed, explicit consent (a clear, informed agreement given freely by the individual, typically through an affirmative action like ticking a box or signing up) for optional data collection, such as email marketing
You are also required to uphold key data rights, including a customer’s ability to:
- Access the information you hold about them
- Request correction or deletion of that data
- Object to certain types of processing
- Lodge a complaint with the Information Commissioner’s Office (ICO)
Online business GDPR compliance isn’t optional – failing to meet these obligations could lead to substantial penalties. In one high-profile case, British Airways was fined £20 million by the ICO after a data breach compromised the personal data of over 400,000 customers.
What is a privacy notice?
Your business must publish a privacy notice on your website and make it easily accessible. This document should clearly outline:
- What data is collected from users and why
- The lawful basis for processing it
- How long the data is retained
- Who it may be shared with and how it is protected
- How individuals can exercise their data rights
Most online businesses that process personal data are required to register with the ICO and pay the data protection fee. Check if you need to register by using the ICO’s own data protection self-assessment.
Securing customer data and being transparent about how the data is used is not only legally required, but also central to earning lasting trust in a privacy-conscious marketplace. Businesses that prioritise data protection demonstrate integrity, reduce risk, and create a solid foundation for long-term success.
Common pitfalls to watch out for
New online businesses often encounter avoidable issues that can lead to customer complaints or costly penalties. Here are some of the most frequent mistakes to watch out for:
- No terms and conditions visibly published
- Essential business and contact details missing
- Delivery costs and times not disclosed upfront
- Cancellation rights not communicated
- Returns policies unclear or unfair
- Customer data collected or handled without proper GDPR consent
- Assuming your website builder manages all legal obligations
These pitfalls breach legal requirements and undermine customer trust. A proactive approach to compliance helps protect your business and build credibility from day one.
Checklist for UK online business legal compliance
Today’s digital marketplace demands keen attention to legal compliance for your UK online business. With growing emphasis on consumer rights and data protection, this checklist outlines essential steps to ensure you operate legally and build trust with your customers.
- Display your full company name, registration number, registered office address, contact details, and VAT number (if you have one) clearly on your website
- Provide accurate and complete product/service descriptions, including all pricing and charges
- Ensure your terms and conditions are easy to find and clearly define your obligations and limitations
- Form legally binding contracts by supplying clear terms, order confirmations, and accessible copies
- Enable customers to review and confirm orders before payment, with clear calls to action (e.g. ‘Buy Now’)
- Clearly disclose delivery options, timeframes, costs, and any regional limitations
- Allow customers to cancel most purchases within 14 days and explain the process upfront
- Set out a fair returns policy, including refund timescales and who pays return postage
- Comply with the Consumer Rights Act by providing goods and services that meet quality standards
- Handle all personal data in line with GDPR and the Data Protection Act 2018
- Publish a privacy notice that explains what data you collect, why, and how it’s used
- Register with the ICO if you process personal data
By staying on top of your legal obligations, you can create a positive shopping experience and set your online business up for success.
Start your online business and make compliance your competitive edge
Legal compliance might feel like admin, but done right, it’s your greatest asset. It protects your business, earns customer trust, and sets you up for sustainable growth.
By embracing key obligations related to GDPR, customer rights, and trading transparency, you demonstrate professionalism and establish genuine credibility from the outset.
If you’re ready to start your online UK company, we’re here to guide you through every step, from fast and reliable company formation to expert compliance support.
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