MotoCMS Blog

Ecommerce Laws Shop Owners Should Know

MotoCMS Editorial

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 to which each shop owner should adhere.

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, leading to 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 trade tax regulations—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, doing things right the first time you start selling online is essential. 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 rules that eCommerce shop owners should satisfy to operate their businesses.

Data Protection

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 your website’s privacy policies to reassure visitors that their data is safe. Similarly, you should comply if a customer requests that you remove their information from their system. 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, countries and states have varying standards and tax expectations that eCommerce businesses should fulfill. That said, ensure 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 taxes. However, for an Australian target market, shoppers are used to product prices, including taxes. Other key tax issues to consider include;

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 properly understand these terms and legal guidelines surrounding them to avoid unnecessary implications. The differences between these intellectual properties are as follows;

Depending on your products and services, you might have to apply for either of these. Applying for either of these isn’t a must for general eCommerce businesses. However, ensure you don’t infringe on other peoples’ copyrighted information, trademarks, or patents. For instance, you can’t sell t-shirts printed with Star Wars characters.

Shipping Restrictions

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;

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 the provisions of the Children’s Online Privacy Protection Act. 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 old when making purchases.

If your eCommerce store sells products or services tailored to a young audience, you should adhere to COPPA regulations. Note that age verification and selling age-restricted products depend on your country’s codes. For instance, eCommerce shops selling alcoholic drinks and vapes should have fool-proof age verification tools before customers check out.

Primary 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 ensure that your business operates legally and defend your business in court.