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    2 November 2020

    Legal issues faced by online retailers

    Society has been making a move towards online purchases for a while now but with retail shops forced to close during the Coronavirus lockdown period this year, online retailers experienced a surge in demand as we were forced to adapt to lockdown living. We are also seeing traditional bricks and mortar retailers making the move to online retailing much more swiftly than normal.

    Recent research shows that the number of consumers shopping online weekly is up 28% compared to pre-pandemic. Whether you are a well-established company accustomed to selling your goods online, or a start-up new to this style of sales, it is important to be aware of some of the challenges and legal risks faced by online retailers, and how we can assist with overcoming these.

    Intellectual Property

    One issue online retailers face is the use of Intellectual Property, such as your logo, website URL and product images. When your branding goes online, it makes it much easier for other people to copy these things for their own use. As an online retailer you will want to protect your own Intellectual Property and make sure others are not using it on their websites. You will also want to make sure you are not infringing anyone else’s Intellectual Property by inadvertently using images for which you do not have permission, for example. The use of your Intellectual Property by other retailers can have a substantial impact on your business and devalue your brand; it can entice customers away from your website and it can confuse customers who may mistakenly associate the other retailer with your brand. If someone else uses your business name in their own URL, for example, it could mean that consumers assume that website is connected to you, which it is not.

    Steeles Law has experience dealing with claims regarding the use of businesses Intellectual Property by another, including trade mark and copyright disputes, and can assist with disputes arising from these areas.

    Goods being resold

    With the rise of online marketplaces, such as Amazon and Ebay, it is now relatively easy for anyone to sell products. You obviously cannot stop the end consumer selling your products second-hand on Ebay, but a common issue that businesses now face is their products being resold online by their distributors at lower prices than the business itself sells them for. You also may not want distributors selling on such websites without first having their advertising copy signed off by you. If you have a premium product, this could harm your brand because it cheapens your products in the eyes of the consumer and you may lose control of your branding and marketing message.

    In normal circumstances, you are not able to control the resale price of your products by your distributors, or where they sell them, as this would be a breach of Competition Law. However, in certain, very limited circumstances, through a selective distribution system, suppliers can control what their distributors do, including which websites they sell on. Steeles Law has extensive experience of preparing such distribution systems. Competition Law: Can I stop my goods from being resold on websites such as Amazon or eBay?

    Formation of online contracts

    Another issue will be found in the businesses’ terms and conditions and relates to when the contract is formed between you and the customer. Generally, a contract is formed when the customer places an order which is then “accepted” by the supplier. Your terms and conditions should be clear about when the order has been accepted to avoid confusion and manage the customer’s expectations. For example, is there a contract formed when the customer pays for the product, or is it formed when you send an email confirmation message accepting the order later? It might sound like a legal technicality, but take the scenario where a particular product is not in stock but still listed on your website and the contract is formed when the customer pays, not when you confirm later by email. In that circumstance, you now have to fulfil the contract but you don’t have the stock to do so.

    You should also be careful to ensure that all necessary terms and conditions are properly incorporated into the contract when the contract is formed, which includes making sure that all the important terms have been brought to the customer’s attention before the contract is formed. The particular placing of your terms and conditions on your website, payment page or email communications is therefore very important. There are also various regulations, such as the Distance Selling Regulations and data protection issues such as with the GDPR, which should be complied with. Steeles Law has experience with drafting tailored website terms and conditions which address all of these issues.

    Online reviews and comments

    Online reviews and comments can have a substantial impact upon a businesses’ reputation and financial prospects. It is difficult to police all reviews and most reviews cannot be changed, especially if the review fairly represents the customer’s experience. However, comments that can be shown to have caused or are likely to cause serious financial loss, and if those comments are not true, may be able to be pursued through legal action. The damaging nature of untrue comments is increasingly apparent on social media, where the re-sharing of such material can quickly get out of hand if not addressed.

    If you have experienced any of the issues mentioned in this article or have a legal concern about trading online our commercial and litigation teams have extensive experience advising on related matters. Please email commercial@steeleslaw.co.uk or call 01603 598000 and a member of the team will be happy to assist. 

    *The information provided in this article is designed to provide useful information on the subject, not to provide specific legal advice.

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