Small firms struggle with e-commerce laws

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

Research shows that more than half of UK e-commerce sites do not comply with all of the three main laws covering web sales: the E-commerce Directive, the Data Protection Act and Distance Selling Regulations.

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

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

The laws are designed to ensure that consumers have the same protection shopping online as they do on the high street.

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

"Large companies know the law and tend to comply," said Jeremy Beale, head of e-business at the Confederation of British Industry.

"The difficulty comes in the small companies that don't have the legal resources."

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

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

Jon Aslin, Clickdocs director, explained that the lack of compliance is particularly damaging for smaller companies.

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

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