Internet RegulationRobert BlamiresAssociate, Field Fisher Waterhouse28 April 2010
The InternetA Declaration of the Independence of Cyberspace Barlow, 1996“Governments of the Industrial World, you weary giants of flesh and steel, Icome from Cyberspace, the new home of Mind. On behalf of the future, Iask you of the past to leave us alone. You are not welcome among us. Youhave no sovereignty where we gather.”“We have no elected government, nor are we likely to have one, so Iaddress you with no greater authority than that with which liberty itselfalways speaks. I declare the global social space we are building to benaturally independent of the tyrannies you seek to impose on us. You haveno moral right to rule us nor do you possess any methods of enforcementwe have true reason to fear…”And so on…
The Internet• Not an entity but a communications infrastructure. To the extent that it is a thing, it is a network of networks, all internetworking with each other by passing data packets. The internetwork expands and contracts as connections are made and broken• …the Internet is arguably the most regulated ‘place’ on earth Reed, Internet Law 2004
Laws on the interneta) Generally applicable lawb) Sector/service/product specific laws and regulationsc) Internet-specific law and regulationd) Soft law
Community infringements• The Enterprise Act 2002 (Part 8 Community Infringements Specified UK Laws) Order 2003• Regulations 6, 7 , 8, 9 and 11 of the E-Commerce Regulations and the Distance Selling Regulations are both specified UK Laws
Consumer Protection from Unfair Trading RegsMisleading omissions – regulation 6Regulation 6(3)(b): “any information requirement which applies in relation to a commercial communication as a result of a Community obligation” is material information.
E-Commerce Regulations“information society service”• “any service normally provided for remuneration, at a distance, by means of electronic equipment for the processing … and storage of data…”• includes most web services• note “normally provided for remuneration”
E-Commerce RegulationsGeneral Information requirements – regulation 6Providers must make certain information available to therecipient of the service and any relevant enforcementauthority, in a form which is easily, directly and permanentlyaccessible. • “any relevant enforcement authority” is any person who is authorised to take enforcement action • “easily, directly and permanently accessible” form
E-Commerce RegulationsGeneral Information requirements – regulation 6a) name of the service provider;b) geographic address of service provider;c) details of the service provider, including his electronic mail address, which make it possible to contact him rapidly and communicate with him in a direct and effective manner;d) details of any trade or similar registration;e) details of any applicable authorisation scheme;f) relevant details of regulated professions; andg) the service provider’s VAT number, if applicable.
E-Commerce RegulationsInformation for contracts – regulation 9Information to be provided where contracts are concluded byelectronic means:“Unless parties who are not consumers have agreedotherwise, where a contract is to be concluded by electronicmeans a service provider shall, prior to an order beingplaced by the recipient of a service, provide to that recipientin a clear, comprehensible and unambiguous manner…”
E-Commerce RegulationsInformation for contracts – regulation 9What information?a) the different technical steps to follow to conclude the contract;b) whether or not the concluded contract will be filed by the service provider and whether it will be accessible;c) the technical means for identifying and correcting input errors prior to the placing of the order; andd) the languages offered for conclusion of the contract.Also, the provider must make any applicable terms and conditions available in a way that allows the recipient to store and reproduce them.
E-Commerce RegulationsInformation for contracts – regulation 9 •Different technical steps, contract filing and language
E-Commerce RegulationsInformation for contracts – regulation 9• Identifying and correcting input errors
E-Commerce RegulationsOrdering process – regulation 11Unless parties who are not consumers have agreedotherwise, where the recipient of the service places his orderthrough technological means, a service provider shall–a) acknowledge receipt of the order to the recipient of theservice without undue delay and by electronic means; andb) make available to the recipient of the service appropriate,effective and accessible technical means allowing him toidentify and correct input errors prior to the placing of theorder.
E-Commerce RegulationsOrdering process – regulation 11Acknowledgement
E-Commerce RegulationsCommercial communications information requirements – regulation 7Commercial communicationsService providers must ensure that commercial communications:a) are clearly identifiable as such;b) clearly identify the sender;c) clearly identify any promotional offer (including any discount, premium or gift) and ensure that any conditions which must be met to qualify for it are easily accessible, and presented clearly and unambiguously; andd) clearly identify any promotional competition or game and ensure that any conditions for participation are easily accessible and presented clearly and unambiguously.
E-Commerce RegulationsSPAM Information requirements – regulation 8A service provider must ensure that any unsolicited [email]commercial communication is clearly and unambiguouslyidentifiable as such as soon as it is received.
E-Commerce RegulationsSPAM Information requirements – regulations 8 and 9
E-Commerce RegulationsSPAM Information requirements – regulations 8 and 9
E-Commerce RegulationsSanctions – regulation 4(6)• “To the extent that anything in these Regulations creates any new criminal offence [does it?], it shall not be punishable with imprisonment for more than two years or punishable on summary conviction with imprisonment for more than three months or with a fine of more than level 5 on the standard scale (if not calculated on a daily basis) or with a fine of more than £100 a day”.• NB breach is a Community infringement under the Enterprise Act
E-Commerce RegulationsLiability – regulations 13 – 16• Provide remedies for breach of regulations 6 to 9 and 11, namely, the following actions by any recipient against the provider: • Where provider hasn’t complied with the info requirements (regs 6, 7, 8, 9(1) and 11(1)(a)), an action for damages for breach of statutory duty; • Where provider has failed to make applicable terms and conditions available (reg 9(3)), injunctive action to require the provider to make them available • Where recipient has concluded a contract covered by these regs and the provider has failed to make available a means of allowing the recipient identify and correct input errors (reg 11(1)(b)), recipient can rescind the contract, unless a court orders otherwise.
E-Commerce RegulationsIntermediary defences - The caching and hosting defences do not apply, broadly, if the service provider: • has actual knowledge of the unlawful activity or information; or • upon obtaining such knowledge, fails to act expeditiously to remove or disable access to the information. Therefore, if (eg) an ISP is put on notice (eg by the OFT) of unlawful activity, it will lose the benefit if these defences if it does not “act expeditiously” to remove/disable access to such information.
Distance Selling RegulationsApplicable contracts• Broadly, apply to distance contracts, other than excepted contracts.• Distance contract - any contract … concluded between a supplier and a consumer … run by the supplier who … makes exclusive use of one or more means of distance communication …– therefore includes business-to-consumer contracts concluded online.• Excepted contracts – land, financial services etc• Also, regs 7 to 19(1) do not apply to certain contracts (relating to time-specific services).
Distance Selling RegulationsInformation requirements – regulation 7…in good time prior to the conclusion of the contract the supplier must provide the certain information in a clear and comprehensible manner appropriate to the means of distance communication used, with due regard in particular to the principles of good faith in commercial transactions and the principles governing the protection of those who are unable to give their consent (eg minors).
Distance Selling RegulationsInformation requirements – regulation 7a) supplier’s identity and, if payment is required in advance, his address;b) description of the main characteristics of the goods/services;c) price of the goods/services (including all taxes);d) delivery costs (where appropriate);e) arrangements for payment, delivery or performance;f) existence of a cancellation right, where applicable (on which more later);g) cost of using the communication where calculated other than at the basic rate;h) period for which the offer or the price remains valid;i) in the case of contracts for the supply of goods/services to be performed permanently or recurrently, the minimum duration of the contract (where appropriate);j) supplier’s commercial purpose;k) if he proposes to provide substitute goods/services of equivalent quality and price in the event of the goods/services ordered being unavailable; andl) if the supplier will pay the cost of returning any substitute goods if the consumer cancels.
Distance Selling RegulationsWritten and additional information – regulation 8Supplier to provide certain information to the consumer in writing, or in another durable medium which is available and accessible to the consumer either:a) prior to the conclusion of the contract, orb) thereafter, in good time and in any event: i. in the case of services, during the performance of the contract; and ii. where goods (not for delivery to third parties) are concerned, at the time of delivery at the latest.
Distance Selling RegulationsWritten and additional information – regulation 8a) the information set out in paragraphs (i) to (vi) of Regulation 7(1)(a) (ie paragraphs a) to f) on the earlier slide); andb) information about exercising the cancellation right including: i. any contractual requirement on the consumer to return goods to the supplier if the consumer cancels; ii. who would be responsible for the cost of returning any goods to the supplier/the cost of his recovering them, if the consumer cancels; iii. the impact on the cancellation rights if the consumer agreeing to performance of a services contract before the end of the seven working day period; iv. supplier’s (geographical) address for complaints; v. any after-sales services and guarantees; and vi. where the contract is of an unspecified duration or a duration exceeding one year, any conditions for exercising a cancellation right.
Distance Selling RegulationsCancellation right – basic right – regulations 10 – 12• Consumer can cancel the contract, on written notice to the supplier within seven working days from the day after the day on which: • the goods are received by the intended recipient; or • a contract for services is concluded, “Commencement Date”.
Distance Selling RegulationsCancellation right – extension – regulations 10 – 12Except:• If the supplier does not inform the consumer, before conclusion of a contract, about the right to cancel but subsequently does so within three months of the Commencement Date, the consumer can cancel within seven working days from the day after the day on which he receives the information.• If the supplier doesn’t meet the three-month time limit, the consumer can cancel within three months and seven working days of Commencement Date.
Distance Selling RegulationsCancellation right – extension – regulations 10 – 12• But, if the supplier does not inform the consumer, prior to conclusion of a services contract, about the cancellation right, and performance of the contract begins (with the consumers agreement) within seven working days from the day after the day on which the contract was concluded but the supplier subsequently informs the consumer in good time during the performance of the contract, the cancellation period ends: • seven working days from the day after the day on which the consumer receives the information; or • if earlier, on the day when the performance of the contract is completed.
Distance Selling RegulationsCancellation right - Exceptions – regulation 13(Unless otherwise agreed between the parties):• Services contract where performance of the contract has begun (with the consumers agreement) • Before the end of the applicable cancellation period; and • After the supplier has informed the consumer about the cancellation right;• Price dependant on financial market fluctuations;• Tailor-made or clearly personalised goods;• Goods which by nature cannot be returned or are liable to deteriorate/expire rapidly;• Audio/video recordings or computer software if consumer unseals them;• Newspapers, periodicals or magazines; or• Gaming, betting or lotteries.
Distance Selling RegulationsCancellation right – consequences of cancellation –regulations 14 and 17• Consumer must have retained possession of and taken reasonable care of the goods and is under a duty to restore them to the supplier (on notice in writing/other durable medium from supplier).• Supplier must reimburse sums paid as soon as possible and in any case within 30 days of notice of cancellation.• Supplier can deduct direct costs of recovering goods if consumer fails to comply with a contractual provision requiring consumer to return goods/returns goods at supplier’s expense (unless: • consumer has a contractual/statutory right to reject the goods; or • the provision requiring return of the goods is unfair under the Unfair Terms in Consumer Contracts Regs 1999).
Distance Selling RegulationsCancellation right – examples
Distance Selling RegulationsCancellation right – examples
Distance Selling RegulationsCancellation right – examplesA consumer:a) orders some jewellery online;b) is not informed of a right to cancel before concluding the contract;c) receives the goods, without cancellation information; andd) is not subsequently informed of a right to cancel within three months from the day after the day on which he receives the goods.What cancellation rights does the consumer have and when do they expire?• The consumer can cancel within three months and seven working days from the day after the day on which he receives the goods.Unless…• The jewellery was earrings for pierced ears, in which case regulation 13 would probably apply and he would have no right to cancel.
Distance Selling RegulationsSanctions/other – regulations 25 – 29• The OFT may apply for an injunction against any person who appears to the OFT to be responsible for a breach by a supplier of the regulations.• The OFT is under a duty to consider complaints made to it about a breach of the regulations (with very limited exceptions) and must give reasons for its decision to apply or not to apply for an injunction (having had regard, if it considers appropriate, to any relevant undertakings re compliance with the regulations).• Other enforcement authorities are under a duty to notify the OFT of any undertakings, injunctions etc re compliance with the regulations).• The OFT should publish “in such form and manner as it considers appropriate” details of undertakings, orders etc re compliance with the regulations.• NB Parties cannot contract out of the regulations.
OFT Web SweepOFT web sweep analysis of top UK retail websites’ compliance with E-Commerce and Distance Selling Regulations:• Results published March 2008• 14% failed to provide physical address• 15% failed to notify consumers of cancellation rights• 31% failed to give full refunds on cancellation• 40% failed to indicate compulsory charges early in the transaction