eCommerce Law—Important Points to Consider Before Selling Online
Updated · May 21, 2022
Whether you’re looking to start an ecommerce business, or even just sell on a small scale online, you need to be familiar with the laws governing ecommerce.
In this article, we’re going to be going over a few key areas for you to focus on, that’ll mainly focus on getting paid, paying taxing, and protecting your customers.
What is eCommerce Law?
This is a branch of law that deals with the ecommerce legal aspects, such as website terms and conditions, privacy policies, and consumer protection.
While the laws governing ecommerce are still evolving, they are designed to provide a fair and safe online shopping experience for consumers, while also protecting businesses from fraud and cybercrime.
In addition to regulating ecommerce transactions, this area of law also encompasses issues such as data security, spam, and copyright infringement.
On these points, it connects to wider internet laws that go beyond ecommerce.
Points to Consider
As the operator of an online business, there are some key ecommerce legal points to consider.
These range from website creation, through taxes, payment collection, data protection, and various forms of compliance.
Depending on your specific business, and where you’re based, some of the below may not apply to you. It’s worth making sure though.
A couple of minutes of reading could save you a lot of trouble later on.
Creating a Website
The basic first step in getting into ecommerce is creating a website. First up, you need is a secure domain. Buying one is relatively simple.
The next step is to meet online business requirements and register as a business. There are different business entities you can form, but the most basic is an LLC.
Now, you can actually bypass both of these steps, by selling on an established ecommerce platform such as eBay, or Amazon, or even by creating a Shopify store as a small seller. If you are a small seller, meaning it’s just you, you don’t need to register as a business.
However, it’s important to note that registering as a business offers protection from personal liability, as well as tax advantages.
Registering to Pay Taxes
Whether you’re a registered business or not, you need to register to pay taxes if partake in the sale of goods and services online.
If you’re unregistered as a business, you’ll have to register to pay income or self-employment taxes.
As a business, you’ll have to register for business taxes. The specific taxes you’ll pay will rest on the scale and structure of your business. They also differ from state to state.
hat said, the most common type of taxes a business will pay is sales taxes.
A vital area for an ecommerce business to pay close attention to is the payment gateway they are using.
Payment gateways are tools that allow your customers to pay you and are a focus of ecommerce regulations.
It’s important to choose a reliable and secure payment gateway in order to protect your customers' information and avoid liability for any money that is lost or stolen.
Some other considerations that may have legal implications are fees, security, and compatibility with your website.
Having a secure gateway is also part of the next consideration.
PCI compliance is a set of security standards that any company that processes, stores or transmits credit card information must follow.
By ensuring that your site/storefront is PCI compliant, you are ensuring that you are protecting your clients, their data, and yourself.
PCI ecommerce compliance goes beyond the payment aspect and includes installing firewalls, encrypting data, and regularly testing your systems for vulnerabilities.
eCommerce platforms such as Shopify, eBay, and Amazon are already PCI compliant, so if you’re not self-hosting, the platform you’re on will take care of it for you.
That said, you need to make sure any platform you’re on is in compliance.
If you’re going through an open-source solution, and making use of WooCommerce hosting, for example, big payment gateways like PayPal and Stripe are also already PCI compliant.
As an ecommerce seller, you’ll also need to be FTC complaint.
This means following the ecommerce requirements set out by the Federal Trade Commission in order to ensure that you are not engaging in any unfair or deceptive practices.
For ecommerce businesses, this can include things like ensuring that your website is clear and easy to navigate, providing accurate product descriptions, and clearly displaying prices and shipping charges.
FTC compliance is essential for building trust with your customers and protecting your business from legal action.
Everyone hates spam, but did you know you can actually be hauled into court for it? That’s why it's vital to be aware of the CAN-SPAM Act and adhere to it.
The CAN-SPAM Act is necessarily a part of ecommerce law, and sets up the regulations for commercial email, sets criteria for how frequent messages can be, and gives customers the right to opt-out.
By adhering to the CAN-SPAM Act, you'll ensure that your emails are legal and avoid any potential penalties. In short, you need to make sure you aren’t flooding your leads’ inboxes, and giving them an opt-out option.
By making use of an autoresponder tool, you can adhere to the CAN-SPAM Act easily, since the top solutions are designed with it in mind.
The General Data Protection Regulation (GDPR), which covers eight consumer rights, went into effect in May 2018. The GDPR is a set of regulations that protect the personal data of individuals in the European Union (EU). This of course sets requirements for ecommerce sites.
If your online business has customers from the EU, you must comply with the GDPR.
Furthermore, you must provide customers with a way to opt-out of having their data collected and used. In other words, make cookies optional. Breaching the GDPR can result in some massive fines.
Be Aware of Copyright
Copyright and patents provide intellectual property protection for creators, preventing others from using or selling their work without permission.
As a seller, to avoid ecommerce legal issues, the most common thing to consider is the product images and branding you use on your website/storefront. You need to ensure that you have the right to use any images.
This can be through getting permission from the copyright holder, using a public domain image, or using an image that is licensed for commercial use.
By taking the time to understand copyright and patents, you can avoid trouble with rights holders. Taking care to create your own product shots is a great way to do this, and it will also ensure the images are correct.
If you’re going to be shipping packages, you need to be aware of the ecommerce laws and regulations regarding what can and cannot be shipped.
After all, order fulfillment is the final and most important step for an ecommerce seller.
These rules vary by state, country, and even between different shipping companies and marketplaces.
You need to be especially cautious when shipping across state lines or out of the country. Some commonly restricted items are alcohol, addictive substances like nicotine, weapons, and in some cases, adult items.
Seeking Legal Advice
While there is an abundance of resources online, if you need absolute clarity, you can contact an ecommerce lawyer. Although ecommerce is a relatively new area, there are legal practitioners that specialize in it.
It’s also worth investing in some website policy software to create usage policies for your website.
There are some basic ecommerce law considerations to take into account, whether you’re building an ecommerce store from scratch, or using an established platform.
Not only will abiding by these guidelines protect you and your customers, but in many cases, you’ll be creating an optimal experience. Customers that feel safe will be more likely to take advantage of the offers you provide.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.