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And improve legal compliance, says OFT

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Internet shoppers are more aware of their rights and more online retailers are complying with consumer protection laws than previously, according to studies by consumer protection regulator the Office of Fair Trading (OFT).

The OFT has carried out a survey of online shoppers and a study of online retail sites in a follow up to 2007-published research which showed that many consumers were ignorant of their rights and many sites broke consumer-protection laws.

It said that it found improvements when it conducted follow-up research last year.

"Overall assumed compliance and information provision by online businesses has improved with more sites (89% in 2009 compared to 84% in 2006) now providing full geographical addresses, and fewer sites (26% in 2009 compared to 38% in 2006) imposing restrictions on cancellations," it said. 'Assumed compliance' is the term its studies use when sites they examine appear to operate in line with the law.

"A greater proportion of sites reviewed in 2009 (21% compared to 17% in 2008) appeared to comply on all aspects for which they were assessed," said its report of its 'sweep' of retail websites. "While the web sweep covered larger businesses, it is possible that assumed compliance of smaller sites, not included in the review, also improved due to the larger sites setting a higher standard."

The OFT also conducted surveys with consumers and found that their knowledge of their rights had improved since previous research.

"The 2009 [study] shows an increase in the proportion of shoppers claiming to be very or fairly aware of their rights when shopping online (up from 49% in 2006 to 62% in 2009)," said the OFT's report. "Shoppers are also more aware of where to go when looking for advice on their rights (decrease in those reporting they do not know where to go for advice from 28% in 2006 to 16% in 2009)."

"Consumer awareness about cancellation rights has improved since 2006 (51% in 2009 compared to 44% in 2006)," it said.

The survey found that a recent trend towards the use of price comparison sites may be reversed. "While fewer shoppers used price comparison sites in 2009 (60%) compared to 2006 (73%), the key reason cited for this was a preference to shop from familiar sites rather than lack of awareness about price comparison sites," it said.

The OFT's report cautioned against firm conclusions that price comparison shopping was on the wane, though. It said that other research contradicted its findings.

"Online research publication, E Marketer, stated in its August 2009 report that a survey of UK internet users carried out by Internet Advertising Bureau UK and Lightspeed Research, UK revealed that the recession had affected the frequency of visits to (retail) websites," it said. "41% of respondents said the time they spent shopping had increased and 45% said they were spending more time looking for deals. 33.7% of respondents said they visited price comparison sites more often due to the recession."

The OFT said that online consumers' situation had improved since its previous research was carried out.

"Overall, there have been many positive changes in the internet shopping market following the OFT study," it said. "Business assumed compliance with regulation and information provision has improved, levels of consumer awareness and confidence have increased since 2006, though there is still scope for the absolute levels to improve for the market to thrive.

Previous OFT research had found that nearly one third of all consumer websites were non-compliant with some aspect of consumer laws. Research conducted in 2008 found that 31% of sites appeared not to refund the full costs of goods as required by EU distance selling laws.

Despite the good news for online shoppers, the research still found problems for buyers of goods. It found that many sites added charges to items later on in the sales process.

"On more than half (55%) of the sites reviewed it was discovered that the final checkout price included compulsory additions to the first price shown," it said. "Such charges were only indicated in 22% of all sites reviewed. In nearly every case (96% ) where additional compulsory charges were experienced at checkout all or part of these were delivery charges."

The OFT is conducting another study into online retail and whether its pricing strategies and advertising methods are fair. That report is expected in spring.

See: The report (41-page / 369KB PDF)

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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