SMEs flout e-commerce laws

Link: SMEs ‘wasting’ profits

Small businesses are placing their ecommerce operations in jeopardy by failing to adhere to regulations for protecting online consumers.

Research shows that more than half of UK ecommerce sites do not comply with all of the three main laws covering web sales – the Ecommerce Directive, the Data Protection Act and Distance Selling Regulations.

The survey, commissioned by online legal specialist Clickdocs, says 68% of sites claim to meet data protection rules, but only 18% are registered with the Information Commission.

Nearly half of sites do not have a privacy statement, and just 37% comply with Distance Selling Regulations.

The laws are designed to ensure consumers have the same protection shopping online as they do on the High Street.

Complying with the rules is not expensive, but a lack of awareness and resources can be a problem for smaller firms.

‘Large companies know the law and tend to comply,’ said Jeremy Beale, head of ebusiness at the Confederation of British Industry. ‘The difficulty comes in the small companies that don’t have the legal resources.’

Simon Stokes, head of ecommerce at law firm Tarlo Lyons, believes non-compliance could be a serious problem in the future.

‘Consumer confidence could be damaged if there were some high-profile actions where people have suffered a loss as a result of failure to comply, and then it would have an impact,’ he said.

Jon Aslin, Clickdocs director, says lack of compliance is particularly damaging for smaller companies.

‘If consumers stick to big sites, new sites won’t be able to make a go of it,’ he said.

‘This is damaging in the long term. You don’t want people to stick with big names all the time.’