Buying and selling online is more than a flash in the pan. Once dismissed as a craze that few would embrace, ecommerce continues to skyrocket in popularity.
Whether you are just starting your online business or you’ve already dipped a toe into online selling but want to make sure you are doing everything correctly, it is crucial that you know some of the major laws that have been put in place to protect both internet buyers and sellers.
Just as brick-and-mortar companies are governed by regulations, so are ecommerce endeavors. This is the case whether you are a global behemoth like Amazon or a tiny start-up with only you as the sole employee.
Since we’re guessing you don’t have the financial resources to hire a stable of lawyers like those monster companies do, it makes sense to learn about some of the major ecommerce laws and best practices that will govern your business for the foreseeable future.
One of your first actions when launching your business should be to establish it as its own separate entity. This means that it needs to be distinct from your personal assets and accounts.
Should the worst happen and the LLC is unable to pay its debts, only its own accounts and assets will be targeted by creditors. By the way, this is a best practice not only for ecommerce companies but for all businesses.
Reckoning with Uncle Sam regularly is an inevitable part of our lives, and ecommerce businesses are no exception. To that end, you should apply for a Tax ID Number from the Internal Revenue Service. Also, take time to learn about the tax laws that govern your ecommerce sales.
Not only what you sell but also where you sell it will have an impact on the taxes you pay and what you charge your customers. If things start to become more complex than you feel comfortable addressing, it makes sense to hire a tax professional.
Think of a payment gateway as the intermediary between your website and your customer and their bank. Picking the right one ensures that transactions are fast and secure.
Consider the following factors when choosing a gateway from your online payment processing provider.
Getting access to a secure and reliable online payment gateway is one of the best ways to streamline your online store, so don’t compromise when it comes to this step.
Whether you are marketing a product you have invented and manufactured or you are selling things made by others, you need to keep intellectual property rights in mind. Get to know the meanings of the following three terms as defined by the United States Patent and Trademark Office:
Trademark: A word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.
Patent: 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.
Copyright: Protects works of authorship, such as writings, music, and works of art that have been tangibly expressed.
If you have come up with your own product, you may want to apply for a patent to protect it from infringement or theft by others. By the same token, it is in your best interests to check that nothing you sell violates the patents or trademarks of other companies.
Don’t just assume that you can ship your products with your carrier of choice without first checking to be sure. For example, many carriers restrict items such as animals, aerosols, cigarettes, fruits and vegetables, drugs, live plants and more., Consult the Federal Trade Commission’s website if you are selling internationally to learn about any applicable duties, customs laws, and taxes.
Your lease, property deed, and/or community zoning codes may have restrictions that regulate how you can use your property. For instance, you might be forbidden from running a larger concern with substantial inventory from your home or garage.
Find out what restrictions apply to you so that you can set up your operations accordingly. In the end, you may need to rent warehouse space or hire a third-party fulfillment company to manage your orders.
All websites are required to comply with the Children’s Online Privacy Protection Act (COPPA). This legislation expressly prohibits you from gathering or collecting any personal information from a child under 13.
Review your product offerings and your country’s codes to ensure that you are complying with any existing age verification regulations.
As is the case with other types of business, you need to protect your ecommerce business from liability. Speak with an insurance provider, focusing on the following options.
Although not all do, yours may. Whether you will or will not be subject to licenses or permits will depend on your location, what you are selling, and the laws governing the region where you are doing business.
The Payment Card Industry Data Security Standard (PCI DSS) has been developed to protect cardholders and their sensitive data. Should you ever be the victim of a data breach, you could be found liable and required to pay significant financial penalties by the government and card issuers.
Moreover, you could be slapped with lawsuits and insurance claims, lose your customers’ trust, and may even lose your business entirely. For that reason, be sure that your website and ecommerce payment platform have programs in place to help you maintain PCI compliance.
Any business wanting to advertise or market online must comply with FTC statutes. These include the following.
For a complete list of FTC rules, visit their website.
Succeeding in the ecommerce realm requires that you have a thorough understanding of the laws and practices that govern it.
Remember, they are set up to protect you and your valued customers. Research and ongoing vigilance in this area will ensure that your business has the underlying infrastructure to succeed in the online marketplace.