Consumers in the Electronic Marketplace: an examination of ... · PDF fileMary Donnelly Jane Mulcahy Fidelma White Faculty of Law, University College Cork

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Consumers in the Electronic Marketplace 1

Consumers in the Electronic Marketplace: an examination of information based consumer protection in the

context of distance selling over the Internet

Mary Donnelly

Jane Mulcahy

Fidelma White

Faculty of Law, University College Cork

December 2005

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Contents

Acknowledgment

1. Introduction ……………………………………………………………. 4

2. Background ……………………………………………………………. 6

2.1 The Law ………………………………………………………….. 6

2.2 Earlier Studies ………………………………………………….. 7

3. The UCC Study and Methodology ………………………………….… 9

3.1 The Website Survey ………………………………………………. 10

3.2 The Consumer Survey ………………………………………….…. 11

4. The Research Findings ……………………………………………….… 13

4.1 The Website Survey ……………………………………………….. 13

4.1.1 Compliance with the Eight Prior Information

Requirements under Regulation 4 …………………………….. 13

4.1.1.1 Interpreting Regulation 4 …………………….. 13

4.1.1.2 Compliance Levels …………………………… 14

4.1.2 Detailed Analysis of Information on Websites …………. 15

4.1.2.1 Information on the Supplier ………………….. 16

4.1.2.2 Arrangements for Payment …………………… 17

4.1.2.3 Arrangements for Delivery/Performance …….. 19

4.1.2.4 Information on Withdrawal ………………….. 20

4.1.3 The Manner in which Legal Information is Presented …. 23

4.1.3.1 How Legal Information is Described ………… 23

4.1.3.2 How Legal Information is Communicated …… 24

4.2 The Consumer Survey ………………………………………….…. 26

4.2.1 The Nature of the Consumer Survey ……………………. 26

4.2.2 Information Provision and Consumer Protection ……….. 28

4.2.3 Consumers’ Awareness of Legal Rights ………………… 31

5. Analysis of Research Findings ………………………………………….. 34

5.1 An Overview of the Findings ……………………………………… 34

5.2 Best Practice Guidelines ………………………………………. 36

6. Annexes

6.1 Extract from EC (Protection of Consumer in Respect of Contracts

made by means of Distance Communication) Regulations 2001 ………. 38

6.2 The website survey form …………………………………………… 40

6.3 List of websites examined …………………………………………. 44

6.4 The consumer survey form ………………………………………… 47

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Acknowledgment

The empirical research, which forms the basis of this report, is part of a wider project

funded by the Irish Research Council for the Humanities and Social Sciences

(IRCHSS) and the authors would like to acknowledge the IRCHSS’s role in enabling

this research to be completed.

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1. Introduction

In the last 10 years, developments in marketing and technology (in particular Information

and Communication Technologies – ICT) have created new challenges for the consumer

protection agenda. A specific application of these developments is distance selling over

the Internet. The advantages of this method of distance selling are obvious. From the

supplier’s perspective the marketplace is greatly expanded and the costs associated with

establishing and maintaining a business can be reduced. From the buyer’s perspective,

the advantages include the convenience of being able to ‘shop from home’ for a wider

range of goods and services, at a more competitive price.

However, there are also risks for the consumer buyer. In particular, it has been suggested

that where consumers buy at a distance, as when they purchase goods or services over the

Internet, they operate in the context of ‘an information deficit’. This is best explained by

comparing the purchase of goods or services in the more traditional bricks-and-mortar

environment with the distance sales environment, such as a website. Where goods or

services are sold face-to-face, the buyer through his physical presence alone has a certain

knowledge of the supplier. In the distance sales environment this information may not be

as readily available. For example, where goods or services are bought at a distance, the

identity and location of the supplier may be unclear. Goods, rather than being media and

the Internet is used. Partly, to meet this ‘information deficit’ the European Community

introduced two Distance Selling Directives: Directive 97/7 deals generally with the sale

of goods and services, while Directive 2002/65 covers financial services specifically.

Both Directives require that particular information be provided at particular times and in

a particular manner. The aim is to ‘inform’ and ‘empower’ consumers. Equipped with

the right information, the consumer can decide whether to enter into a particular contract.

Further protections are afforded to consumers by the Directives, including a right of

withdrawal (a ‘cooling-off period’); some protection against payment card fraud; and

prohibitions on cold-calling and inertia selling.

In this Report, we examine information based consumer protection in the context of

distance selling over the Internet. In particular, we focus on the prior information

requirements of Directive 97/7 in order to determine the effect of information provision

on suppliers and consumers.1

The Report is divided into five main parts. Following this introduction, the background

to the Report is explained in Part 2. This includes a brief description of the legal

provisions that underpin the protection of consumers who buy online and reference to

earlier related studies. This Report is based on two surveys: a website survey and a

consumer survey. These surveys and the research methodology that was employed in

1 Directive 2002/65 was transposed into Irish law by the EC (Distance Marketing of Consumer Financial

Services) Regulations 2004, SI No. 653 of 2004 and the EC (Distance Marketing of Consumer Financial

Services) (Amendment) Regulations 2005, SI No. 63 of 2005, both effective from February 15 2005 and

hence it was felt that insufficient time had elapsed following the making of the Regulations to assess their

effect at the time the surveys were conducted.

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each survey are described in Part 3. The research findings are presented in Part 4 and

analysis of these findings is presented in Part 5. Part 6 contains various Annexes to the

Report to assist the reader.

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2. Background

2.1 The Law

Directive 97/7 was transposed in Ireland by the European Communities (Protection of

Consumers in Respect of Contracts made by means of Distance Communication)

Regulations 2001 (SI No 207, 2001, as amended by SI No 71, 2005) (hereinafter the

Distance Selling Regulations).

There are four pre-conditions to the application of the Regulations (Reg. 3):

(1) the contract must be between a supplier (any natural or legal person acting in his

commercial or professional capacity) and a consumer (any natural person who is

acting for purposes which are outside his trade, business or profession);

(2) the contract must relate to goods or services;

(3) the contract must be made under an organised distance sales or service-provision

scheme run by the supplier; and

(4) the contract must be made by the supplier making exclusive use of one or more

means of distance communication up to and including the moment of contract

conclusion.

“Means of distance communication” is further defined as any means which, without the

simultaneous physical presence of the supplier and the consumer, may be used for the

conclusion of the contract between those parties, such as the telephone or the Internet.

Further to the four pre-conditions identified above, the Regulations specify a number of

exemptions from their application. Some types of contract are completely exempted, the

most notable example being contracts for the supply of financial services (which are now

covered by Directive 2002/65). Other types of contracts are exempted from the main

provisions of the Regulations, including those dealing with rights to information and

withdrawal. Examples of this type of exemption include contracts for the provision of

accommodation, transport, catering or leisure services where the supplier undertakes,

when the contract is made, to provide those services on a specific date or within a specific

period. Lastly, some types of contract are exempt from the right of withdrawal only, such

as, contracts for the supply of goods made to the consumer’s specifications or goods

which are perishable.

The information obligations placed on suppliers can be divided into two categories. First,

Regulation 4 requires that the consumer be provided with specified information, in

advance of contract formation, in a clear manner – ‘the prior information’. The content of

the ‘prior information’ is specified in Schedule 3 as follows:

(1) the identity of the supplier and, in the case of a contract requiring payment in

advance, his or her address;

(2) the main characteristics of the goods or services;

(3) the price of the goods or services including all taxes;

(4) delivery costs, where appropriate;

(5) the arrangements for payment, delivery or performance;

(6) the existence of a right of withdrawal (except in the exempted cases);

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(7) the period for which the offer or the price remains valid;

(8) where appropriate, the minimum duration of the contract in the case of

contracts for the supply of products or services to be performed permanently or

recurrently.2

In practice, where goods or services are sold via the Internet, these eight prior information

requirements must be made available on the website, before or in the course of the

ordering process.

Secondly, Regulation 5 requires that confirmation or communication of the prior

information (plus some additional information) be made available to the consumer in

writing or in another durable medium during the performance of the contract and at the

latest at the time of delivery of goods - “post-contractual confirmation”.

As noted above, this study focuses on the prior-information requirements of the

Regulations, to assess the effective of information provision as a consumer protection

mechanism.

2.2 Earlier Studies

Two earlier studies were conducted which are broadly relevant to this study and hence

deserve further mention.

First, in 2003, the European Consumer Centre’s (ECC) Network published a report,

‘Realities of the European online marketplace’ on cross-border e-commerce.3 The project

comprised three main parts: a shopping-exercise whereby 114 orders were placed cross-

border within the EU; an information quality examination whereby 262 EU based

websites were checked; and legal and practical analysis of the cooling-off period.

Significant findings as regards the shopping exercise included:

• 34% of orders were never delivered;

• 8% of ordered products not delivered were paid for in advance;

• 31.5% of returned goods were not refunded.

As regards the information quality examination, further deficiencies were identified. For

instance:

• 32% failed to give information about the cooling-off period;

• 13% contained no information about Terms and Conditions; and

• 7% failed to give full information about total cost.

The second study of relevance, published in 2004, was a Special Eurobaromter Report on

‘European Union Public Opinion on Issues relating to Business to Consumer e-

2 There is one further ‘prior information’ requirement in Schedule 3 - the cost of using the means of

distance communication, where it is calculated other than at the basic rate. This refers to premium rate

services and was excluded from the study because of its lack of relevance to the online market. 3 Available at http://www.eccdublin.ie/publications/ecc_reports.html Since 2003, the ECC Network also

publishes an annual Consumer Complaints Report on the European Online Marketplace – for 2004 Report

see http://www.eccdublin.ie

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Commerce’.4 As well as providing useful demographic analysis, the Report identified

‘concerns about buying on the Internet (security of payment, followed by ability to get a

refund were the major concerns); reasons for buying on the Internet (convenience and

cost were the dominant reasons); and reasons for not buying on the Internet (lack of

access and issue of trust being the key factors). Importantly, the Report found that only

17% of Irish citizens (and 16% of EU15 citizens) had bought something on the Internet,

suggesting that e-confidence is still a crucial issue.

4 Available at www.europa.eu.int/comm/consumers/topics/facts_en.htm

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3. The UCC Study and Methodology

As noted above, the only previous study in this area examined the cross-border online

market. The concept of the ‘cross-border shopper’ has been used as a rationale for the

introduction of much of the consumer protection legislation by the European Community

and yet the reality for a lot of European consumers is that they shop ‘at home’ much more

frequently than ‘cross-border’.5 Accordingly, there was a gap in our knowledge and

understanding of how Directive 97/7 impacts on consumers and suppliers in the national

context. Therefore, we decided to focus in our study at how Directive 97/7 as transposed

into Irish law by the Distance Selling Regulations protects Irish consumers shopping on

Irish based Internet sites.

The aim of this study is to assess the effectiveness of information provision as a means of

protecting consumer interests using the Distance Selling Regulations as a vehicle. In this

regard two questions arise:

• first, are suppliers meeting their information provision obligations under the

Regulations; and

• secondly, even where suppliers are compliant, does the provision of information

lead to better-informed customers?

This study has sought to address these questions through the use of two surveys: a

website survey and a consumer survey.

The website survey involved the close examination of 80 Irish based sites to determine

the current levels of compliance amongst suppliers with the information provision

obligations set by the Regulations. For practical reasons, we focussed on the eight prior

information requirements, as opposed to the post information requirements, because the

prior information must be made available on the website whereas the latter information

may be provided otherwise, including in hard copy form at the time of delivery of any

goods. Further, it is important to note that the language of the prior information

requirements is deceptively simple. In fact, a number of the requirements lack clarity and

are open to more than one interpretation.6 Therefore, in order to assess levels of

compliance, judgments of a legal nature had to be made. As well as measuring levels of

compliance, the website survey enabled us to identify best-practice standards with regard

to legal compliance.

The second survey, a survey of 352 consumers, sought their opinion about the role of

information and thereby questioned the underlying assumption of the Regulations, namely

that information provision is an effective consumer protection mechanism. Importantly,

the findings of this Part of the study have application beyond the immediate field of

distance selling to all areas of consumer protection legislation (credit, door-step selling)

5 Wilhelmsson, “The Abuse of the ‘Confident Consumer’ as a Justification for EC Consumer Law”, 27

(2004) Journal of Consumer Policy 317. 6 See Donnelly & White, “The Distance Selling Directives – a Time for Review”, 56 (2005) Northern

Ireland Legal Quarterly 200.

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that use similar information provision mechanisms by questioning the feasibility and

effectiveness of the information based model.

The research was conducted by two Principal Investigators (Mary Donnelly and Fidelma

White) and one research assistant (Jane Mulcahy) based at the Law Department,

University College Cork.

The research project was funded by the Irish Research Council for the Humanities and

Social Sciences for a nine-month period, between February - October 2005. The surveys

were drafted, piloted and finalized in March - April; empirical data was collected May -

July, this data was reviewed, collated and analysed in August - September; and the Report

was drafted October and published in December 2005.

The size of the surveys was relatively modest. A broader sample of websites would need

to be examined and a greater number of consumers surveyed to enable us to draw more

definitive conclusions. However, along with earlier studies, we believe that this new

data, based on the examination of 80 Irish websites and 352 consumer surveys, is

sufficient to indicate general levels of compliance among Irish suppliers with the

Distance Selling Regulations and consumer experiences and perceptions of information

provision and purchasing decisions.

3.1 The Website Survey

The purpose of the website survey was to assess current levels of compliance among Irish

suppliers (i.e. suppliers with either .ie or .com domain names, who had offices located in

Ireland) with the Distance Selling Regulations. The researcher identified Irish-based

websites using telephone directories, search engines such as Google, and advertisements

in newspapers, magazines or on the television. A final list of 80 websites, combining

large and small businesses, well-known and more recently established businesses, selling

goods and/or services was compiled.

The researcher progressed to the check-out stage for every transaction so as to monitor

the time and place of any pertinent information disclosure on the websites, taking

comprehensive notes on the lay-out of the sites and the attempts made to convey

information in a clear manner. In doing so, the researcher operated under the identity of a

consumer.

In relation to goods, the researcher examined websites that supplied:

• Books

• CDs

• Clothing

• Computers

• Gifts

• Jewellery

• Mobile phones

• Toys

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These products were selected because consumers frequently purchase such items online.

The researcher also reviewed websites selling more specialty items such as equestrian

goods, kites, fitness equipment, and water coolers. Finding Irish-based websites that

provided services online, subject to the disclosure requirements of the 2001 Regulations,

proved much more challenging. Many service suppliers advertised their services online

but for the most part the services could not be ordered and/or paid for over the Internet.

Services which came within the scope of the disclosure requirements of the 2001 and

which were reviewed by the researcher included:

• Broadband Internet Services

• Car Breakdown Services

• Dating Services

• Downloadable Ring-tone Services

• E-learning courses

• Gaming/Lottery Services

• Landline Phone Services

• Legal Services (Online Wills)

• Mobile Phone Services

As well as gathering data as to compliance with content, timing and clarity obligations,

the survey required legal judgments to be made regarding compliance. Therefore, all

websites were assessed by the research assistant and reviewed by one principal

investigator. Where an issue of judgment arose, this was discussed and agreed by both

principal investigators to ensure accuracy and consistency.

3.2 The Consumer Survey

The purpose of the consumer survey was to identify consumer opinions and perceptions

in relation to the provision of information in the context of the online market. To do so,

352 face-to-face interviews were conducted by the researcher during the day-time in

neutral, public areas. Passers-by were stopped at random and asked if they would

participate in the survey. The researcher spent 2-3 hours per session, either in the

morning or afternoon conducting the interviews at a variety of locations, including:

• various street locations in Cork City –

o Patrick’s Street outside Brown Thomas,

o Daunt Square,

o Merchant’s Quay,

o Oliver Plunkett Street outside the GPO,

o Marlboro Street, outside the entrance English Market,

• various shopping centres in Cork –

o Blackpool Shopping Centre,

o Mahon Point Shopping Centre

o Paul Street Shopping Centre,

• on the streets of various selected towns

o Macroom,

o Youghal,

o Listowel

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• and other cities

o Dublin,

o Waterford

o Limerick.

In interviewing a total of 352 respondents in a variety of geographical locations at

different times of the day, we sought to ensure as balanced a demographic mix as

possible, with regard to age, gender, educational background, consumer expectation and

Internet buying experience.

The findings of both these surveys are presented in the next part of this Report.

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4. The Research Findings

This part of the Report is divided into two sections. The first relates to the website

survey; the second to the survey of consumers.

4.1 The Website Survey

This section of the survey had three elements. First, it looked at overall compliance with

the eight prior information requirements under Regulation 4; secondly, it examined in

more detail the kind of information provided on websites to consumers; and, thirdly, it

looked at the manner in which legal information was presented.

4.1.1 Compliance with the Eight Prior Information Requirements under

Regulation 4

Regulation 4 of the Distance Selling Regulations sets out the requirements for

information in general and in deceptively simple terms. Therefore a number of issues of

interpretation arise. As these issues have not been considered by a court, we adopted

interpretations of the requirements which we believe are most consistent with the

underlying aim of the Regulations. In so doing, we were conscious that the Regulations

require a balance to be struck between consumers’ interest in receiving information and

the cost to suppliers of providing this information.7 For this reason, we have adopted a

reasonable approach which does not require an exceptionally high level of information

disclosure but at the same time, exceeds a minimal requirement in this regard. While we

have operated on the basis of these interpretations, it should be noted that they do not

have legal status and that only a court, and, ultimately, the European Court of Justice may

provide a definitive interpretation.

4.1.1.1 Interpreting Regulation 4

We interpreted Regulation 4 in the following way:

• Compliance regarding the identity of the supplier required simply the provision

of the supplier’s trading name. In the case of payment in advance, compliance in

relation to the address required provision of the geographical address.

• Compliance regarding the main characteristics of the goods or services required

a simple description only. We did not consider the provision of photographs or

testimonials to be essential in order to comply with this requirement.

• Compliance with the requirement that the price of the goods, including taxes,

must be provided required either a single price accompanied by a clear statement

that the price included taxes (if this was the case) or a breakdown of the price and

any taxes.

• Compliance with the requirement that delivery costs be provided required a clear

statement of those costs or, if special delivery arrangements had to be made (for

example with some fragile, high-value items), a statement to this effect.

• Compliance with the requirement to provide arrangements for payment,

delivery or performance was interpreted to require that information should be

7 See further Case 336/03 The Easycar case available at www.curia.eu.int

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given as to the method and time of payment, and the method and time of

delivery/performance. We did not take the view that simply requiring payment by

credit card constituted information regarding the time of payment; instead we

asked whether a clear indication was given to the consumer as to when the

payment would be processed.

• Compliance with the requirement that the consumer should be informed of the

right to withdraw required that the consumer be alerted to the existence of the

right and the time limit for the exercise of the right. We did not regard it as

necessary that details of how to exercise the right be given at this point.

• Compliance with the requirement for information as to the period for which an

offer remains valid required either a clear statement of a time limit for the offer

or a statement that the supplier has a unilateral right to change the price offered.

“Offer” in this context is interpreted to mean the terms under which the supplier is

willing to do business with the consumer.

4.1.1.2 Compliance Levels

As Graph 1 below makes clear, there was considerable variation in terms of compliance

levels with the various requirements under the Regulation 4.

Only one requirement achieved one hundred per cent compliance. This was the

requirement that information about the main characteristics of the goods or services be

provided. Most websites went far beyond the basic requirements of the Regulation and

provided extensive details in this regard. This makes commercial sense; a supplier has, in

a sense, a vested interest in providing accurate information about these matters; if a

supplier does not provide details of the goods or service sold, he or she will have

difficulty persuading anybody to buy.

There was also a high level of compliance with the requirement to provide the identity of

the supplier. Again, this is necessary if a supplier is to gain the consumer’s trust and

persuade them to buy the goods. The websites that failed to comply with the requirement

in this regard (approximately 8% of those surveyed) usually did so because of their failure

to meet the second part of this requirement, specifically to provide the supplier’s

geographical address where payment in advance is required.

There were compliance difficulties in relation to a number of practical matters. It may

seem surprising that almost 25% of sites failed to comply with the requirement to provide

information relating to price. Most compliance problems in this area related to the

provision of information relating to whether or not tax was included in the payment price.

Furthermore, almost 50% of suppliers failed to provide adequate information regarding

payment, delivery or performance and over 30% of suppliers failed to provide adequate

information regarding the consumer’s right to withdraw. These issues will be discussed

further in the detailed analysis of information provision to follow.

There was also limited compliance with the requirement to provide information regarding

how long the offer remained valid. This requirement could be complied with by the

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inclusion of a standard price variation clause (i.e. a simple statement in the terms and

conditions of supply that the supplier retains the right to unilaterally change the price at

his or her discretion). However, over 45% of websites did not contain even a simple

statement of this kind.

Graph 1 – Supplier Compliance with Prior Information

0

10

20

30

40

50

60

70

80

90

100

Identity of SupplierM

ain characteristics of the goods/services

Total price including all taxes

Delivery costs

Payment, delivery or perform

ance

The existence of a right of withdraw

al

The period for which the offer rem

ains valid

Minim

um duration of the contract

Compliant

Not Compliant

N/A

4.1.2 Detailed Analysis of Information on Websites

As well as assessing compliance levels with legal requirements, the website survey also

elicited further data on the information made available on the websites surveyed. In this

part, we analyse certain aspects of the information requirements. In particular, we

examine how the websites dealt with:

• information on the identify of the supplier;

• arrangements for payment;

• arrangements for delivery/performance; and

• withdrawal.

These aspects were chosen for detailed consideration because of their immediate practical

relevance for consumers. Moreover, this analysis enables us to identify the standards of

best practice in this area as opposed to a minimal compliance standard.

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4.1.2.1 Information on the Supplier

There was a high level of compliance with this aspect of Regulation 4. However, as

noted earlier, suppliers have a commercial interest in providing this information.

Therefore, it is arguable that it is the market rather than the Regulations that sets the

standard in this area. Furthermore, other legal regulations, for example the e-Commerce

Regulations8, require the provision of detailed information relating to the supplier so this

kind of requirement is familiar to online suppliers.

In terms of information gaps, as can be seen from Graph 2 below, the most notable aspect

of this part of the survey is that approximately 55% of suppliers did not give a contact

name to consumers conducting business on-line. The absence of a contact name makes it

more difficult for a consumer who wishes to raise queries or exercise rights under the

Regulations.

We would suggest that best practice would dictate that all websites should include a

contact name together with all the other information set out in the Graph.

Graph 2 - Information on Identity of the Supplier

0

10

20

30

40

50

60

70

80

90

100

Trading Nam

e

Geographical address

Phone number for queries

Email address

Contact N

ame

Yes

No

8 EC (Directive 2000/31 EC) Regulations, 2003, SI No. 68 of 2003.

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4.1.2.2 Arrangements for Payment

The issue of security of payment has been identified in a number of earlier studies as one

of the most significant concerns of consumers in buying online.9 Therefore finding a

way of boosting consumer confidence in online payments is essential to the future

development of the online market. Irish law does not currently require suppliers to offer

consumers legal rights regarding payment in the event of either third party fraud or

supplier insolvency.10

While greater online payment security may be a general policy

goal, there is little incentive for individual suppliers to take steps to protect consumers in

this regard. In analysing the arrangements for payment, we examined the extent to which

websites provided information on:

• the time of payment;

• the extent to which websites addressed the issue of the technological security of

payments; and

• the legal protections offered to consumers making online payments.

The survey found some significant limitations in the information relating to payment

provided to consumers. A surprisingly large number of sites (approximately 45%) failed

to tell consumers the time at which payment would take place. Most typically, where

payments were made by credit or debit cards, consumers were not told when the payment

would be processed. Therefore the consumer did not know if he or she was paying in

advance or at the time of dispatch or at some other time.

More positively, it would seem that the majority of websites are conscious of security

issues and over 70% of sites included a security symbol to suggest the existence of a

secure payment mechanism. Further, over 80% of websites contained information

relating to the security of payment.

Unfortunately, the issue of consumers’ legal protection in the case of credit card fraud

received less attention. Approximately 50% of websites did not contain any statement

regarding consumers’ protections in this context. This reflects the inadequate legal

situation where there is no mandatory requirement for protection of consumers in the

event of online fraud.

9 The 2004 Eurobarometer survey indicated that 48% of those surveyed has concerns about security of

payment when buying on the Internet: European Commission, European Union Public Opinion on issues

relating to business to consumer e-commerce (2004) at

www.europa.eu.int/comm/consumers/topics/facts_en.htm. In an earlier survey in 1999, 57% of the EU

population surveyed indicated that they would not transmit their credit cards details to make an internet

purchase; 41% said that they would not use internet currency: Hobley Just Numbers: Numbers on Internet

Use, Electronic Commerce, IT and Related Figures for the European Community (European

Commission’s Electronic Commerce Team, 2001), p.10. 10

Article 8 of Directive 97/7 requires member states to ensure that appropriate means exist to allow the

consumer to request cancellation of a payment where fraudulent use has been made of his payment card

and in the event of fraudulent use to be re-credited with the sum paid. The Article does not state who

should be responsible for the re-crediting or how a consumer should establish the fraudulent use of his or

her card. This provision is reproduced without any substantial amendment in Regulation 10 of the 2001

Regulations. Neither the Directive nor the Regulations makes any mention of the issue of supplier

insolvency.

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The issue of payment protection in the event of supplier insolvency was completely

ignored by 100% of the websites surveyed. Yet, the majority of these websites expect

consumers to pay for services in advance with no guarantee of protection of the payment

in the event that the supplier becomes insolvent. Again, the absence of statements on the

websites reflects an inadequate legal situation. If a supplier does become insolvent, in

most situations, the consumer who has pre-paid will have no legal protection.11

Because this survey was concerned with the issue of information rather than the extent of

payment protection which is appropriate, we do not make any suggestions regarding the

appropriate level of payment protection for consumers dealing online.12

However, we do

suggest that best practice requires that consumers should be informed about the nature of

the payment protection provided or of the absence of such protection if this is the case.

Graph 3 - Arrangements for Payment

0

10

20

30

40

50

60

70

80

90

100

When paym

ent must occur

Presence of Security Symbol

Information on Security of Paym

ent

Legal Protection re Credit C

ard Fraud

Information re Supplier's Insolvency

Yes

No

N/A

11

In some situations, if payment is made by credit card, the credit card issuer may have entered into a

security arrangement with the supplier (for example through the use of charge-backs) and therefore may

have a better chance of obtaining payment out of the insolvent supplier’s estate. In these circumstances, if

the card issuer successfully recovers the amount of the payment, it may voluntarily agree to compensate

the consumer for the loss. 12

See the authors’ arguments in this regard in Donnelly and White “The Distance Selling Directives: A

Time for Review” (2005) 56 Northern Ireland Legal Quarterly 200, 224 et seq.

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4.1.2.3 Arrangements for Delivery/Performance

The Regulations require the supplier to inform the consumer regarding arrangements for

delivery (for goods) or performance (for services). In relation to goods, a simple

statement of the delivery method and time is likely to be sufficient for compliance. As is

evident from Graph 4 below, this was found in 95% of websites surveyed. In addition,

approximately, one third of the websites surveyed offered consumers a choice of delivery

method; this usually also involved a choice of delivery costs with faster methods of

delivery typically costing the consumer more.

With services, the survey investigated whether information was given regarding the

commencement and termination of the service. We found higher levels of compliance

regarding commencement dates than in relation to termination dates. From a commercial

perspective, this is to be expected; consumers are likely to be more interested in finding

out when the service they have paid for will begin rather than when it will end.

We consider it to be best practice to provide information regarding time and method of

delivery (in the case of goods) and regarding the commencement and termination dates

(in the case of services). We regard the matter of choice of delivery method or cost as a

commercial decision and therefore not relevant to the establishment of best practice.

Graph 4 - Arrangements for Delivery of Goods (61 sites)

Yes

%

No

%

Information on Delivery

Method/Time

95

5

Choice of Delivery Method

33

66

Graph 5 - Arrangements for Performance of Services (19 sites)

Yes

%

No

%

Information on

Commencement of Service

90

10

Information on Termination

of Service

84

16

_________________________________________________________________________________________________________


4.1.2.4 Information on Withdrawal

Details on the right to withdraw from a distance contract are contained in Regulation 6.

This Regulation states that there is an implied condition in a distance contract that the

consumer has a period of 7 working days to withdraw from the contract without having to

give a reason. Regulation 4 only requires the consumer to be provided with information

regarding the existence of a right to withdraw prior to the conclusion of the contract.

Information on conditions and procedures for exercising the right of withdrawal must be

given to consumer in a “durable medium” (i.e. in a manner that the consumer can keep)

after the contract has been completed.

Otherwise, there is very little guidance as regards how the right of withdrawal should

operate. In particular, the Regulations (and Directive 97/7) offer very little guidance

regarding circumstances in which restrictions may be placed on goods being returned.

There are a number of exceptions to the consumer’s entitlement to withdraw. These arise

where (Reg. 6(4)):

• the performance of a service has already started;

• the price of the goods or services is dependent on fluctuations in the financial

markets;

• the goods are made to the customer’s specifications or are clearly personalized;

• the goods are perishable;

• audio or video recordings or computer software have been unsealed by the

consumer; and in relation to

• newspapers, periodicals and magazines;

• gaming and lottery services.

Out of 80 sites surveyed, 16 were exempt from the obligation to permit a right of

withdrawal (9 of these related to services which once commenced are exempted; the

remaining 7 sites came within one of the other exceptions). Therefore this part of the

survey relates to a total of 64 sites.

In this part of the survey we looked at four aspects of the right to withdraw in order to

explore how suppliers give effect to the right in practice. These were:

• time;

• reasons;

• details; and

• cost.

As all of this information does not all have to be given before the consumer enters the

contract, it cannot be said that failure to provide this information constitutes a failure to

comply with Regulation 6. However, if the information given at this point is contrary to

the requirements under Regulation 6, this is a clear indication of non-compliance with

the Regulation.

_________________________________________________________________________________________________________


• Time for Withdrawal

As Graph 6 below shows, the majority of sites surveyed (41%) exceeded their statutory

obligations and allowed consumers more than 7 days within which to withdraw from

contracts. In these cases, the most typical period for withdrawal was 28 days. 28% of

sites allowed consumers the statutory period of 7 days. Thus, 69% of sites clearly

complied with Regulation 6. The remaining sites either allowed a shorter period or

provided no information on withdrawal at all.

We consider that the question of whether a supplier offers longer than the statutorily

required withdrawal period to be a commercial decision. However, we consider it to be

best practice that the relevant withdrawal period should be drawn to the attention of the

consumer.

• Reasons for Withdrawal

The Regulations state that the consumer has a right to withdraw without giving reasons.

27% of sites contained an express statement to this effect. This statement was variously

termed as a “no quibble” right to return or as a right to return “whatever the reason”. We

consider that an express statement of this kind constitutes best practice.

The majority of sites (44%) did not contain any statement regarding a need for reasons.

While less clear than those sites which contained an express statement, this approach still

complies with the statutory requirement. The remaining sites either required a reason or

provided no information at all relating to the right to withdraw. These websites are in

breach of both Regulation 4 and Regulation 6.

Graph 6 - Time for Withdrawal

7 days exactly

More than 7 days

Less than 7 days

No Information

_________________________________________________________________________________________________________


• Details on Withdrawal

While there is no legal obligation on suppliers to provide details about how to exercise

the right to withdraw until after the contract has been concluded, we found that 58% of

suppliers explained the withdrawal procedure in advance. We consider that the inclusion

of an explanation of withdrawal procedures before the consumer has entered into the

contract constitutes best practice.

We also found that 47% of sites had restrictions on return. Among the more common

restrictions were the requirement that goods had to be in their original packaging and that

they were unused. Because of the lack of clarity regarding the legal position on

withdrawal, it is not possible to offer a definitive conclusion as to the legality of these

restrictions.

• Cost of Withdrawal

The Regulations state that withdrawal is to be without penalty, although they do allow the

supplier to require the consumer who opts to return goods to pay the direct cost of return.

The majority of sites (47%) did this. A small proportion of sites (9%) was more generous

and did not require the consumer to pay any cost of return. The remaining sites either

required the consumer to pay a penalty or cost which was not permitted under the

Regulations (3%) or did not contain information on the issue of costs at all (41%).

We consider that the matter of whether a consumer is required to pay the direct cost of

return or is freed from having to make any payment to be a matter of commercial practice.

However, we consider it to be best practice that an express statement of the position be

included.

Graph 7 - Withdrawal / Reasons

Express Statement

No statement

Reason Required

No Information

_________________________________________________________________________________________________________


4.1.3 The Manner in which Legal Information is Presented

Regulation 4 sets out certain information that has to be provided in a clear and

comprehensible manner but it does not prescribe in detail the manner in which this

information should be provided. There is no point in allowing consumers to have legal

rights if they do not know of their entitlements. Therefore, this part of the survey went

beyond Regulation 4 and looked at the way in which websites provided information to

consumers about their legal rights. It looked first at how legal information was described

and then at how the information was communicated.

4.1.3.1 How Legal Information is Described

The majority of sites (63%) provided legal information under the heading “Terms and

Conditions”. 21% of sites used other headings including “Legal Conditions” or

“Frequently Asked Questions”. In other sites, the legal information was divided up into

separate parts, such as “Returns”; “Payment Information” etc.

A significant number of sites (26%) did not contain any legal information relating to the

contract at all. Some of these sites may have contained a heading “Terms and Conditions”

or “Terms of Use” but the information contained under this heading related to the use of

the website and not to any underlying contract.

There are different ways of presenting legal information and best practice does not require

the adoption of just one of these. We would regard it as best practice however to use a

heading that connotes the provision of information about legal rights. For this reason, we

would not consider it to be appropriate to contain legal information under the heading

“Frequently Asked Questions” as this heading could signify any number of different

issues and is therefore potentially confusing. Further, we consider it best practice that the

Graph 8 - Cost of Withdrawal

No cost

Direct Cost of Return

Other penalty/cost

No Information

_________________________________________________________________________________________________________


terms of use of the website be clearly differentiated from the terms and conditions of sale

relating to the goods/service purchased through the website.

4.1.3.2 How Legal Information is Communicated

This part of the survey looked at the way in which legal information is communicated to

consumers under four headings. These are accessibility; mention of the underlying legal

framework; availability in different languages; and, the way in which the information is

drawn to the consumer’s attention.

• Accessibility of Information

In 60% of sites, the legal information provided was accessible from each page of the site.

Of the remaining sites, in some cases, the information was accessible from all pages other

than the front page while, in others, it was not accessible until the very last page where

the consumer confirms the order. While this last option is technically compliant with the

Regulations (all that Regulation 4 requires is that information be given prior to the

contract), it does not provide the consumer with information at the formative stage of the

process in deciding whether to buy or not. We consider that it is best practice to make the

information available by links from every page.

We noted two other points regarding accessibility. First, a small number of websites used

pop-up windows to provide information. As many computers have anti pop-up

protection, this is not an effective way of communicating legal information. Secondly, in

some websites, the legal information was linked at the very bottom of a page which must

be scrolled down to and is not immediately obvious from the initial view of the screen.

We consider that it is best practice to have the link immediately visible on the first view

of the screen, either on the top of the screen or at the side.

• Mention of Underlying Law

A small proportion of sites (13%) mentioned the existence of the legislation (either the

Regulations or Directive 97/7) underlying consumers’ legal rights in this area. Some

sites linked directly to the legal provision itself or to a consumer rights website. We

consider that this constitutes best practice and that consumers will be better informed if

they are made aware of the legal foundation for their rights.

• Different Languages

A very small number of sites (3%) provided the information in a language other than

English. While this is unlikely to be a problem for most Irish consumers, it is more likely

to be significant in terms of an overseas market.

• Bringing the Information to the Consumer’s Attention

21% of sites required the consumer to click a box to confirm that they have read the terms

and conditions of supply (a click-wrap system). The remaining sites either contained a

statement that the consumer’s use of the site constituted an agreement to the terms and

conditions or were silent in this regard. While the use of a click-wrap system does not

guarantee that the consumer has actually read the terms and conditions, it is a more

_________________________________________________________________________________________________________


effective way of alerting consumers to the existence of these terms and conditions. We

consider that the use of a click-wrap system constitutes best practice in this regard.

Graph 9 - Communicating Legal Information

0

10

20

30

40

50

60

70

80

90

100

Accessible from

every page

97/7 or Regulations m

entioned

Available in different languages

Use of click-w

rap

Yes

No

_________________________________________________________________________________________________________


4.2 The Consumer Survey The second part of this study comprises a consumer survey. The purpose of this survey

was to explore consumer perceptions of the information provided in the context of online

retail and to examine the effectiveness of information provision from the consumer’s

perspective. The consumer part of the survey may be divided into three sections:

• the nature of the survey;

• information provision and consumer protection;

• consumers’ knowledge of their legal rights.

4.2.1 The Nature of the Consumer Survey

The first part of the consumer survey ascertained what kinds of people bought online and

why they did so.

53% of the 352 respondents to the survey had bought something online. This compares

with 17% under the Eurobarometer survey discussed earlier which was conducted in

September 2003. Care should be taken in drawing simple comparisons between the two

surveys - the Eurobarometer survey was more extensive, covering a total of 1001 Irish

citizens. However, our findings would suggest that there is an increase in online

commerce in Ireland.

Also, by way of background, when the socio-demographics are analysed it is interesting

to note that:

• there is a minimal gender difference (53% male / 47% female have bought on-

line);

• predictably, the most active age group is 25-39 at 71%; but even the least

active grouping 55+ scores 23% - almost a quarter;

• in terms of occupation, the most active group are Managers at 66% and self-

employed at 63%; with the least active groups being home-makers at 16% and

the unemployed at 11%;

• there is very little difference in terms of residence with those from cities and

large towns scoring 57% and those from rural areas and villages rating 54%.

_________________________________________________________________________________________________________


Graph 10 – The Demographics

Yes

%

No

%

Gender Male 53 47

Female 47 53

Age 15-24 51 49

25-39 71 29

40-54 46 54

55+ 23 77

Education Up to age 15 20 80

16-19 36 64

20+ 70 30

Occupation Self-employed 63 37

Managers 66 34

Manual Workers 49 51

Home-maker 16 84

Unemployed 11 89

Retired 38 62

Students 54 46

Other 55 45

Residence Rural/Village 54 46

Medium Town 44 56

City/Large Town 57 43

The main reasons given for buying on-line were:

• cost (81%);

• convenience (75%);

• greater choice (66%);

• ease of comparison (65%).

Our figures indicate not only a growth in the number of those buying goods/services on-

line but also growth in the frequency of such activity. Respondents were asked how

many times they had bought something on-line over the last year:

• the largest grouping, 46% of respondents, had bought between 5-20 times;

• 12% had bought in excess of 20 times.

Lastly, respondents were asked what they had bought. The most common purchases

were:

• tickets (plane and concert) at 84%;

• accommodation at 55%;

• CDs at 42%;

• books at 35%;

• downloadable materials at 29%.

These figures are particularly interesting because the two highest purchases, namely,

tickets and accommodation are exempt from the core provisions of the Regulations,

including the information obligations.

_________________________________________________________________________________________________________


0

5

10

15

20

25

30

35

40

45

50

Never Once Twice Three-Five

times

Five-Twenty

times

Twenty times

+

Graph 11 - How many times have you bought something online

over the last year

Never

Once

Twice

Three-Five times

Five-Twenty times

Twenty times +

4.2.2 Information Provision and Consumer Protection

This part of the survey explored the way in which consumers actually respond to

information provided in the online retail environment. In doing this, we sought to

evaluate three matters: first, how do consumers assess their information needs; secondly,

how do consumers assess the information that they actually received; and, thirdly, how

active are consumers in accessing the information provided.

The matter of consumers’ assessment of their information needs was surveyed by asking

two questions. The first was an unprompted question: is there any specific information

that you would typically check for before making a purchase online? While 60% of

respondents answered yes, the responses were extremely varied making the identification

of a pattern almost impossible. The only numerically significant response was that 31%

said that they would check security of payment on the site or search for the padlock icon.

The next most significant responses were that:

• 4% said they would only buy from reputable companies;

• 4% checked dispatch times and costs;

• 2% checked refunds and returns policies.

The second question was “prompted” - it asked respondents to rate the importance of

each of the eight prior information requirements under Regulation 4 as either “very

important” or “unimportant”. Not surprisingly perhaps, of the eight items of information

required to be provided, over 80% of respondents rated all but one of the items as very

important.

As Graph 12 below shows:

_________________________________________________________________________________________________________


• the price was considered very important by most respondents (98%) followed

closely by

• the description (97%);

• arrangement for payment and delivery/performance (94%);

• delivery costs (91%);

Respondents were then asked if there was any other information that should be provided.

64% of respondents said “No”, while 36% said “yes”. Of those who said yes, 31%,

almost one-third, said that information on on-line security should be provided.

Graph 12 - Consumer Assessment of the Importance of

Information

0 20 40 60 80 100

The minimum duration

of the contract

The period for which

the offer remains valid

The existence of a right

of withdrawal

The arrangements for

payment and delivery

Delivery costs

The price of the goods

or services including all

taxes

A description of the

goods or services

The name of the

supplier and his address

Very important

Unimportant

Don't Know

Having ascertained that the vast majority of consumers considered the information required

by the Regulations to be “very important”, the survey then looked at the extent to which

consumers were happy with the information they actually received.

Almost two thirds (64%) of the people who had bought online indicated that they had never

encountered any difficulty with the information provided on the websites they visited. Graph

_________________________________________________________________________________________________________


13 below shows the kinds of difficulties encountered by the 36% of consumers who had

encountered difficulties.

As is evident from Graph 13, the main difficulties encountered related to a lack of

information or a lack of organisation of the information provided.

• 69% of people said the information they were looking for was not

available

• 79% said the information was not well organized

• 67% said that it was hard to navigate through the information

• 50% said that the language used was not “clear and comprehensible”

• 47% said that there was too much information on the website

Other difficulties were technical in nature:

• 57% said that it took too long to load the page

• 35% experienced difficulties downloading files/forms from the website –

i.e. they were in an inaccessible format

Graph 13 - Problems experienced 36% of the consumers who bought online

0 20 40 60 80 100

Other

The language used was

not "clear and

comprehensible"

Downloadable

files/forms were in an

inaccessible format

It took too long to load

the page

It was hard to navigate

through the information

There was too much

information

Information was not well

organized

Information sought by

consumer was not

available

Problem

Not a Problem

Don't Know

Unspecified

The final matter evaluated in this part of the survey related to the extent to which consumers

play an active role in relation to the information provided. This matter was assessed by asking

_________________________________________________________________________________________________________


consumers whether they read the terms and conditions before deciding to buy on-line. Of the

respondents:

• less than half (43%) answered “sometimes”;

• almost equal proportions answered always (29%) and never (28%).

These responses suggest that while consumers may rank certain information as important in

theory, actually checking that the information is provided in an individual purchasing situation

is not a major priority for most consumers.

Graph 14 - Do you read the Terms and Conditions

always, sometimes or never?

Always

Sometimes

Never

4.2.3 Consumers’ Awareness of Legal Rights

The final part of the consumer survey sought to evaluate consumers’ awareness of their legal

rights. In order to do this, we surveyed consumers in relation to two matter; first, consumers’

knowledge of their legal rights in relation to a specific matter, namely, the right to withdraw

from the contract, e.g. to return goods purchased at a distance and secondly, consumers’

general awareness of the fact that they have legal rights when purchasing goods or services

online.

We choose to use the withdrawal rights as the subject for a specific case study because this

issue is immediately accessible to consumers and it therefore provided a suitable means of

testing consumers’ actual knowledge in an applied situation.

It is clear from the survey that the matter of returns is to the forefront of consumers’

concerns. 44% of respondents indicated that they always check the returns policy (as

compared with only 29% who always check the broader terms and conditions of the contract).

However, it should be noted that, when asked an unprompted question about what

information they look for, only 2% of consumers mentioned the returns policy.

We asked consumers two basic questions relating to returns: first, how long do consumers

have to return goods? Secondly, in what circumstances may consumers return goods? The

answers are represented on Graphs 15 and 16 below.

_________________________________________________________________________________________________________


Only 10% of the respondents stated that consumers who buy online have up to 7 days to

return the goods. Most assumed that the time limit was longer with 34% of the respondents

believing that consumers who buy online have a month to return goods. As discussed above,

while a significant portion of suppliers (41%) do actually allow consumers this longer period,

consumers have no general legal right in this regard. The other noteworthy aspect of this

survey is that relatively few respondents (only 6%) indicated that they did not know how long

consumers who buy online have to return goods. Consumers would seem to have a

misplaced confidence in their knowledge in this regard.

0

5

10

15

20

25

30

35

Up to 7 days

2 weeks

Up to 28 days

A m

onth

2 months

3 months

6 months

Other

Don't K

now

Graph 15 - When can you return goods?

Up to 7 days

2 weeks

Up to 28 days

A month

2 months

3 months

6 months

Other

Don't Know

Graph 16 shows that only 40% of consumers knew that they had a right to return goods

without giving a reason. Of the remainder, 40% of consumers believed that the goods

had to be faulty and 16% gave another inaccurate response in this regard; some

consumers thought that the right to return goods depended on the supplier’s returns policy

and others stated that the right of return varied depending on the jurisdiction from which

the consumer purchased the products. Once again, only a very small number of

consumers indicated that they did not know the answer to this question.

_________________________________________________________________________________________________________


0

10

20

30

40

50

Faulty only

Faulty/don't like goods or they don't suit/fit

Other

Don't K

now

Graph 16 - In what circumstances can you return goods?

Faulty only

Faulty/don't like goods or they don't suit/fit

Other

Don't Know

Finally, in order to assess consumers’ general awareness of the existence of legal rights when

they buy goods or services online, we asked all the respondents, i.e. those who had bought

something online and those who had not, whether they were aware of any laws which protect

people when buying online. 78% of the respondents were not aware of any laws which

protect consumers when buying online. Of those who had bought online, 73% were not

aware of any legal protection while, of those who had not, 83% did not know about any legal

protections.

Of the 67 respondents who indicated that they were aware of laws protecting them when

buying online, the legal protections identified were very diverse, ranging from statements that

they had heard of the Sales of Goods and Supply of Services Act, 1980 (3%) to the fact that

they thought the Director of Consumer Affairs would protect them or that they were generally

aware of credit card security protection (2%). 3% respondents were of the opinion that the

regular consumer laws applied to online transactions.

_________________________________________________________________________________________________________


5. Analysis of the Research Findings

5.1 An Overview of the Findings

The aim of the study was to assess the effectiveness of information provision as a means

of protecting consumer interests in the online retail environment. In this regard two

questions arose:

• first, were suppliers meeting their information provision obligations under the

2001 Regulations; and

• secondly, even where suppliers were compliant, does the provision of information

lead to better-informed customers?

The study addressed these questions through the use of two surveys: a website survey and

a consumer survey.

The website survey, which measured compliance with the eight prior information

requirements of Regulation 4, indicated considerable variation in terms of compliance.

For instance, there was 100% compliance with the requirement that information about the

main characteristics of the goods or services be provided. There was also a high level of

compliance with the requirement as to supplier’s identity. In contrast, almost 50% of

websites failed to provide adequate information about payment, delivery or performance;

over 30% of websites failed to provide adequate information about the consumer’s right

of withdrawal; and almost 25% of sites failed to comply with the requirement as to price.

These results raise questions about the effectiveness of the legislation with regard to

suppliers. Why are suppliers complying with some requirements more than others? One

possible explanation is that compliance has less to do with the existence of legal

requirements and more to do with market and competitive forces. For example, a

supplier in the business of selling goods or services will have a strong commercial

interest in describing those goods and services, and hence the high level of compliance

with the requirement as to the main characteristic of the goods or services. In contrast,

the consumer’s right of withdrawal is designed with the consumer’s interest in mind and

there is not the same commercial interest for the supplier in disclosing information about

this right and hence the lower level of compliance with the Regulations in this regard. If

this analysis reflects reality then it is arguable that the 2001 Regulations are not operating

as intended by ensuring the provision of information to consumers as a means of

protecting consumer interests. Arguably, the 2001 Regulations are not effective where it

really matters, namely by requiring suppliers to provide information in circumstances in

which they would not otherwise do so.

Further questions arise as to why this might be the case. There are three possible reasons

for this. First, suppliers are not aware of their legal obligation under the 2001

Regulations; secondly, even where suppliers are aware of the Regulations, complying

with the Regulations is made difficult because many of the legal provisions are

ambiguous; thirdly, suppliers are not concerned to comply with the Regulations because

_________________________________________________________________________________________________________


compliance is inadequately monitored and/or the cost of failure to comply is not set at

such a level as to persuade suppliers of the need to comply.13 Indeed, failure to comply

with the Regulations may arise from a combination of all three of these causes. It should

be noted that failure to comply with the prior information requirements under the 2001

Regulations is a criminal offence. However, we are not suggesting that the appropriate

response to non-compliance is a criminal prosecution. Rather, it seems to us that the

appropriate response, initially at least, is education. First, more should be done by the

Department of Enterprise, Trade and Employment and by business representative

organisations to ensure that suppliers are made aware of the existence of the Regulations,

and secondly, the Department and business representative organisations should co-operate

to produce a set of guidelines advising suppliers how to comply with the Regulations.14

As well as advising suppliers about minimal levels of compliance we suggest that

guidance as to Best Practice should also be provided. In this regard, and to give a flavour

of what we mean, a set of Best Practice Guidelines which have emerged from the website

survey are re-produced at the end of this Part.

As well as seeking to protect consumers by requiring suppliers to comply with various

information obligations, the 2001 Regulations, like many other consumer protection

measures, seek to protect consumers by putting consumers in a position whereby they can

protect themselves. The underlying premise is that if you provide consumers with the

appropriate information they can play an active role in protecting themselves. Equipped

with the right information, the consumer can make an informed decision whether to enter

into, or perhaps withdraw from, a particular contract, for instance. In this context, the

consumer survey sought to elicit consumer views about the role of information and to

examine the effectiveness of information provision from the consumer’s perspective. The

survey suggests that the vast majority of consumers recognise the importance of pre-

contract information provision and moreover, that consumers are generally satisfied with

the information they receive in advance of contracting (information on security of

payment being the only exception in this regard). However, this apparently positive

picture needs to be viewed along with the fact that 71% of consumers either never, or

only sometimes, read the Terms and Conditions of Supply (where much of the prior

information can be located). The consumer survey also suggests a lack of understanding

about aspects of withdrawal, including the minimum time period for withdrawal and the

circumstances when withdrawal is permissible. Therefore, it seems to us that consumers

have a misplaced confidence in the role of information and how it can be used to protect

their interests. Again, the education of consumers about their legal rights (78% of

consumers were not aware of any laws which protect them when buying online) must be

recognized as a priority. Consumers must be educated to play a more active role in their

own protection. At the same time, the promotion of Best Practice Guidelines among

suppliers will enable consumers to fulfill this role in reality.

13

A further survey of suppliers would be necessary to determine the validity of these views. 14

Clearly, the legislature in introducing or transposing such legislation also has a role to play in

minimising any ambiguities.

_________________________________________________________________________________________________________


5.2 Best Practice Guidelines regarding Regulation 4 (the eight prior information

requirements)

Regulation 4 requires suppliers to provide specified information, in advance of contract

formation, in a clear manner. The following are Best Practice Guidelines which may go

beyond what is necessary to achieve minimal compliance with Regulation 4.

Timing

• All the prior information should be made available on the website to ensure that it

is available to the consumer before any order is placed and any contract

concluded.

• All the prior information should be made available at all stages of the transaction

process and not just immediately before the order is placed

Content

• Information on the Supplier - All websites should include full information as to

the identity of the supplier (including trading name; and other identifying

information such as VAT number; companies registration number etc); the

supplier’s address (geographical; url and e-mail) and further contact information

(including telephone and fax numbers and the name of a contact person).

• Arrangements for Payment –Information should be given as to the method and

time of payment. Consumers should be informed about the nature of the payment

protection provided or of the absence of such protection if this is the case.

• Arrangements for Delivery/Performance - Information should be provided

regarding time and method of delivery (in the case of goods) and regarding the

commencement and termination dates (in the case of services). We regard the

matter of choice of delivery method or cost as a commercial decision and

therefore not relevant to the establishment of best practice.

• Information on Withdrawal (Time) - We regard the matter of extending the

withdrawal period beyond the statutory 7 day minimum as a commercial decision

and therefore not relevant to the establishment of best practice. However, where a

longer withdrawal period is provided, this extended period should be clearly

communicated.

• Information on Withdrawal (Reasons) - Websites should contain an express

statement to the effect that a consumer has a right to withdraw without giving

reasons.

• Information on Withdrawal (Details) – Websites should contain an explanation

of withdrawal procedures.

• Information on Withdrawal (Costs) - Websites should contain an express

statement to the effect that a consumer has a right to withdraw without costs or

penalty (other than the direct cost of return, if relevant).

_________________________________________________________________________________________________________


Manner

• The prior information should be communicated using plain language.

• Information concerning the identity of the supplier should be presented under a

heading such as “About Us” or “Contact Us”, as a hyperlink on the Home Page

and subsequent pages.

• There are different ways of presenting legal information. Headings such as

“Legal” or “Terms and Conditions” may be used. Best practice does not require

the adoption of any one of these. We would regard it as best practice however to

use a heading that connotes the provision of information about legal rights. For

this reason, we would not consider it to be appropriate to contain legal

information under the heading “Frequently Asked Questions” only as this heading

could signify any number of different issues and is therefore potentially confusing.

• The terms of use of the website should be clearly differentiated from the terms

and conditions of sale relating to the goods/service purchased through the website.

• Legal information should be available from the Home Page and all subsequent

pages via hyperlink, and that link should be immediately visible on the first view

of the screen, either on the top of the screen or at the side.

• Best practice requires the use of a “click-wrap” system (the consumer is required

to click a box to confirm that they have read the terms and conditions of supply)

as a means of alerting consumers to the existence of these terms and conditions.

• Best practice dictates that websites make express mention of the legislation (either

the 2001 Regulations or Directive 97/7) underlying consumers’ legal rights in this

area. Moreover, a direct link to the legislation or to a consumer rights website is

desirable.

_________________________________________________________________________________________________________


6. Annexes

6.1 Relevant extract from the EC (Protection of Consumer in Respect of Contracts

made by means of Distance Communication) Regulations 2001

Regulation 3

In these Regulations "distance contract" means a contract between a supplier and a consumer which -

(a) relates to goods or services,

(b) is made under an organised distance sales or service-provision scheme run by the supplier, and,

(c) is made by the supplier making exclusive use of one or more means of distance communication up to

and including the moment at which the contract is made,

other than -

(i) in the case of any provision of these Regulations (including a provision referred to in

paragraph (ii)) a contract which -

(I) relates to financial services, including financial services referred to in Annex II of the

Directive which, for convenience of reference, is set out in Schedule 2,

(II) is made by means of automatic vending machines or automated commercial

premises,

(III) is made with telecommunications operators through the use of public payphones,

(IV) is made in respect of the construction and sale of immovable property or relating to

other immovable property rights, other than the rental of such property or rights in such

property,

or,

(V) is made at an auction,

(ii) in the case of Regulations 4, 5 and 6 and 7(1), a contract -

(I) for the supply of foodstuffs, beverages or other goods intended for everyday

consumption supplied to the home, residence or workplace of the consumer by regular

roundsmen,

or,

(II) for the provision of accommodation, transport, catering or leisure services where the

supplier undertakes, when the contract is made, to provide those services on a specific

date or within a specific period.

Regulation 4

(1) A distance contract shall not be enforceable by the supplier against the consumer unless, in good

time prior to making the contract, the supplier has -

(a) provided the information set out in Schedule 3,

(b) made the commercial purpose of both the proposed contract, and the information referred

to in subparagraph (a), clear to the consumer,

(c) provided the information referred to in subparagraph (a) in a clear and comprehensible

manner in a way which is appropriate to the means of distance communication used, with due

regard to any enactment or rule of law requiring good faith in commercial transactions or

governing protection of those who are unable to give their consent, such as minors.

(2) Without prejudice to paragraph (1), where contact is made by the supplier with the consumer by

means of telephone communication, the identity of the supplier and the commercial purpose of the call

shall be made explicitly clear and a distance contract made by such means, accordingly, shall not be

enforceable by the supplier against the consumer unless such identity and commercial purpose have been

made clear.

(3) A person who fails to comply with this Regulation is guilty of an offence.

_________________________________________________________________________________________________________


Regulation 5

(1) Without prejudice to Regulation 4 but subject to paragraph (3), a distance contract shall not be

enforceable by the supplier against the consumer unless the consumer has received written confirmation,

or confirmation in another durable medium available and accessible to him or her, of the information

referred to in paragraphs 1 to 6 of Schedule 3 in good time during the performance of the contract, and at

the latest at the time of delivery where goods not for delivery to third parties are concerned, unless the

information has already been given to the consumer prior to making the contract, in writing or on another

durable medium available and accessible to him or her.

(2) The following information and particulars shall accompany the information referred to in paragraph

(1) (and in the case of the information referred to in subparagraph (a) shall be in writing)

(a) information on conditions and procedures for exercising a right of cancellation referred to in

Regulation 6, (including cancellation of distance contracts referred to in subparagraph (a) of

paragraph (3) of that Regulation),

(b) the geographical address of the place of business of the supplier to which the consumer may

address any complaints,

(c) information on after-sales services and guarantees which exist, and

(d) conditions for cancelling the contract in the event that it is of unspecified duration or its

duration exceeds one year.

(3) Paragraph (1) shall not apply to a distance contract for supply of services where these services are

supplied on one occasion, and are invoiced by the operator of the means of distance communication.

(4) A distance contract referred to in paragraph (3) shall not be enforceable by the supplier against the

consumer unless the consumer has been furnished with the geographical address of the place of business

of the supplier to which the consumer may address complaints.

(5) A person who fails to comply with this Regulation is guilty of an offence.

Regulation 6

(1) There is an implied condition in a distance contract that -

(a) the consumer has a period of 7 working days in which to cancel the distance contract without

giving a reason, and,

(b) if the consumer exercises that right of cancellation, he or she shall not incur any charges or

penalties for so doing except the direct cost of returning the goods.

(4) Unless there is agreement between the supplier and the consumer to the contrary, the consumer may

not exercise the right of cancellation referred to in paragraph (1) in respect of a distance contract:

(a) for the provision of services if performance has begun, with the consumer's agreement,

before the end of the cancellation period referred to in the preceding paragraphs of this

Regulation,

(b) for the supply of goods and services the price of which is dependent on fluctuations in the

financial market which cannot be controlled by the supplier,

(c) for the supply of goods made to the consumer's specifications or clearly personalised or

which, by reason of their nature, cannot be returned or are liable to deteriorate or expire rapidly,

(d) for the supply of audio or video recordings or computer software which were unsealed by

the consumer,

(e) for the supply of newspapers, periodicals and magazines, and

(f) for gaming and lottery services

_________________________________________________________________________________________________________


6.2 The website survey form

Distance Selling Website Survey

Date of Survey -

1. Address of the website

2. What goods/services was the website selling (broadly defined)?

3. Information on sites, leading up to the placing of order

Does the website supplier provide the consumer with information on:

Yes No

(a) The identity of the supplier, and in contracts

requiring payment in advance his address � �

Yes No

� Trading Name � �

� Geographical address � �

� Phone number for queries � �

� Email address � �

� Contact Name � �

Remarks

(b) The main characteristics of the goods or services

Yes No

� Is there a written description of the main

characteristics of the good(s)/service(s)? � �

� Are there photos of the product(s)? � �

� Are there reviews/testimonials on the

product(s) or service(s)? � �

Remarks

Yes No

(c) The price of the goods or services including all taxes � �

Remarks

_________________________________________________________________________________________________________


Yes No N/A

(d) Delivery costs, where appropriate � � �

Remarks

Yes No

(e) Arrangements for payment, delivery or performance � �

(i.e. how and when to pay, how and when to deliver)

payment arrangements

� information as to time of payment

In advance �

On despatch �

Other time �

Not stated �

� presence of a security lock symbol on website � �

� information on the technological security

of payment � �

� information as to consumer’s legal protection

should credit card fraud occur � �

� information as to consumer protection in the

case of supplier insolvency � �

� choice of payment method � �

delivery arrangements

Yes No N/A

� Information on target time for dispatch � � �

� Information on delivery method/time � � �

� Choice of delivery times � � �

� Choice of delivery method � �

� Choice of delivery costs � � �

performance

Yes No N/A

� Details as to when the contract for services

will commence � � �

� Details as to when the contract for services

will terminate � � �

� Explanation as to how contract will be performed � � �

Remarks

_________________________________________________________________________________________________________


(f) The existence of a right of withdrawal Yes No � �

Time for Withdrawal:

State time in days:

More than 7 days �

7 days �

Less than 7 days �

Reasons Given for Right to Withdraw

Express statement that no need for reason �

No statement regarding need for reason �

Express requirement for a reason �

Details on Return

Yes No

Explanation of return procedure � �

Restrictions on returns � �

Nature of restriction:

Cost of Withdrawal

No cost �

Direct cost of return �

Other penalty, interest, cost �

Remarks

Yes No

(g) The period for which the offer remains valid � �

Remarks

Yes No N/A

(h) The minimum duration of the contract in the

case of contracts for the supply of products or

services to be performed permanently/ recurrently � � �

Remarks

_________________________________________________________________________________________________________


(h) Terms and Conditions

Yes No

Are ‘T&C’ accessible before placing order � �

If so, are they

� Available in different languages � �

� Accessible from every page � �

� Terms and conditions identify “Choice of Law” � �

� Mention of revocation/ returning/cooling-off � �

� Any direct mention of the Distance Selling � �

Directive 97/7/EC

Are ‘T&C’ available in another form (e.g. FAQ) � �

If so, are they

� Available in different languages � �

� Accessible from every page � �

� Terms and conditions identify “Choice of Law” � �

� Mention of revocation/returning/cooling-off � �

� Any direct mention of the Distance Selling � �

Directive 97/7/EC

bringing terms and conditions to consumer’s attention

Yes No

� a click wrap system is in place � �

_________________________________________________________________________________________________________


6.3 List of websites examined

1. http://www.aaireland.ie/

2. www.adornais.com/

3. www.babysitters.ie

4. www.blarney.com

5. www.blackfield.com

6. www.bonusprint.ie

7. http://www.buy4now.ie/arnotts/

8. www.buy4now.ie/rte/home.aspx?loc=H

9. http://www.buy4now.ie/discountelectrical/

10. http://www.buy4now.ie/Eason/

11. https://www.buy4now.ie/irfu/home.aspx?loc=H

12. www.claddaghrecords.com

13. www.clanarans.com

14. www.clerys.com

15. http://corkcityfc.buy.ie/catalog/index.php

16. www.crystalsprings.ie

17. http://dating.ireland.com/

18. www.dell.ie

19. http://www.dreamweddingpackages.com/

20. http://dsl.digiweb.ie/

21. www.eircom.ie

22. www.elara.ie

23. www.farmersjournal.ie (advertising)

24. http://www.four-courts-press.ie/

25. www.foxfordjewellery.com

26. http://www.furnituretoday.ie/

27. www.gifts.ie

_________________________________________________________________________________________________________


28. http://www.gillandmacmillan.ie/

29. http://www.guinnesswebstore.com/

30. www.hiberniacollege.net

31. www.irishgen.com

32. www.irishgenealogycentre.com

33. www.irishstamps.ie

34. http://www.irishwills.ie/

35. www.jamster.ie

36. www.kennys.ie

37. http://www.kidsgym.ie/

38. www.kiteshop.ie/

39. www.komplett.ie

40. www.lantz.ie

41. http://www.lilyobriens.ie/

42. http://www.mementos.ie/

43. http://www.mimitoys.ie/

44. http://www.montessorionthenet.com/

45. http://www.newbridgesilverware.com/

46. http://web.o2.ie/

47. http://www.ogills.com/

48. http://peoplesrepublicofcork.com

49. www.penguin.ie

50. http://www.poolbeg.com/

51. www.pride.ie

52. http://www.rac.ie/

53. www.readireland.ie

54. https://redletterdaycards.com/home.php

_________________________________________________________________________________________________________


55. http://safetyireland.com/

56. http://www.salmonpoetry.com/

57. http://www.schoolbooks.ie/

58. http://www.schoolbooksonline.ie/

59. www.siemens.ie

60. http://www.simplybaby.ie/index.asp

61. www.simplyirish.com

62. http://www.superquinn.ie/ (wine)

63. http://www.tele2.ie/homepage.aspx

64. www.tesco.ie (non-perishable items)

65. http://www.thedayiwasborn.ie/

66. http://www.theequestrianstore.com/

67. http://www.thewinebuff.com/

68. http://www.trees.ie/

69. www.vjhomefitness.com

70. www.vodafone.ie

71. www.wills.ie

72. www.wineonline.ie

73. http://www.woodiesdiy.com/woodies/default.asp?shop=woodies

74. www.boylesports.com

75. www.farmersjournal.ie (periodical)

76. http://www.flowersbymulqueens.com/

77. http://www.gamebookers.ie/

78. www.madflowers.com

79. www.paddypower.com

80. https://rehablotteries.gelotto.com/index.htmp

_________________________________________________________________________________________________________


6.4 The consumer survey form

1. Have you ever purchased anything online?

2. We are interested in finding out the main reasons why people buy online. Can you indicate

which of the following you consider important or not?

(a) Convenience

(b) Greater Choice

(c) Cost

(d) Easy to compare various e-commerce providers

(e) It’s unnecessary to go to a real shop/service provider

(f) Other

(Q 3 for those who answered no to question 1)

(Q 4 is for respondents who, in answer to Q3,said that lack of trust was an important reason for

not buying online)

4. Why do you not trust the internet? Is it because you are concerned about:

(a) Security of payment

(b) Credibility of information on the internet

(c) Accessibility of information on the internet

(d) Delivery, damaged goods etc

(e) Your rights as a consumer being respected

(f) Ability to get a refund

(g) Other – please specify

(Qs 5-16 are for those who have made online purchases)

5. How many times have you bought something online in the past year?

(a) Never

(b) Once

(c) Twice

(d) Three –Five Times

3. We are interested in finding out the main reasons why people don't buy online.

Is it because:

_________________________________________________________________________________________________________


(e) Five-Twenty Times

(f) More than twenty times

6. What did you buy?

(a) CDs

(b) Books

(c) Tickets

(d) Clothes

(e) Downloadable music/software

(f) Accommodation

(g) Groceries

(h) Other - please specify

7. Was the computer you used to make the purchase(s)

(a) A home pc

(b) A work computer

(c) An internet café computer

(d) Other

8. Is there any specific information that you would typically check for before making a

purchase on line? (if necessary to prompt, use price as an example)

9. Please rate the following information in terms of importance to you

(a) the name of the supplier and his address

(b) a description of the goods or services

(c) the price of the goods or services including all taxes

(d) delivery costs

(e) the arrangements for payment and delivery

(f) the existence of a right of withdrawal

(g) the period for which the offer remains valid

(h) the minimum duration of the contract

10. Is there any other information that should be provided?

_________________________________________________________________________________________________________


11. Before deciding to buy online, do you read the “Terms and Conditions”?

(a) Always

(b) Sometimes

(c) Never

12. When can you return goods? (elicit response regarding (a) time and (b) fault/no fault)

13. Before deciding to buy online do you check for a returns policy?

(a) Always

(b) Sometimes

(c) Never

14. Before deciding to buy online have you ever encountered any difficulty with the

information provided on a website?

(Q 15 is for respondents who answered yes to Q 14)

15. From your experience, what were the problems with information provided online?

(a) Information you were looking for was not available

(b) Information was not well organized

(c) There was too much information

(d) It was hard to navigate through the information

(e) It took too long to load the page

(f) Downloadable files/forms were in a format I can't access

(g) You found it hard to understand the way things were phrased (language not clear and

comprehensible)

(h) Other (please specify)

16. Are you aware of any particular laws which protect you when buying online?

_________________________________________________________________________________________________________


(the following demographic questions are for all respondents)

Gender

Male

Female

Approximate Age

(a) 15-24

(b) 25-39

(c) 40-54

(d) 55+

Education

(a) Up to age 15

(b) 16-19

(c) 20+

What is your occupation? What do you do for a living?

Where do you live?

(a) Rural village

(b) Medium Town

(c) City/Large Town

Documents

Consumers in the Electronic Marketplace: an examination of ... · PDF fileMary Donnelly Jane Mulcahy Fidelma White Faculty of Law, University College Cork