Since the inception of ecommerce or electronic commerce, businesses have adapted it to continuously develop and modernize their services. Ecommerce essentially involved the buying and selling of goods and services using the electronic medium such as the internet, smartphones, email, or other computer networks. Once you have evaluated your business idea and planned for the sourcing of your products, it becomes extremely essential that you invest your time in researching about the laws, regulations, and restrictions that could be imposed on your ecommerce store. Planning wisely by knowing these can help you save your money, time, and energy. In this article, we will be discussing the ecommerce laws that can be a possibly a hindrance for the smooth functioning of your ecommerce store if not acknowledged at the right time.
What is an ecommerce law?
As said above, an ecommerce business is the trading of goods and services in exchange for money through an electronic medium. It is a combination of internet technology, electronic fund transfer, electronic data interchange, mobile commerce, supply chain management, internet marketing, and many such technologies. There are many forms of ecommerce including e-tailing, which is one of the most prominent ones. It refers to a virtual storefront or virtual mall wherein products are listed in a catalogue format for sale on a website. Ecommerce law can be defined as the legal terms and conditions that must be abided by anyone who wishes to seller purchase using ecommerce. The very nature of ecommerce is that it is multi-arbitrary which means it delivers products throughout the world and each country has a different set of laws for ecommerce and to sell online the website or store needs to follow the laws of the country in order to sell in that specific country. For instance, there might be a country that accepts liquor delivery while there would be some that have banned it. Internet is a space where people are active from around the globe. It becomes difficult to customize a website or online store in a way that a few products are available in one country and are not in the others. Due to this reason many websites are banned in such restricted countries; limiting the sales of the company.
What are the laws that govern ecommerce?
It is important for both, businesses as well as consumers to know about the basic laws of ecommerce that are implied by their country. If not, the state or the country government can impose strict ban and penalties on the business that is functioning by breaking the laws. Although different nations have different ecommerce laws, here are a few common laws that could be implied on an ecommerce business:
Every country follows different sets of tax rules. Therefore, as an ecommerce owner, you need to do market research before stepping into it. For this, you need to define your target market and research about them. For instance, if your target audience is in the US, you might need to learn the laws of the country and showcase the rate and available products based on the taxes applicable there. You need to discover what taxes are applicable on the products you intend to sell to your desired location. You can consider taking guidance from tax professional for the same. They can rightly guide you about the problems you may face while selling to specific locations and the impacts of your products or your business. However, be aware that these taxes and laws are subject to change with time as well. Therefore, it becomes essential to seek professional guidance to help you run your ecommerce business smoothly.
The Shipping and Delivery Policy
Every ecommerce business must have a well-defined shipping and delivery policy so that the customers get to know how their orders will be delivered and when to expect the delivery. You need to specify the delivery timeframe, detailed shipping terms, and the costs that will be charged for the service. The shipping information must be clear on the product pages as well as on the terms and conditions of your business by which you can easily deal with the unhappy customers you may face at times.
The Refund Policy
When purchasing online, the fear of getting delivered with the wrong product, damaged product, or being cheated, still prevails. Due to this reason, it becomes essential that your ecommerce business provides a clear refund policy on your product pages. In fact, each product must be inclusive of the refund policy along with the product details. In case you are providing products or services that are not eligible for a refund, you must mention the same and keep it transparent with your customers. Moreover, you also need to mention the terms and conditions in which the product amount shall be refunded.
Restrictions on Age
No matter when you are entering the ecommerce market, you need to strictly comply to the Children’s Online Privacy Protection Act or COPPA which states that you are not allowed to collect any personal data of a child who is under 13 years old and is using your website or online ecommerce store. In case you are planning to sell products for the younger sector, you must make sure that you are abiding by the law of COPPA. In order to sell age-restricted products or goods, your business must look in the state and country laws you are confined to. You need to do detailed research if you are selling age-restricted products such as alcohol, tobacco, and such in order to run a smooth business.
Whenever anyone uses others already copyrighted material without seeking their permission, it is termed as copyright infringement. It is governed by the Digital Millennium Copyright Act or DMCA. On the web, it would be very easy to copy others work and republish it in their name. However, today, many technologies help you track when your work is copied. The online infringement act works like any other copyright act that is to protect the genuine works of online businesses and other online websites.
Trademarks and Patents
Although understanding the repercussions of violating the copyright laws, you might have noticed a lot of ecommerce business that has clearly infringed. You must know that if the copyright law is unseen, you are liable to be sued to a point that even a few generations after you would not be able to repay the penalty. Moreover, your license to sell could be cancelled for a lifetime. For instance, if you have a business account on Facebook with infringed content, it can possible blacklist your profile as well as restrict you from creating a new one any time later. To tell you the difference between copyright, trademark, and patent, it would be right to say that a copyright protects the authority of the work done, a trademark is a symbol, phrase, word, or design that establishes the source of products of a particular company, and the patent is a time-constrained property right regarding any invention.
PCI compliance is an essential factor for all ecommerce sellers; especially the SaaS-based ecommerce platforms. Since online businesses are the primary sources of data theft, it is essential to adhere to PCI compliance. Being PCI compliant not just refers to providing a secure and safe checkout process, but also prevents any business to store personal information such as payment details of credit card, debit card, or any other.
Terms and Conditions
Every ecommerce business does and must showcase the terms and conditions of availing their services. These terms and conditions are the clauses that are meant to secure a business or a merchant while servicing online. The most common terms and conditions of an ecommerce business include the shipping and delivery policy (as mentioned before), laws of the website or store, liability limitations, and the information regarding adverse conditions in servicing online. Whatever you need that your customers must know before availing your services, you must include in the terms and conditions so that your customers do not get a surprise as well as you do not face any legal allegations for your services.
As in any business field, laws are fluctuating and may improve in the future with the continuous development of ecommerce, especially with the increasing fear of the coronavirus spread. Given the international nature of ecommerce businesses, every business including small startups to large-scale businesses must be aware of the ecommerce laws including the local laws, state laws, and as and when needed, the international laws. There is no such option to ignore any ecommerce law, irrespective of the reasons behind. With the continuously growing ecommerce market, it becomes essential to acknowledge the laws pertaining to the ecommerce industry as well as update the same with the change in the laws.