If you're starting out in eCom or you're a seasoned bull rider these are the must know ecommerce laws.
DISCLAIMER: This article is written for information purposes only, under no circumstances does it constitute professional legal advice. You need to consult independent legal advice for laws and information specific to your needs and country of residence.Where possible links have been placed to external resources for you to research further. Storehacks.com is not liable to you in any way for your reference or reliance on this guide.
Ok, it can be daunting to start out (and if you haven't make sure you read our “2018 Ultimate Beginner's Guide: Shopify How To”) however it needn't be. Once you have done your due diligence, actioned what you must and ensured you are abiding by your specific legal requirements then you will be good to start kicking some goals.
The 13 Must Know eCommerce Laws
While it's hard to give a complete overview of what you must be adhering to for your business, having an understanding of certain elements will help you to get started. Below we have compiled a list of things you need to have an understanding of before you open your store.
15Copyrights, Trademarks & Patents
After being online for any length of time you will start to notice that some people just have no interest in abiding by any ecommerce laws. Let alone, having any common morality. The one that is most obviously infringed upon, day in and day out is copyright.
If you scroll through your newsfeed it typically doesn't take long before you come across advertisers clearly infringing. In most cases it is not easy to get licensing to sell official merchandise. Some people seem to think it's easy money without realising the future repercussions.
Despite opening yourself up to being sued to the point of putting your great, great, great grandkids in debt you will end up being completely banned from opening new ad accounts.
If that's not bad enough, the next step will be Facebook disabling your personal account and closing any future one you open. You might get around that now, but with the level at which technology is learning these days it's in your best interest to be a legitimate seller.
I abhor infringers as it enhances Facebooks determination to make it as hard as possible for everyday entrepreneurs to try and make a living. Why? Because time and again, marketers are trying to push the boundaries, spam the newsfeed and turn a quick buck. Be proud of the content your are sharing and create something you can call your own.
So what is a Copyright, Trademark or Patent…
The United States Patent and Trademark Office (and again it changes from country to country so do your own research and get local legal advice) describes the following;
- Copyright – A copyright protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture.
- Trademark – A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. Some examples include: brand names, slogans, and logos.
- Patent – A patent is a limited duration property right relating to an invention, granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention.
For a full description of what each is have a read through the USPTO website. Another thing to be mindful of when designing shirts is whether or not the phrase is trademarked. I often use this tool on the USPTO website to be sure theres no infringement.
One final word on infringing on other peoples work. You will have a monkey on your back following you around for the rest of your digital days. Face it, in this day and age it will only be a matter of time before a silly decision today leads to a hell in 10 years. Be smart.
14Website Policies and Terms and Conditions
You will also be stating under which law and jurisdiction your store operates as the last thing you will want to be doing is learning another countries policies if you ever did need to go to court.
If you've followed The 2018 Beginner's Guide to Shopify you will have already created your Refund & Privacy Policies and Terms and Conditions. If you have not you can find them here;
Creating these policies are an absolute must before you launch your store and again should be done with the legal advice from an independent source.
Terms and conditions help in your fight against fraud, and seeing as you are launching a store to hit some serious scale it is unlikely you won't get any. Fraud constitutes various things, from someone using someone else's payment details to someone claiming they never received a package when they actually did.
Unfortunately due to the length of time between someone paying for something and the victim actually finding out about a fraudulent payment, the thief has long gone and leaves you footing the bill and accepting chargebacks.
Using Shopify is a great way of being alerted to any potential fraudulent threat, as they will flag any suss payments so you can verify with the person that they have actually made the payment themselves.
Due to the often very expensive nature of taking any legal action against such claims most stores typically take the hit and move on. When margins are so tight and time so limited in some cases it's better to take the hit.
Shipping and Delivery Policy
Having a shipping and delivery policy helps set your customers expectations before and after they purchase. It should clearly define the expected length of time for delivery and the way in which their product will be shipped.
Most store owners use promotions in order to increase their average order value. i.e. Spend $100 for free shipping. These promotions should be included in your policy.
By ensuring your Shipping and Delivery Policy is noted on product pages and in your terms and conditions, the likelihood of having upset customers will be reduced. Although, let's face it, you can't keep everyone happy. Clearly setting expectations will definitely help in your quest to build happy, repeat clientele.
While it's a necessary evil in business having a somewhat relaxed refund policy can play a huge part in building massive trust with your customer base. Remember, upset customers speak louder than the happy ones so keep an open mind in each case. You do need to be aware of the statutory “cooling off” period of 14 days in all cases.
In any such case, you can charge the customer the cost of shipping to return and require that the product is still in merchantable condition. As dropshippers and POD ecommerce operators, it's not so easy to stomach having to refund however it is a necessary evil of the world we operate in.
Dealing with Refund Requests
When a refund request comes through it's another great opportunity to build brand evangelists. Responding quickly and with courtesy will ensure your customer purchases from you again and shows that your business cares. Making visitors to your site aware of your refund policy can play an important part to increasing your conversions.
Some stores state no questions asked refund policies which puts your customers minds at ease, you don't need to do it (offer the no questions asked policy), but if your margin allows it's certainly something to think about.
Considerations to keep refunds to a minimum;
- Crystal clear, high res product images
- Accurate product descriptions
- Good packaging
- Set delivery time expectations before purchase
- Despatch as quickly as possible
Make sure you keep a handle on why refunds are occurring as refunds can reek havoc on your bottom line. If the same issue keeps popping up, address it to make sure it's not going to send you to the ecommerce graveyard.
Terms and Conditions
Often times there will be clauses in almost all ecommerce terms and conditions, either by requirement of the specific business or for legal necessity to protect the merchant in the process of selling. The following is a few items to take into consideration that are often included in most ecom t&c's.
- Shipping and delivery policy
- Law/Jurisdiction of store
- What happens and who pays for returns
- Liability limitations
As previously addressed. Policy and terms and conditions generators do exist however they don't take into consideration your own personal circumstances so you should seek legal advice to ensure full compliance.
13Online advertising compliance
Did you know that there are laws that govern how we can and can't advertise online? Well there is. And as someone who is about to embark on a life of advertising it will pay dividends to make sure you are adhering to what is required of you. It will protect the consumers and prevent unfair and deceptive marketing practices. Check out the FTC's website for the rules of the road.
There are strict guidelines around how emails are to be sent under the CAN-SPAM Act. Failure to adhere to requirements could result in fines of up to $40,654 per email and can apply to more than one person (within a company).
Considerations for your emailing;
- Don't use false or misleading header information
- Don't use deceptive subject lines
- Identify the message as an ad
- Tell recipients where you are located
- Tell people how to opt out of receiving future emails
- Honour opt out requests immediately
- Keep an eye on others sending emails on your behalf
Thankfully a lot of email platforms require that you adhere to these terms. Failure to do so will mean you're kicked off their platform.
12GDPR – General Data Protection Regulation
This is the new big boy on the block. Off the back of all that Facebook has done wrong, Europe is introducing Privacy protection laws to protect its citizens.
What does this mean for you? It means that you cannot get someone to subscribe to your list by way of discount if they are not giving consent to be marketed to in the future. You need to explicitly tell your prospects what they are signing up to and not differing from that message. Massive fines apply if you do not.
There are several other factors you must know about as well. Thankfully, we've written an article explaining everything you must know about the GDPR here.
11Customer Financial Data
PCI DSS Compliance. What's that I hear you ask? PCI DSS is short for Payment Card Industry (PCI) Data Security Standard (DSS). Online retailers must follow this standard when storing, processing and transmitting credit card data to ensure safety and financial security in all transactions, on or offline.
The PCI Securities Council is an organization founded by a group of financial institutions including Mastercard and Visa. The organization is responsible for the implementation and development of security standards for financial data protection.
Through the PCI security standards they aim to be enhancing security for payment account data.
Taxes, like death, are unavoidable and that goes for taxes in eCommerce. You may have noticed on some stores you are charged shipping while on others you aren't.
In the states, tax law can and does vary from state to state. If a company has a physical presence in one state it must adhere to the tax laws in that jurisdiction. Or, the business does not reside in that tax zone it's not required to collect tax.
Being outside of the United States will have other laws you must be aware of from country to country. Australia has GST, UK has the VAT… you get the idea.
To find out more on tax by country check out Shopify's resource here.
To ensure you are meeting your tax requirements it is best to speak to a local tax advisor.
Most companies (particularly those you will be using through Shopify or any other platform) will clearly state their restricted items.
Not every company is the same so be sure to take note of the one you are using.
Items that are restricted in Australia;
- Animal products and by-products (finished leather products are acceptable)
- Counterfeit goods
- Ivory and ivory by-products (if you're sending this stuff, shame on you)
- Engine oils / essential oils
- Flammable and toxic content products
- Fuels, gasoline and gas torches
- Hazardous or loose liquids
- Ink cartridges
- Lithium ion batteries
- Nail polish/s
- Perfume or aftershaves
- Portable battery chargers
If you have large inventory or have an unusually large amount of traffic in and out of your house you may find that you might be breaking local laws.
In some circumstances your business may scale incredibly quickly and you need to keep in mind that you may require a move into an industrial complex rather quickly.
7Licenses or Permits
Depending on the product you are wanting to sell you may find that you require a special permit or license. One way of selling Trademark or Copyright is by applying for a official license from the holder in question. For other things such as medical devices or holistic health care supplements there could also be further requirements.
Trading without the necessary documents could land you in very hot water, so taking the time before you launch your store will save you in the long run.
Check out LegalZoom, as they can certainly help with getting through any licensing or red tape.
There are numerous insurances when starting out in business and finding the right one will be done with a good broker. Some of the insurances available are general liability, product liability, professional liability, commercial liability and home-based insurance.
When vetting your providers it is a good idea to look into public liability and product liability insurance. PLI is typically for companies that manufacture, wholesale, distribute and retail a product and may be liable for its safety.
Be sure to speak to an independent insurance provider in order to get what you absolutely need. Searching for insurance through a provider is asking McDonald's what healthy food is, they're bound to sell you something.
If you're launching a store to a young audience you will (everyone is) be bound by COPPA (Children’s Online Privacy Protection Act). The act has a ton of requirements but the one you need to be most aware of is not collecting the personal data of anyone under 13 years old.
Selling restricted items such as tobacco or alcohol will require age verification. For compliance you should research your local laws to which you are liable.
4Stock Imagery & Vectors
The use of stock imagery is all through POD. Something you may not be aware of however is that there are different license requirements for stock images. You need to take into consideration what license is applicable when purchasing.
Most of the time the cheapest price on an image is not for commercial reuse, which means you can't make money off it. On different platforms from iStock, Deposit Photos, Vectorstock and numerous others, you will be required to buy an extended license. These are more expensive, however allow you to use it for commercial reuse up to a certain dollar value.
There are a plethora of Payment Gateways available on Shopify and as such you should become familiar with the conditions your particular gateway sets as some restrict the selling of some products or services.
When looking for your gateway be sure to look at what the requirements are in terms of transaction fees, monthly or termination fees as well as setup costs (if any).
2Consumer Law and Consumer Rights
An eCommerce store operating in the EU and selling to consumers online will be required to adhere to the regulations imposed on distance selling. The laws surrounding consumer rights became more detailed and prescriptive on the 13th of June.
Under the new guidelines, specific information must be made available to the customer before they've submitted their order, including the cooling off period of 14 days. This same information must be sent to the customer post checkout via email or hard copy.
The checkout process has also changed. Customers need to be aware of all fees and charges immediately before they complete their order. This includes the description of goods, who the seller is and all prices including delivery fees.
Upon submitting the order there must be an acknowledgement that they will need to pay for the product or service. Failure to provide this information is considered a criminal offence. I'm not sure I would want to be explaining the reason I was behind bars was because of a forgotten consent form.
Would be a hell of a way to lose your dignity…amongst losing other things.
Online retailers should be vigilant when using 3rd party platforms to host their stores as US-based platforms may not be compliant to European regulations, they may give the consumer 12 months instead of 14 days to cancel their order.
This is by no means an exhaustive list of laws for anyone in eCommerce, there will absolutely be more to add to it. As the new laws become available the list will be updated to reflect any change. It may pay to bookmark this page and use it as a reference.
If you found this article helpful in anyway please help me grow the community by sharing with your Facebook Groups, Communities or anywhere else you hang out with people in eCommerce.
The same way I article was started, will be the same way I end it, with a disclaimer…
DISCLAIMER: This article is written for information purposes only, under no circumstances does it constitute professional legal advice. You need to consult independent legal advice for laws and information specific to your needs and country of residence.Where possible links have been placed to external resources for you to research further. Storehacks.com is not liable to you in any way for your reference or reliance on this guide