Internet Regulation

Internet Regulation

Robert Blamires
Associate, Field Fisher Waterhouse

28 April 2010

The Internet
A Declaration of the Independence of Cyberspace
Barlow, 1996

“Governments of the Industrial World, you weary giants of flesh and steel, I
come from Cyberspace, the new home of Mind. On behalf of the future, I
ask you of the past to leave us alone. You are not welcome among us. You
have no sovereignty where we gather.”
“We have no elected government, nor are we likely to have one, so I
address you with no greater authority than that with which liberty itself
always speaks. I declare the global social space we are building to be
naturally independent of the tyrannies you seek to impose on us. You have
no moral right to rule us nor do you possess any methods of enforcement
we have true reason to fear…”

And so on…

The Internet

• Not an entity but a communications infrastructure. To the
extent that it is a thing, it is a network of networks, all
internetworking with each other by passing data packets.
The internetwork expands and contracts as connections
are made and broken
• …the Internet is arguably the most regulated ‘place’ on
earth
Reed, Internet Law 2004

Laws on the internet
a) Generally applicable law

b) Sector/service/product specific laws and
regulations

c) Internet-specific law and regulation

d) Soft law

Scope

• Electronic Commerce (EC Directive) Regulations 2002
• Consumer Protection (Distance Selling) Regulations
2000
• Application – examples
• Concluding thoughts

Community infringements

• The Enterprise Act 2002 (Part 8 Community Infringements
Specified UK Laws) Order 2003

• Regulations 6, 7 , 8, 9 and 11 of the E-Commerce
Regulations and the Distance Selling Regulations are both
specified UK Laws

Consumer Protection from Unfair Trading Regs
Misleading omissions – regulation 6

Regulation 6(3)(b):

“any information requirement which applies in relation to
a commercial communication as a result of a Community
obligation” is material information.

E-Commerce Regulations
“information society service”

• “any service normally provided for remuneration, at a
distance, by means of electronic equipment for the
processing … and storage of data…”
• includes most web services
• note “normally provided for remuneration”

General Information requirements – regulation 6
Providers must make certain information available to the
recipient of the service and any relevant enforcement
authority, in a form which is easily, directly and permanently
accessible.
• “any relevant enforcement authority” is any person who is
authorised to take enforcement action
• “easily, directly and permanently accessible” form

General Information requirements – regulation 6
a) name of the service provider;
b) geographic address of service provider;
c) details of the service provider, including his electronic mail
address, which make it possible to contact him rapidly and
communicate with him in a direct and effective manner;
d) details of any trade or similar registration;
e) details of any applicable authorisation scheme;
f) relevant details of regulated professions; and
g) the service provider’s VAT number, if applicable.

Information requirements – regulation 6
Example 1:

Example 2

Example 3:

Information for contracts – regulation 9
Information to be provided where contracts are concluded by
electronic means:

“Unless parties who are not consumers have agreed
otherwise, where a contract is to be concluded by electronic
means a service provider shall, prior to an order being
placed by the recipient of a service, provide to that recipient
in a clear, comprehensible and unambiguous manner…”

What information?
a) the different technical steps to follow to conclude the
contract;
b) whether or not the concluded contract will be filed by the
service provider and whether it will be accessible;
c) the technical means for identifying and correcting input
errors prior to the placing of the order; and
d) the languages offered for conclusion of the contract.
Also, the provider must make any applicable terms and
conditions available in a way that allows the recipient to
store and reproduce them.

•Different technical steps

•Different technical steps, contract filing and language

• Identifying and correcting input errors

Ordering process – regulation 11
Unless parties who are not consumers have agreed
otherwise, where the recipient of the service places his order
through technological means, a service provider shall–
a) acknowledge receipt of the order to the recipient of the
service without undue delay and by electronic means; and
b) make available to the recipient of the service appropriate,
effective and accessible technical means allowing him to
identify and correct input errors prior to the placing of the
order.

Ordering process – regulation 11
Acknowledgement

Commercial communications information requirements – regulation 7

Commercial communications
Service providers must ensure that commercial communications:
a) are clearly identifiable as such;
b) clearly identify the sender;
c) clearly identify any promotional offer (including any discount, premium
or gift) and ensure that any conditions which must be met to qualify
for it are easily accessible, and presented clearly and unambiguously;
and
d) clearly identify any promotional competition or game and ensure that
any conditions for participation are easily accessible and presented
clearly and unambiguously.

SPAM Information requirements – regulation 8

A service provider must ensure that any unsolicited [email]
commercial communication is clearly and unambiguously
identifiable as such as soon as it is received.

SPAM Information requirements – regulations 8 and 9

Sanctions – regulation 4(6)
• “To the extent that anything in these Regulations creates
any new criminal offence [does it?], it shall not be
punishable with imprisonment for more than two years or
punishable on summary conviction with imprisonment for
more than three months or with a fine of more than level 5
on the standard scale (if not calculated on a daily basis) or
with a fine of more than £100 a day”.
• NB breach is a Community infringement under the
Enterprise Act

Liability – regulations 13 – 16

• Provide remedies for breach of regulations 6 to 9 and 11, namely, the
following actions by any recipient against the provider:
• Where provider hasn’t complied with the info requirements (regs 6, 7, 8,
9(1) and 11(1)(a)), an action for damages for breach of statutory duty;
• Where provider has failed to make applicable terms and conditions
available (reg 9(3)), injunctive action to require the provider to make them
available
• Where recipient has concluded a contract covered by these regs and the
provider has failed to make available a means of allowing the recipient
identify and correct input errors (reg 11(1)(b)), recipient can rescind the
contract, unless a court orders otherwise.

Intermediary defences - regulations 17, 18 and 19

• Regulation 17 – mere conduit

• Regulation 18 – caching

• Regulation 19 – hosting

Intermediary defences -
The caching and hosting defences do not apply,
broadly, if the service provider:
• has actual knowledge of the unlawful activity or
information; or
• upon obtaining such knowledge, fails to act
expeditiously to remove or disable access to the
information.
Therefore, if (eg) an ISP is put on notice (eg by the
OFT) of unlawful activity, it will lose the benefit if
these defences if it does not “act expeditiously” to
remove/disable access to such information.

Distance Selling Regulations
Applicable contracts
• Broadly, apply to distance contracts, other than excepted contracts.

• Distance contract - any contract … concluded between a supplier
and a consumer … run by the supplier who … makes exclusive use
of one or more means of distance communication …– therefore
includes business-to-consumer contracts concluded online.

• Excepted contracts – land, financial services etc

• Also, regs 7 to 19(1) do not apply to certain contracts (relating to
time-specific services).


…in good time prior to the conclusion of the contract the
supplier must provide the certain information in a clear
and comprehensible manner appropriate to the means of
distance communication used, with due regard in
particular to the principles of good faith in commercial
transactions and the principles governing the protection of
those who are unable to give their consent (eg minors).

a) supplier’s identity and, if payment is required in advance, his address;
b) description of the main characteristics of the goods/services;
c) price of the goods/services (including all taxes);
d) delivery costs (where appropriate);
e) arrangements for payment, delivery or performance;
f) existence of a cancellation right, where applicable (on which more later);
g) cost of using the communication where calculated other than at the basic rate;
h) period for which the offer or the price remains valid;
i) in the case of contracts for the supply of goods/services to be performed
permanently or recurrently, the minimum duration of the contract (where
appropriate);
j) supplier’s commercial purpose;
k) if he proposes to provide substitute goods/services of equivalent quality and
price in the event of the goods/services ordered being unavailable; and
l) if the supplier will pay the cost of returning any substitute goods if the consumer
cancels.

Written and additional information – regulation 8
Supplier to provide certain information to the consumer in
writing, or in another durable medium which is available
and accessible to the consumer either:
a) prior to the conclusion of the contract, or
b) thereafter, in good time and in any event:
i. in the case of services, during the performance of the
contract; and
ii. where goods (not for delivery to third parties) are
concerned, at the time of delivery at the latest.

Written and additional information – regulation 8
a) the information set out in paragraphs (i) to (vi) of Regulation 7(1)(a) (ie
paragraphs a) to f) on the earlier slide); and
b) information about exercising the cancellation right including:
i. any contractual requirement on the consumer to return goods to the
supplier if the consumer cancels;
ii. who would be responsible for the cost of returning any goods to the
supplier/the cost of his recovering them, if the consumer cancels;
iii. the impact on the cancellation rights if the consumer agreeing to
performance of a services contract before the end of the seven working
day period;
iv. supplier’s (geographical) address for complaints;
v. any after-sales services and guarantees; and
vi. where the contract is of an unspecified duration or a duration exceeding
one year, any conditions for exercising a cancellation right.

Cancellation right – basic right – regulations 10 – 12

• Consumer can cancel the contract, on written notice to the
supplier within seven working days from the day after the
day on which:
• the goods are received by the intended recipient; or
• a contract for services is concluded,
“Commencement Date”.

Cancellation right – extension – regulations 10 – 12
Except:
• If the supplier does not inform the consumer, before
conclusion of a contract, about the right to cancel but
subsequently does so within three months of the
Commencement Date, the consumer can cancel within
seven working days from the day after the day on which
he receives the information.
• If the supplier doesn’t meet the three-month time limit, the
consumer can cancel within three months and seven
working days of Commencement Date.

Cancellation right – extension – regulations 10 – 12
• But, if the supplier does not inform the consumer, prior to conclusion
of a services contract, about the cancellation right, and performance
of the contract begins (with the consumer's agreement) within seven
working days from the day after the day on which the contract was
concluded but the supplier subsequently informs the consumer in
good time during the performance of the contract, the cancellation
period ends:
• seven working days from the day after the day on which the
consumer receives the information; or
• if earlier, on the day when the performance of the contract is
completed.

Cancellation right - Exceptions – regulation 13
(Unless otherwise agreed between the parties):
• Services contract where performance of the contract has begun (with the
consumer's agreement)
• Before the end of the applicable cancellation period; and
• After the supplier has informed the consumer about the cancellation right;
• Price dependant on financial market fluctuations;
• Tailor-made or clearly personalised goods;
• Goods which by nature cannot be returned or are liable to deteriorate/expire
rapidly;
• Audio/video recordings or computer software if consumer unseals them;
• Newspapers, periodicals or magazines; or
• Gaming, betting or lotteries.

Cancellation right – consequences of cancellation –
regulations 14 and 17
• Consumer must have retained possession of and taken reasonable
care of the goods and is under a duty to restore them to the supplier
(on notice in writing/other durable medium from supplier).
• Supplier must reimburse sums paid as soon as possible and in any
case within 30 days of notice of cancellation.
• Supplier can deduct direct costs of recovering goods if consumer fails
to comply with a contractual provision requiring consumer to return
goods/returns goods at supplier’s expense (unless:
• consumer has a contractual/statutory right to reject the goods; or
• the provision requiring return of the goods is unfair under the Unfair
Terms in Consumer Contracts Regs 1999).

Cancellation right – examples

Cancellation right – examples
A consumer:
a) orders some jewellery online;
b) is not informed of a right to cancel before concluding the contract;
c) receives the goods, without cancellation information; and
d) is not subsequently informed of a right to cancel within three months from
the day after the day on which he receives the goods.
What cancellation rights does the consumer have and when do they expire?
• The consumer can cancel within three months and seven working days
from the day after the day on which he receives the goods.
Unless…
• The jewellery was earrings for pierced ears, in which case regulation 13
would probably apply and he would have no right to cancel.

Sanctions/other – regulations 25 – 29
• The OFT may apply for an injunction against any person who appears
to the OFT to be responsible for a breach by a supplier of the
regulations.
• The OFT is under a duty to consider complaints made to it about a
breach of the regulations (with very limited exceptions) and must give
reasons for its decision to apply or not to apply for an injunction
(having had regard, if it considers appropriate, to any relevant
undertakings re compliance with the regulations).
• Other enforcement authorities are under a duty to notify the OFT of
any undertakings, injunctions etc re compliance with the regulations).
• The OFT should publish “in such form and manner as it considers
appropriate” details of undertakings, orders etc re compliance with the
regulations.
• NB Parties cannot contract out of the regulations.

OFT Web Sweep
OFT web sweep analysis of top UK retail websites’
compliance with E-Commerce and Distance Selling
Regulations:
• Results published March 2008
• 14% failed to provide physical address
• 15% failed to notify consumers of cancellation rights
• 31% failed to give full refunds on cancellation
• 40% failed to indicate compulsory charges early in the
transaction

Questions?

Robert Blamires
robert.blamires@ffw.com
+44 (0)20 7861 4136 / +44 (0) 7872822 353

Internet Regulation

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