Legal requirements for your online shop

Sorting out the legal requirements for your online shop will save you from trying to fix problems and complaints later. The easiest way to sell goods or services for your small business is to do it online.

Many consumers started buying online during the pandemic and many would like to continue doing so. An online shop also means that you do not have to pay for expensive retail space.

After seeing an increase in complaints about online shopping, even before the pandemic in 2019, the National Consumer Commission decided to issue a Business Guide for online businesses based on international best practice using guidelines from the Organisation of Economic Cooperation and Development (OECD), local legislation such as the Electronic Communications Act 25 of 2002 and the Consumer Protection Act 68 of 2008.

According to the NCC, the guide is designed to ensure that consumers are protected and businesses that sell products online have an obligation to ensure that the following principles are observed:

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Information in plain and understandable language

Plain and simple information is important to ensure that consumers can make informed decisions when shopping online. If more than one language is used, all the information must also be available in that language.

No misleading information

Online businesses are not allowed to use misleading information about a material fact of the product such as quality, standard, ingredients, performance, either directly or indirectly.

Accurate pricing

Accurate pricing is important to ensure that consumers know upfront how much they will pay or what the total price of the contract is. Different payment options must be disclosed upfront to allow consumers to understand the cost implications of each option.

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Not relying on terms and conditions to convey important information

As an online business, you are not allowed to bury material and key information in terms and conditions that consumers seldom read. This information must be in plain and understandable language upfront and must not only become available after the contract is concluded. This will help consumers to look at the product and check its compatibility with other products. 

Express consumer consent

Businesses must get the consumer’s express consent before charging for goods or services bought online and not rely only on pre-checked boxes, as this is not a meaningful way to get consumer consent.

Consumers will often leave the pre-checked boxes checked without necessarily applying their minds to what it means. The same would apply to negative option marketing, where a consumer has to decline an offer for goods or services and if they do not, it is seen as consent for the supply of the goods or services.

This kind of offer is void according to section 31(2) of the Consumer Protection Act (CPA) and automatic renewal of contracts are also unfair, unlawful and against the spirit of the CPA.

Timing of information

Online businesses usually provide information to consumers before they buy something, but in the case of an ongoing contract, timely reminders are more effective than relying on information that was provided before the contract was signed.

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Return and refund policies

Online businesses must provide their return and refund policy up front. These policies must be in simple and understandable language as well as conspicuous and easily accessible. Section 55(2) of the CPA requires that goods must be suitable for its purpose, of good quality, in good working order and free from defects.

If the goods are faulty within six months after delivery to a consumer, the consumer may return the goods without a penalty, at the supplier’s risk and expense and demand that the supplier must, at the discretion of the consumer, either replace the faulty goods or repair it or refund the price paid for the goods.

Information about the business

The information required on your platform must include:

• Full name and legal status in the case of a legal person
• The business registration number
• Names of office bearers
• Place of registration
• Business contact details (telephone or fax numbers, email address, website or other electronic means of contact)
• Physical address where the supplier will receive legal service of documents
• Membership of any self-regulatory body or accreditation and the contact details of this body
• Any code of conduct of a body the supplier subscribes to and how that code of conduct can be accessed by the consumer.

Information about the transaction

In addition, online businesses must provide:

• A clear full statement of the transaction that includes the price, optional charges imposed, costs imposed by third parties, contract terms and conditions, method of payment, ways to opt out and terms of delivery.
• Upfront information relating to all the related charges, including customs duties for international transactions, clearance charges and postage.

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Electronic Communication and Transactions Act

The Electronic Communication and Transactions Act also shows how important it is to buy online only from business with all these relevant details on their platform:

• The name and legal status of the business, as well as the street address, phone number and email address.
• How you can pay with a credit or debit card or direct electronic funds transfer (EFT) with the full banking details of the business.
• When your goods will be delivered.
• The policy for refunds and returns as the consumer cannot inspect the goods beforehand.
• How refunds are done and how soon it happens. The policy is usually that the consumer is refunded into the account the consumer paid from as soon as the business receives the returned product.
• What the business is doing to protect their customers’ personal information, including their ID numbers and card numbers that have to be protected from hackers.