eBay trader legal issues

As an online seller, there are various consumer protection and fair trading laws that you need to be aware of.

Depending on what you buy and sell on eBay, there may be further specific legislation that applies to you. However, note that the sale of many of the types of product that are covered by special legislation, for example alcohol, knives and tobacco, is prohibited under eBay's own rules.

The following is a brief overview of some of the key points.

What licences does an eBay trader need?

There are no specific licences that you need to trade on eBay. In fact, eBay rules prohibit the sale of some of the items that would normally need a licence to sell in the UK, for example alcohol. You will, of course, need to be registered with eBay as a business seller before you can start trading.

Licensing of second-hand dealers

Local authorities in Scotland require second-hand dealers (including motor dealers) to obtain a licence or registration to operate. This applies unless dealing in second-hand goods is only incidental to the main business activity. Elsewhere in the UK, some - but not all - local authorities license or register businesses where second-hand dealing is the main or a significant part of the business and is not just incidental. However, certain specific exemptions generally apply - these typically include motor vehicle dealers and jewellers. If you are in any doubt as to whether second-hand dealer licensing may apply to your business, contact your local authority trading standards department for guidance.

Money laundering

The Money Laundering Regulations apply to High Value Dealers who are prepared to accept the equivalent of 15,000 euros in cash for any transaction, including where money is paid directly into your bank account. If you handle transactions of this size you must register with HM Revenue & Customs (HMRC) and put in place anti-money laundering systems.

Selling goods to overseas buyers

The Export of Goods (Control) Order requires an export licence to be obtained for antiques and art works over certain age and value limits if they are to be exported from the UK. Full details are available from the Art Council's Export Licensing Unit.

Export licences are also needed for certain other goods, although it's not particularly likely that you would be selling these on eBay.

eBay rules and policy

When you register as an eBay user you agree to abide by the eBay rules. The eBay rulebook is quite comprehensive and covers many different aspects of buying, selling and communicating with other users. Users who break the rules may have their account suspended. eBay has a strict enforcement policy and will actively cooperate with the police, Trading Standards and other enforcement bodies if it suspects that the law has been broken. The rules can be read in full on the eBay website.

Dealing in antiquities and cultural objects

Under the Dealing in Cultural Objects (Offences) Act, it is an offence to deal dishonestly in 'cultural objects' like antiquities that you know to be 'tainted' - for example stolen, removed illegally from a historic building or taken illegally from an archaeological dig by a 'nighthawk' metal detectorist.

Retailing

There is a wide range of legislation that applies to retailers and protects the interests of the consumer. For example, goods and services must not be misleadingly described and the price of goods must be clearly displayed. You will be responsible for making sure that all goods or services are fit for their intended purpose and of satisfactory quality. You must not pretend to be a private seller when you are in fact a professional eBay trader.

You will be responsible for making sure that all goods are fit for their intended purpose and of satisfactory quality. Be particularly careful when it comes to selling second-hand electrical items - these must be safe to use. According to Trading Standards:

"If you sell second-hand electrical goods which are unsafe or incorrectly labelled, and you haven't taken reasonable precautions to avoid this, you may be prosecuted. Taking reasonable precautions means you must take positive steps to ensure that you comply with the law. This will mean, in most cases, having the goods checked by a qualified electrician."

Under consumer contracts legislation, eBay traders have to offer buyers a right to cancel and comply with all the other aspects of this legislation.

There is a a great deal of guidance on consumer protection, fair trading and distance selling regulations on the Trading Standards Business Companion website.

Substances that could be used to make explosives

There are special regulations in place to prevent substances that could potentially be used to make explosives getting into the wrong hands. Some substances, which would normally only be available from specialist suppliers such as chemicals wholesalers, are regulated and can only be supplied to a member of the public who has a licence to obtain and possess them. Other substances, although not regulated, are nevertheless of potential concern. Examples of these, which are referred to as 'reportable substances', include the solvent acetone and products containing hexamine (for example some fuel products for camping stoves). Any products labelled with the 'skull and crossbones' hazard pictogram are also potentially of concern, although they are not classified as reportable under the regulations.

You must report any suspicious transactions involving regulated or reportable substances to the police Anti-terrorist Hotline on 0800 789 321. A transaction could be suspicious for various reasons, for example because the customer wants an unusually large quantity of a product containing a reportable substance.

There's more information for businesses about regulated and reportable substances on the Gov.uk website.

Money laundering

The Money Laundering Regulations apply to high value dealers who are prepared to accept the equivalent of 10,000 euros in cash for any transaction including where money is paid directly into your bank account. If you handle transactions of this size you must register with HM Revenue & Customs (HMRC) and put in place anti-money laundering systems.

Finding out more

The employing people section of the Gov.uk website includes information and guidance on all aspects of employment legislation. Information for businesses in Northern Ireland is available on the NI Business Info website.

Insurance for an eBay trader

Contact an insurer or insurance broker and explain exactly how your business will operate - they will then explain what insurance cover you must have by law, and other cover you should consider. This might include:

  • premises (if you have any) and stock
  • business interruption
  • public and product liability
  • motor insurance, including goods in transit (you might, for example, use a van for regular buying trips)
  • employer's liability if you employ any staff

If you're buying and selling vehicles then you'll need motor trader's insurance cover.

Note that eBay recommends that sellers always insure international packages if these are not already covered by the carrier. Some carriers automatically include insurance up to a certain value limit. Make sure that all parcels are properly packaged or your insurance will be invalid.

If you intend to run your eBay business from home remember to notify your household insurer.

When comparing insurance quotes, uncover the differences between policies by using an insurance comparison form.

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