Revised laws to protect online shoppers finally came into force today, giving customers seven days to decide whether or not they want to keep goods bought over the internet.

The European directive gives so-called e-shoppers an automatic right to cancel an order and claim a refund within 30 days of any money paid - even after goods are dispatched. Customers have a seven-day cooling-off period to decide whether or not they want to keep the goods purchased.

Unless agreed beforehand, consumers can also claim a refund for goods not dispatched within 30 days. Previously, customers had to return goods before cancelling any contract with a retailer.

Internet traders now have to alter their websites to notify customers of their right to withdraw from a contract, and provide shoppers with a cancellation form.

There are some exceptions to the law, notably for contracts involving accommodation, transport, catering or leisure services, such as holidays and concert tickets.

Other exceptions include contracts where goods deteriorate rapidly, CDs, videos and computer games where the packaging has been opened, newspapers, magazines and gambling services.

Even so, some businesses have expressed concern that the directive gives too much power to the consumer. Lawyers have predicted that the directive will cost e-tailers millions in administrative and service costs, and could force smaller firms out of business.

Others are sceptical as to how effective the ruling may be anyway. They argue that while the directive protects consumers dealing with European e-tailers, there is no requirement for US vendors to obey it.

"It is the right to withdraw from the contract that will undoubtedly have the largest impact," said Dai Davis, an IT lawyer with law firm Nabarro Nathanson.

"Although the consumer is required to take reasonable care before returning the goods, suppliers will undoubtedly have to be prepared to receive a number of goods in less than perfect condition," he added.

"Some online services will be severely affected. For instance, where a consumer wishes to buy an internet domain name, he or she will be given a right to withdraw."

Currently, users registering domain names are tied into long-term contracts without having the chance to test their registrar's hosting capabilities.

The new laws are based on the European Union's Distance Selling Directive, which was first discussed in 1998. The UK government originally missed the 4 June deadline to bring in laws based on the directive, which applies to all contracts not conducted face-to-face. As such, this includes orders made by phone, fax or mail - not only those made over the internet.