The eCommerce space has recently exploded, with people across the globe embracing this type of business. Most business owners have also leveraged this chance, selling their products and services through various eCommerce platforms. However, like any other business, the online space has its own rules and regulations that are eCommerce laws each shop owner should adhere to.
Why Is It Important to Understand eCommerce Laws?
Ecommerce laws protect customers from deceptive marketing and data breaches. Marketing tactics like a, b, and call scam by taking advantage of customers’ trust. Data breaches like x and y leaked customer data and led to situations of identity theft and fraud.
Some punishments for violating eCommerce law are more severe than others. If you are caught sending spammy emails, you may be subject to a fine by the Federal Trade Commission. On the other hand, if you illegally use another company’s trademark—like a Disney character as a mascot, for example—your company could be sued. Failure to meet PCI standards could lead to accounts like PayPal being terminated, making it harder to run a successful business.
For these reasons and more, it’s important to do things right the first time you start selling online. Most eCommerce platforms have protections built in that will help you stay legal. While it’s not difficult to keep things on the right side of the law, it’s still important to be aware of your responsibilities as a shop owner. That said, below are some laws that eCommerce shop owners should satisfy to operate their businesses.
Data protection is an essential segment of the law that eCommerce website owners should mind. Most websites have mechanisms that collect personal user data, ranging from emails, addresses, credit card details, and phone numbers, among other information. To avoid legal implications, ensure that you register according to the Data Protection Act and comply with the provisions of this law.
You should clearly outline the privacy policies on your website to reassure website visitors that their data is safe. Similarly, if for some reason a customer requests that you remove their information from their system, you should comply. The Federal Trade Commission is the agency tasked with regulating several eCommerce activities, including email, consumer privacy, and online marketing. Therefore, you should consider checking their provisions to avoid violating the law.
eCommerce Laws – Taxes
Tax compliance applies to both physical and online businesses. However, different countries and states have varying standards and tax expectations that eCommerce businesses should fulfill. That said, ensure that you conduct deep research and due diligence about your target market before quoting product prices.
For instance, if most of your target market is based in the U.S, you should display your product prices, excluding the taxes. However, for an Australian target market, shoppers are used to product prices inclusive of taxes. Other key tax issues to consider include;
- New York-based eCommerce stores that sell clothes should know that selling clothes is taxed in the state
- VAT applies to all non-essential products in Britain
- If your products have plastic bottles, you will incur an additional $0.11 recycling fee in California
To avoid tax violations, consult a tax professional for proper guidance. With the help of these experts, you can understand various circumstances that affect your eCommerce business. Professionals also come in handy in feeding you updates on the constantly changing tax regulations.
Copyright, Trademarks, and Patents
Copyright, trademarks, and patents are the three most confusing terms that most eCommerce store owners tend to overlook. However, you should have a proper understanding of these terms and legal guidelines surrounding them to avoid unnecessary implications. The differences of these intellectual properties are as follows;
- Trademark- refers to terms, phrase, symbol, or design that identifies and distinguishes your business from other similar businesses.
- Copyright – protects the rights of authors, including writings, art, and music.
- Patent – this is a right that confirms the invention of a new idea granted by the U.S Patent and Trademark Office.
You might have to apply for either of these depending on your products and services. For general eCommerce businesses, applying for either of these isn’t a must. However, ensure that you don’t infringe on other peoples’ copyrighted information, trademark, or patents. For instance, you can’t sell t-shirts printed with Star Wars characters.
Unlike physical businesses, shipping is a necessary process in eCommerce businesses. Different countries and states have varying shipping restrictions that online businesses should adhere to. Since you will have to engage with third-party shipping companies, ensure that you check their provisions, including restricted items. In most cases, restrictions are placed on the following items;
- Animal products
- Alcoholic beverages
- Hazardous materials
Note that some shipping service providers only ship some restricted items at an extra fee if you provide additional paperwork. Therefore, consider this among other factors when evaluating your shipping service providers.
Essential eCommerce Laws – Age Restrictions
Before launching a website, ensure that you comply with provisions of the Children’s Online Privacy Protection Act later. The act provides several regulations, but one that will affect your eCommerce shop is the inability to collect personal information for children below 13 years when making purchases.
You should adhere to COPPA regulations if your eCommerce store sells products or services tailored to a young audience. Note that age verification and selling of age-restricted products depends on your country’s codes. For instance, eCommerce shops selling alcoholic drinks and vapes should have fool-proof age verification tools before the customer checks out.
Main eCommerce Laws – Bottom Line
Before selling anything online, ensure that your eCommerce store satisfies all requirements of the law. Generally, it should meet the sales tax demands, emails should comply with FTC guidelines and CAN-SPAM Act, PCI compliant, and COPPA regulations. If you aren’t sure about all these, seek legal guidance from employment lawyers. They will not only ensure that your business operates legally but also defend your business in court.