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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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Consumers in the Electronic Marketplace 2
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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Consumers in the Electronic Marketplace 3
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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Consumers in the Electronic Marketplace 4
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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Consumers in the Electronic Marketplace 5
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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Consumers in the Electronic Marketplace 6
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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Consumers in the Electronic Marketplace 7
(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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Consumers in the Electronic Marketplace 8
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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Consumers in the Electronic Marketplace 9
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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Consumers in the Electronic Marketplace 10
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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Consumers in the Electronic Marketplace 11
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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Consumers in the Electronic Marketplace 12
• 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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Consumers in the Electronic Marketplace 13
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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Consumers in the Electronic Marketplace 14
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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Consumers in the Electronic Marketplace 15
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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Consumers in the Electronic Marketplace 16
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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Consumers in the Electronic Marketplace 17
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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Consumers in the Electronic Marketplace 18
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 19
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 20
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 21
• 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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 22
• 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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 23
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 24
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 25
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 26
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%.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 27
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 28
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:
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 29
• 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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 30
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 in the Electronic Marketplace 31
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 32
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 33
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 34
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 35
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 36
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).
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Consumers in the Electronic Marketplace 37
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.
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Consumers in the Electronic Marketplace 38
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.
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 39
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
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Consumers in the Electronic Marketplace 40
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
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Consumers in the Electronic Marketplace 41
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
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Consumers in the Electronic Marketplace 42
(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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 43
(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 � �
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 44
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
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Consumers in the Electronic Marketplace 45
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
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Consumers in the Electronic Marketplace 46
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
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 47
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:
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Consumers in the Electronic Marketplace 48
(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?
_________________________________________________________________________________________________________
Consumers in the Electronic Marketplace 49
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?
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Consumers in the Electronic Marketplace 50
(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