Online shopping has increased 350% in past five years

The OFT said it wanted to establish whether current consumer laws was up to the job of protecting online shoppers.

Internet retail sales have grown by 350% in the past five years and about 130,000 businesses sell online.

Four representative "case study" sectors will be examined; electrical goods, music sales, airline tickets and online auctions.

These sectors have been chosen because they account for at least a third of all online spending.

We may see some tweaking of the distance selling regulations and customers cancellation rights as a result of this OFT fact find Alex Brown, Simmons & Simmons

Consumer confidence

Recently, the OFT raised concerns about pricing in the electronic and online food retailing markets.

The OFT said its investigation aimed to establish whether:

• consumers are confident when shopping on the Internet
• consumers are aware of their rights when shopping online
• businesses understand and comply with the regulations for online shopping

• consumers receive the right level of regulatory protection

The OFT will consult with businesses, trade bodies, consumer groups and public sector organisations as part of its fact finding mission.

"This study is core to the OFT's mission to make markets work well for consumers," said John Fingleton, chief executive of the OFT.

"The OFT is committed to looking proactively at identifying and addressing new and future challenges, so as to ensure that consumers and the economy benefit from the innovation and choice that the internet can offer."

The results of the OFT study will be made public in the spring of 2007.

Alex Brown, a technology lawyer at London law-firm Simmons & Simmons, does not expect the report to lead to a radical shake-up of UK consumer law.

"We may see some tweaking of the distance selling regulations and customers cancellation rights as a result of this OFT fact find but I don't think we will see wholesale changes to consumer legislation," Mr Brown said.