4 Legal Challenges for E-commerce Businesses

Legal Challenges for E-commerce Businesses

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Slowly but surely, e-commerce sales are slowly taking over an area that has traditionally been dominated by physical analogue stores. This trend has been attributed to factors such as easier access to the internet and cheaper mobile phones.

As we continue with what will prove to be an interesting transition, online sellers should recognise and familiarize themselves with the legal requirements they are expected to fulfil. Failing to do so puts them at risk of lengthy court battles, financial penalties and the potential loss of intellectual property.

In particular, here are four legal challenges for e-commerce businesses that you need to be aware of.

1. The need for a detailed terms and conditions

You’ve probably been guilty of it yourself at some point in the past, but too many people take the Terms and Conditions (also referred to as ‘Terms of Service’ – ToS) offered by businesses before signing up for granted. These differ slightly from standard terms and conditions in that there are some legal requirements you must comply with when marketing or selling goods online. Technically, you’re not required to have a Terms and Conditions page by the law, but it’s a smart thing to include.

The TOS page is what is used to set the ground rules for your website. It limits your liability in case anything goes wrong with the customer and protects your right to owning content posted on your website. So, ensuring that your website has an effective and legally sound set of terms and conditions of use will help to protect both your business and website users.

If you ever get caught up in a legal dispute, one of the things that will be observed to determine the contractual terms between you and the customer is the Terms of Service page. Crucially, the ToS should also mention where your site is operating from, and thus, what governing law it complies with.

Operating terms of service are different for every company, but a few common themes prevail. At a minimum, you should limit your liability in case the product fails.

  • Return policies
  • Tax regulations
  • Delivery terms
  • Refund policies

2. Taxes

Every business in the world, regardless of where you run it, needs to pay taxes. Each of these countries have different expectations of what taxes should be paid. You have to research your target market to ensure you meet both legal and consumer expectations on what should be done about taxes.

A common issue e-commerce startups face is the different ways countries expect taxes to be handled. In the US, consumers expect prices to be listed minus tax, while the opposite is true for many of the remaining countries.

To bridge the knowledge gap, e-commerce businesses should ensure they seek legal counsel before expanding into new territory.

They should be able to clear up any confusion regarding the kind of taxes to be paid and any other financial requirements you are expected to honour by the law. This may include obtaining things like a tax ID and informing you whether you qualify for exemptions on certain commodities.

3. Cancelling goods and services

One of the laws brought about by the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 is the consumer’s right to cancel a contract within 14 days of entering it.

In other words, the consumer has a right to cancel an order from the moment the order is placed and ends 14 days after the order has been fulfilled.

The buyer has 14 days to make up their mind about the product, and has an extra 14 days to actually send the goods back. Two weeks is the minimum amount of time afforded by the law, so it can be adjusted upwards to suit your business needs.

The consumer also has the right to a refund after cancellation. The refund should be issued within 14 days of the retailer getting the goods back, or provided the buyer produces evidence of having sent the goods back to the seller.

However, the seller can make a reasonable deduction on the refund depending on the amount of wear and tear the products have experienced during the time it spent with the customer.

4. Data Privacy laws

A crucial component of being an online seller is collecting user information. You are typically required to collect physical and email addresses, phone numbers, and the customer’s name before processing their transactions.

There are different laws in different countries all over the world governing how this data should be stored and what you’re allowed to do with it.

In which case, you are required to have a privacy policy and all the ways you use customer data should be outlined in it. Your privacy policy is meant to disclose the kinds of personal information you collect, how they are collected and how they are used.

Additionally, you are required to take measures to ensure that the data is stored securely. If you operate in the EU, you need to abide by the GDPR, which requires various rules to be followed. Some of the rules include reporting data breaches 48 hours at most after they are detected and the presence of a Data Officer to audit your data privacy measures.

Another issue that may arise with regards to data privacy for e-commerce stores is the need for PCI compliance. Among other things, it requires businesses to provide customers with a secure checkout experience and avoid keeping any records of sensitive consumer data. For instance, if you’ve been writing down customers’ credit card numbers, or suppliers and distributors information, you might get yourself in trouble if it’s discovered.

Conclusion on the legal challenges for E-commerce

Operating a business on the internet doesn’t mean anyone is completely free of all consequences. In the age of data privacy, companies should familiarize themselves with the different laws that will come into play, depending on where they operate and the kinds of goods they handle.

You may be required to keep certain records and not others, follow different laws and regulations on taxation, prompt users for their age at the purchase of certain goods, or refuse them service altogether. Failing to follow the different laws expected of you might land you in serious legal trouble, which may result in damaging repercussions like expensive court cases and life-altering fines.

If you need legal advice for your business, book a call with Linkilaw! We’ll answer all the questions you may have and guide you through every stage of your legal needs.

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Author: Becky Holton is a journalist and a blogger at Best Dissertation. She is interested in education technologies, custom essay  and is always ready to support informative speaking at Best Essays. Follow her on Twitter.

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