Planning an e-venture? Know the rules

A few years ago the web was full of articles describing e-commerce as the most significant development since the Industrial Revolution.

And venture capitalists seemed prepared to throw money at any new e-business proposition, even if the business plan appeared to have been written on the back of a cigarette packet.

Unlike traditional businesses, there was little regulation and almost total flexibility to be creative in the offering and delivery of services.

With so many jurisdictions involved in international web sales, it seemed hard to contemplate any strict regulatory regime. Business appeared to be free from the shackles of red tape.

But it's a different picture now. E-commerce, whether straight e-commerce or mobile commerce, is almost a dirty word to angel financiers.

If you are considering setting up an e-commerce or m-commerce venture you will need to include some or all of the following in your plans:

• Electronic Commerce (EC Directive) Regulations 2002
• Data Protection Act 1998
• Five Telecoms Directives
• Consumer Protection (Distance Selling) Regulations 2000
• Sale of Goods Directive 1999
• Distance Marketing of Consumer Financial Services Directive 2002
• Information Society/Digital Copyright Directive 2002
• Brussels Regulation 2000
• Control of Misleading Advertising Regulations 2000
• Electronic Communications Data Protection Directive 2002
• Regulation of Investigatory Powers Act 2000 and connected regulations
• A variety of health and safety and consumer regulations applying to specialist product sectors.

Has the IT slump and European bureaucracy stifled enterprise on the internet? We don't think so. Of course, there has been a financial shake-up, and only the most promising ventures are likely to get virgin finance.

As for the regulations, you can rush from pillar to post organising compliance on an ad hoc basis, or you can use a risk management approach and feature the relevant issues in your business plan.

In fact, if you have a proper compliance programme from the outset you can turn that work into a goodwill investment.

As an e-commerce business, you will need to build trust, which is vital in persuading people to do business with you. Securing your website will also help you comply with the new data protection laws and avoid the adverse publicity of a complaint.

Look at the adverse reaction to those businesses whose customer data has become available to all and sundry because of inadequate security.

E-commerce has moved on, but it still offers great opportunities.

Peter Wilson is partner for the dispute resolution department, and Simon Stokes is partner head of the e-commerce and digital media group, both at law firm Tarlo Lyons.