Commerce

Website compliance: protecting consumers online In this feature consumer law complaints limited resources Caught by the web In this era of cutbacks, how high a priority should e-commerce compliance be for trading standards, and what does compliance look like? Paul Miloseski-Reid presents his view I magine you get a call about a rm that is targeting vulnerable people via a doorstep scam. One victim is planning to hand over 1,000 to the fraudsters today. You must choose between acting upon this complaint or improving the compliance of a website. You can only do one thing. You can either drive to the scam victims home to stop them handing over 1,000 and do the various follow-up work, all of which takes an afternoon to complete. Or, you can spend that afternoon inspecting a website and drafting a letter of advice to the business about the non-compliance you found. Given the choice between the two, the decision seems like a no-brainer: the vulnerable doorstep victim wins every time. In all likelihood, the website will be put to the bottom of the pile continually, because there will always be another Mr or Mrs Vulnerable tomorrow, with a complaint that appears more important. Its easy to appreciate the need to tackle crimes that have an immediate nancial and psychological impact on victims but ensuring improved compliance on that website would probably end up protecting a lot more people in the long term. Government cuts have hit trading standards departments hard, and we are all struggling to maximise the impact we can make with much more limited resources. So where should e-commerce sit among our list of enforcement priorities? How many online consumers would we have to protect to conclude that improving compliance on that website is a worthwhile use of our time? Why is compliance online so important? E-commerce is critical to the UK economy. Small businesses are the lifeblood of the economy, with micro-businesses making up the majority of UK enterprises. Online rms enjoy six times more revenue growth than ofine businesses, and digitally advanced small and mediumsized enterprises (SMEs) employ more people than SME digital snails. Whats good for small business is good for the economy. The UK is the worlds most developed online retail market, with the highest share of consumers (85 per cent of adults) buying online. E-commerce accounts for more than 25 per cent of all retail sales and this share will continue to grow. The chart at the bottom of this article is from 2012, but presents a good visual of the signicant gap between e-commerce across various G-20 countries. Argos gets 800 million website visits a year; Amazon.co.uk has 109 million unique visitors per month. Shop Direct had 4.2 million web visits on Black Friday 2015 alone. How many consumers would be exposed to malpractice if these sites contained restrictive statements or misleading prices? Its true that not every visitor is a buyer. But even if only 0.5 per cent of visitors to the Shop Direct website were affected by a misleading practice, thats 21,000 consumers. If they each lost 5 because of malpractice, thats 105,000 in just one day of trading on one website. The majority of consumers would not bother to complain about small individual losses; nationally, only a relatively small number of consumers may complain. With each suffering a small nancial loss, it would probably not be agged up in intelligence reports so such practices could go on, undetected, for years. An e-commerce audit is not simply about regulatory compliance; it can also help businesses to maximise online sales. Compliance with a number of the checks is in a business commercial interest. Much of the information required to be compliant with EU consumer law improves trust, which is key to persuading consumers to buy online. Intuitively, it makes sense that if a business owner sees the commercial benet to compliance they will drive compliance internally. Perhaps more importantly, a business that makes a choice as opposed to feeling forced to comply is more likely to stay compliant in the long term. A well-regulated UK e-commerce market also has a global impact. The UK is the worlds third-biggest online exporter to international consumers: 86.4 million international online shoppers bought from the UK in 2015. A poorly regulated e-commerce market could impact upon the UKs reputation as a safe place to shop. Only a relatively small number of consumers may complain so such practices could go on, undetected, for years The extent of non-compliance The UK is the third-biggest online exporter to international consumers. A poorly regulated e-commerce market could impact upon its reputation as a safe place to shop The majority of websites do not comply with EU consumer protection law. Nine EU web sweeps looking at thousands of sites across a range of sectors found the percentage of businesses that complied with EU law was on average 39 per cent. Almost double the websites were compliant after advice was given by member states. So why am I concerned? Surely, this suggests compliance is improving? These results only reect the EU picture the UK has greater levels of compliance, right? Well, consider this: G Web sweeps typically target the largest FACTS ON UK COMPLIANCE businesses in a sector. These businesses are Sweeps of UK websites have found poor levels more likely to have access to legal advice, of compliance: yet there is typically 40-60 per cent nonG 62 per cent of the top 100 UK websites did not compliance among such businesses. What include an email address level of compliance could we expect to see G 29 per cent of UK internet auction sites did among micro-businesses? not state their physical address G The majority (74 per cent) of businesses have no employees, and 95 per cent of A sweep of 220 websites in 2012 found: businesses have one to ve staff. These G 50 per cent did not make a full refund when businesses lack the time to research the a purchase was properly cancelled law and identify which are relevant to their G 43 per cent failed to inform consumers of business. They rely upon advice and support their right to cancel from local authority regulators, something G 70 per cent required some form of action that is in short supply from trading standards G Sweeps typically only audit for compliance with one or two European laws. The site could remain non-compliant with the variety of other laws G Each EU web sweep typically includes just 10-20 sites in the UK. There are thousands of other UK sites that have not beneted from a comprehensive inspection G Are those websites in the web sweep still compliant today? What would be more telling is repeating the web sweeps two years after a business amends its website to determine ongoing levels of compliance. Our friends at Which? have done just that (well, the closest thing to such an exercise). Two years after the EU Consumer Protection Cooperation Network highlighted concerns to the car hire industry and a year after industry pledged to improve price transparency G Which? did 300 online car hire price checks. The results were pretty disappointing: 32 per cent1 failed. Car hire extras werent being presented clearly online at the time of booking, including mandatory fees of 137 Support and information There have been several changes in legislation in the past few years and a growing list of laws must be considered when inspecting a website. In addition, there are a number of grey areas in e-commerce law that are open to interpretation plus, there appears to be a common problem of the law on online contracts not being applied correctly. For all of these reasons, I transformed a checklist that I had created for my personal use into an audit that colleagues can use. This should help more ofcers to inspect websites more quickly and bring some consistency to the advice we give. I give my interpretation on some matters, which is not set in stone. It is a live document and I welcome feedback. I have posted a basic version of the checklist on the Knowledge Hub. You can nd the post by logging into the Knowledge Hub and searching website compliance checklist. Ideally, feedback should be left at the Knowledge Hub post, so others may contribute to the discussion. Alternatively, send feedback to LOecommerce@CTSI. org.uk with website compliance checklist in the title. References: 1. Car hire extras: A third of charges still not clear, 26 October 2016. Online retail is expected to account for up to 23 per cent of total UK retail in 2016 Online retail % U.K. 23.0 Germany 11.7 Australia 8.9 South Korea 8.1 Saudi Arabia Developed market average 8.0 Italy 8.5 8.0 U.S. 7.1 Japan 6.8 France G-201 6.7 6.0 Canada 5.3 India 4.5 Brazil 4.3 China2 3.4 Russia 3.2 2.9 Argentina Mexico Developing market average 1.6 South Africa 3.2 1.5 Turkey Indonesia 1.1 0.3 Natives Players Laggards Aspirans Sources: Economist Intelligence Unit; Organisation for Economic Co-operation and Development (OECD); country statistical agencies; BCG analysis. 1 This figure does not include the EU-27. 2 This figure reflects business-to-consumer retail only. Credits Paul Miloseski-Reid is a CTSI lead ofcer for e-commerce. Images: ra2studio / Shutterstock To share this page, in the toolbar click on You might also like The imitation game October 2016