Other ecommerce legislation

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Sparrow (2000) identified eight areas of law which need to concern online marketers. Although laws have been refined since then, this is still a useful framework for considering the laws to which digital marketers are subject.

Domain name

The domain name refers to the name of the web server and it is usually selected to be the same as the name of the company, e.g. www.company-name.com, and the extension will indicate its type.

1 Marketing your e-commerce business

At the time of writing, Sparrow used this category to refer to purchasing a domain name for its web site. There are now other legal constraints that also fall under this category.

Domain name registration

Most companies are likely to own several domains (see end of Chapter 1 for an introduction), perhaps for different product lines or countries or for specific marketing campaigns. Domain name disputes can arise when an individual or company has registered a domain name which another company claims they have the right to. This is sometimes referred to as 'cybersquatting'.

One of the best-known cases was brought in 1998 by Marks and Spencer and other high-street retailers, since another company, 'One In a Million Limited', had registered names such as marks&spencer.com, britishtelecom.net and sainsbury.com. It then tried to sell these names for a profit. The companies already had sites with more familiar addresses such as marksandspencers.co.uk, but had not taken the precaution of registering all related domains with different forms of spelling and different top-level domains such as .net. Unsurprisingly, an injunction was issued against One in a Million which was no longer able to use these names.

The problem of companies' names being misappropriated was common during the 1990s, but companies still need to be sure to register all related domain names for each brand since new top-level domain names are created through time such as .biz and .eu.

If you are responsible for web sites, you need to check that domain names are automatically renewed by your hosting company (as most are today). For example, the .co.uk domain must be renewed every two years. Companies that don't manage this process potentially risk losing their domain name since another company could potentially register it if the domain name lapsed.

Using competitor names and trademarks in meta-tags (for search engine optimisation)

Meta-tags, which are part of the HTML code of a site are used to market web sites by enabling them to appear more prominently in search engines as part of search engine optimisation (SEO) (see Chapter 8). Some companies have tried putting the name of a competitor company name within the meta-tags. This is not legal since case law has found

Pay-per-click (PPC) search marketing

Refers to when a company pays for text ads to be displayed on the search engine results pages when a specific keyphrase is entered by the search users. It is so called since the marketer pays for each time the hypertext link in the ad is clicked on.

Accessibility legislation

Legislation intended to protect users of web sites with disabilities including visual disability.

against companies that have used this approach. A further issue of marketing-related law is privacy law for e-mail marketing which was considered in the previous section.

Using competitor names and trademarks in pay-per-click advertising

A similar approach can potentially be used in pay-per-click marketing (see Chapter 8) to advertise on competitors' names and trademarks. For example, if a search user types 'Dell laptop' can an advertiser bid to place an ad offering an 'HP laptop'? There is less case law in this area and differing findings have occurred in the US and France (such advertising is not permitted in France).

Accessibility law

Web accessibility refers to enabling all users of a web site to interact with it regardless of disabilities they may have or the web browser or platform they are using to access the site. The visually impaired or blind are the main audience that designing an accessible web site can help.

Many countries now have specific accessibility legislation. This is often contained within disability and discrimination acts. In the UK, the relevant act is the Disability and Discrimination Act 1995.

2 Forming an electronic contract (contract law and distance-selling law)

We will look at two aspects of forming an electronic contract. Country of origin principle

The contract formed between a buyer and a seller on a web site will be subject to the laws of a particular country. In Europe, many such laws are specified at the regional (European Union) level, but are interpreted differently in different countries. This raises the issue of which law applies - is it that for the buyer, for example located in Germany, or the seller (merchant), whose site is based in France? Although this has been unclear, in 2002 attempts were made by the EU to adopt the 'country of origin principle'. This means that the law for the contract will be that where the merchant is located.

Distance-selling law

Sparrow (2000) advises different forms of disclaimers to protect the retailer. For example, if a retailer made an error with the price or the product details were in error, then the retailer is not bound to honour a contract, since it was only displaying the products as 'an invitation to treat', not a fixed offer.

A well-known case was when an e-retailer offered televisions for £2.99 due to an error in pricing a £299 product. Numerous purchases were made, but the e-retailer claimed that a contract had not been established simply by accepting the online order, although the customers did not see it that way! Unfortunately, no legal precedent was established in this case since the case did not come to trial.

Disclaimers can also be used to limit liability if the web site service causes a problem for the user, such as a financial loss resulting from an action based on erroneous content. Furthermore, Sparrow suggests that terms and conditions should be developed to refer to issues such as timing of delivery and damage or loss of goods.

The distance-selling directive also has a bearing on e-commerce contracts in the European Union. It was originally developed to protect people using mail-order (by post or phone). The main requirements, which are consistent with what most reputable e-retailers would do anyway, are that e-commerce sites must contain easily accessible content which clearly states:

• The company's identity including address;

• The main features of the goods or services;

• Prices information, including tax and, if appropriate, delivery costs;

• The period for which the offer or price remains valid;

• Payment, delivery and fulfilment performance arrangements;

• Right of the consumer to withdraw, i.e. cancellation terms;

• The minimum duration of the contract and whether the contract for the supply of products or services is to be permanent or recurrent, if appropriate;

• Whether an equivalent product or service might be substituted, and confirmation as to whether the seller pays the return costs in this event.

After the contract has been entered into, the supplier is required to provide written confirmation of the information provided. An e-mail confirmation is now legally binding provided both parties have agreed that e-mail is an acceptable form for the contract. It is always advisable to obtain an electronic signature to confirm that both parties have agreed the contract, and this is especially valuable in the event of a dispute. The default position for services is that there is no cancellation right once services begin.

3 Making and accepting payment

For transactional e-commerce sites, the relevant laws are those referring to liability between a credit card issuer, the merchant and the buyer. Merchants need to be aware of their liability for different situations such as the customer making a fraudulent transaction.

4 Authenticating contracts concluded over the Internet

'Authentication' refers to establishing the identity of the purchaser. For example, to help prove a credit card owner is the valid owner, many sites now ask for a 3-digit authentication code which is separate from the credit card number. This helps reduce the risk of someone buying fraudulently who has, for instance, found a credit card number from a traditional shopping purchase. Using digital signatures is another method of helping to prove the identity of purchasers (and merchants).

5 E-mail risks

One of the main risks with e-mail is infringing an individual's privacy. Specific laws have been developed in many countries to reduce the volume of unsolicited commercial email or spam, as explained in the previous section on privacy.

A further issue with e-mail is defamation. This is where someone makes a statement that is potentially damaging to an individual or a company. A well-known example from 2000 involved a statement made on the Norwich Union Healthcare internal e-mail system in England which was defamatory towards a rival company, WPA. The statement falsely alleged that WPA was under investigation and that regulators had forced them to stop accepting new business. The posting was published on the internal e-mail system to various members of Norwich Union Healthcare staff. Although this was only on an internal system, it was not contained and became more widespread. WPA sued for libel and the case was settled in an out-of-court settlement when Norwich Union paid £415,000 to WPA. Such cases are relatively rare.

Intellectual property rights (IPRs)

Protect the intangible property created by corporations or individuals that is protected under copyright, trade secret and patent laws.


A trademark is a unique word or phrase that distinguishes your company. The mark can be registered as plain or designed text, artwork or a combination. In theory, colours, smells and sounds can also be trademarks.

6 Protecting intellectual property (IP)

Intellectual property rights (IPRs) protect designs, ideas and inventions and include content and services developed for e-commerce sites. Closely related is copyright law which is designed to protect authors, producers, broadcasters and performers through ensuring they see some returns from their works every time they are experienced. The European Directive of Copyright (2001/29/EC) came into force in many countries in 2003. This is a significant update to the law which covers new technologies and approaches such as streaming a broadcast via the Internet.

IP can be misappropriated in two senses online.

First, an organisation's IP may be misappropriated and you need to protect against this. For example, it is relatively easy to copy web content and re-publish on another site, and this practice is not unknown amongst smaller businesses. Reputation management services can be used to assess how an organisation's content, logos and trademarks are being used on other web sites.

Secondly, an organisation may misappropriate content inadvertently. Some employees may infringe copyright if they are not aware of the law. Additionally, some methods of designing transactional web sites have been patented. For example, Amazon has patented its 'One-click' purchasing option which is why you do not see this labelling and process on other sites.

7 Advertising on the Internet

Advertising standards that are enforced by independent agencies such as the UK's Advertising Standards Authority Code also apply in the Internet environment (although they are traditionally less strongly policed, leading to more 'edgy' creative executions online.

8 Data protection

Data protection has been referred to in depth in the previous section.

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