Under the Distance Selling Regulations, which apply to all sales to consumers at a distance such as online shopping, consumers must now be given some basic information, including that they have rights to cancel their order and get a refund.
The ECJ has ruled that it is not enough to just place those rights on a website and provide a hyperlink - which many retailers do - and that consumers must actively "receive" this information rather than just be told where to access it online.
The new ruling means that retailers cannot be certain that they have actually banked the cash for a sale for three months, because a consumer could change their mind and ask for a refund at any time during that period.
The Consumer Protection (Distance Selling) Regulations 2000
These regulations were introduced to protect consumers when shopping online, or entering into contracts at a distance from the supplier. The regulations give consumers a right to:
- Receive clear information about the supplier, the goods or services and the intended sale before deciding to buy.
- Confirmation of such information in written form.
- A open cancellation period of 7 working days in which to withdraw from the contract.
- Protection from payment card fraud.
These rights apply to distance contracts, which are contracts for the sale of goods or the provision of services which are concluded between a supplier and a consumer, not business to business.
For any such contract to be created the regulations require the supplier to give information about the products and confirmation of the information in writing. Extra information such as cancellation rights are required to be given also.
Vanessa Barnett, partner at Charles Russell LLP, commenting on the new ruling said: "It is vital for all online retailers to audit their sales process and terms and conditions for compliance with Distance Selling Regulations.
"Although this sounds like a small administrative point, essentially the difference between a consumer actively being given important information or being told where to find it, the consequences of not getting it right are material - it essentially extends a consumer's cancellation rights period to months rather than a week.
"This is good news for consumers because it will create an environment where consumer rights are better known and easier to exercise, which ultimately will lead to fewer disputes.
"Retailers should bear in mind other changes on the horizon which affect online retail such as the Consumer Rights Directive and data protection reform. There is no better time than now to have an online heath check of your retail business."
Based on research commissioned by Kelkoo, 2011 online sales in the UK were £50.34 billion (€59.4 billion) or 12.0 per cent of UK retail trade. In 2008, online was equivalent to only 8.6 per cent of retail sales.
A recent report (April 2012) by Boston Consulting Group said that UK online share of retail trade will jump to 23 per cent by 2016.