In spite of the challenges the last few years have presented, a new wave of digital entrepreneurs has emerged.
With advanced technologies, virtual office services, and an ever-growing array of online platforms, running a business remotely has become more viable than ever before. In fact, figures suggest as many as one in five of us have started a side hustle since March 2020.
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.
Clear and transparent information
Transparency is crucial when it comes to running any business, but particularly online where customers aren’t receiving information face to face. You must provide clear and accurate details about your products or services, so that consumers can make an informed decision when purchasing from you. Here are the key areas to be aware of:
Terms and conditions policy
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 what is legally required of them when using your business.
While terms and conditions are not required by law, they may help your company should a legal dispute arise, so it’s strongly advisable that you have a policy in place and that it’s readily available to your customers.
For your policy to be legally binding, it must be brought to the consumer’s attention during the buying process. You should state your terms in clear and simple wording that’s easy for everyone to understand. Customers should be required to view and agree to these terms before proceeding with their purchase. This can be done by integrating a tick box during the buying process, and including a link to a dedicated webpage housing your terms in full.
To help you word your terms, you can make use of a free online policy generator available on sites like Termly and Shopify. It’s important that you keep your terms updated with any changes or new information concerning your business, for them to be effective.
Your identity
Whether you’re selling products via your own website, an online marketplace, or social media, your identity as a business should always be made clear, so the customer knows exactly who they are purchasing from.
As a limited company, you are legally obliged to state your full business name and registered office address, as well as contact details such as an email address and telephone number. You should also include your company registration number and, if applicable, your VAT number.
Having this information displayed assures customers of your legitimacy and allows them to make contact with you directly should they have any concerns, queries, or disputes.
Typically, this information should feature in the footer of your website, or within the seller description or contact details on an alternative marketplace or platform. You might also want to include it in your terms and conditions, and on your contact page, so that it can be easily found at any time.
Contract formation
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.
Online businesses will need to ensure the presentation of clear and specific terms and conditions on the business’s website or platform as already covered, the acceptance of those terms by the customers through actions such as making a purchase or creating an account, and the mutual agreement of the parties involved.
How this happens may vary depending on the nature of your business, but it might include incorporating elements such as electronic signatures and providing accessible copies of the contract for reference.
Once an offer is accepted, it is essential that you 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.
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. But it’s important that the key information can be easily identified and any features or details that aren’t obvious, for example from your photograph or description, are clearly stated.
Pricing
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.
Ordering goods or services
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 state the means by which a customer can make their payment. This may include a range of methods such as credit card, debit card, or PayPal.
Delivery of goods or services
When it comes to delivery, you should 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.
You must also communicate the available shipping methods and associated costs to customers. As mentioned earlier, provide transparency regarding any additional fees, such as handling charges or taxes, to avoid any surprises during the checkout process.
Finally, you must specify any postcodes or locations where you are unable to deliver, and bring this to the customer’s attention before they commit to paying.
Cancellation and returns policies
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 right of cancellation allows the consumer a chance to examine the goods as they would be able to do in a physical environment.
The 14-day cancellation period begins the day the customer has received their goods. If the order is split into multiple deliveries, this timeframe starts from the day the last order is received.
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 either notify you using a model cancellation form, if you have provided them with one, or by making a statement of cancellation to you which 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.
It’s important to 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. View a full list of ‘Contracts with no right to cancel’ here.
Consumer rights and dispute information
Consumers have rights 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, and protection against unfair contract terms.
If a dispute arises with a customer, make sure you have a clear and accessible complaints procedure. Consider alternative dispute resolution methods such as mediation or arbitration, to resolve issues before they escalate to legal action.
Data protection and privacy
As an online business, you are likely to collect and process personal data from your customers. As such, it is essential that you comply with the General Data Protection Regulation (GDPR) and the Data Protection Act 2018.
You should implement a process to obtain explicit consent from customers before collecting their data, and clearly state the purposes for collecting data and how the information will be used. Make sure to implement appropriate security measures to protect personal details, and ensure that you handle and store data securely. Failure to do so could result in significant penalties.
If your company is processing personal data of customers, you will need to register with the Information Commissioner’s Office.
So, there you have it
We hope that this post has helped clarify your legal obligations as an online business. While some of this information will seem obvious, forgetting to incorporate the simplest of details on your website and in your policies could have drastic consequences for your company. The key is to ensure transparency and effective communication throughout your customer experience.
If you have any questions, please leave us a comment below and we’ll come back to you as soon as possible. Thanks for reading.
