The popularity of online businesses is increasing by the day. These days, millions of people are involved in online business, with more people joining.
However, with any type of business, it comes with some requirements. For one to start an online business, someone should maintain a couple of legal requirements. Without these legal requirements and laws, you couldn’t start your online business, nor can you ensure its security.
What is Ecommerce Law
Ecommerce laws are usually a set of legal issues that can affect the online retail industry. Every kind of ecommerce company should abide by particular rules and regulations, and just like with any business, failure to do so can lead to lawsuits and legal issues. Check out this complete guide to ecommerce integration.
Now, let’s see some of the important ecommerce laws and legal requirements that every ecommerce business needs to be aware of:
1. Marketing Infringement
The internet offers plenty of opportunities to market their products online. However, there are specific rules that you need to abide by. For instance, online merchants, no matter how small, can also be subjected to federal regulations when selling their products on the Internet.
For instance, you can’t make false claims about your products and services. Similarly, you should also disclose any paid endorsements.
Email marketing is a great way to reach prospective customers. You can take the help of free email marketing software to automate your email campaigns. Both business owners and employees need to ensure that their email campaigns are compliant with the CAN-SPAM Act. This act states that businesses can be subjected to penalties that could reach up to $46,517 for every email violation.
In the same way, you shouldn’t infringe on trademarks or patents. Nowadays, it’s too easy for small business owners to look up a particular product or image and then download them directly to their website. However, you’re violating the law if it isn’t copyrighted or trademarked.
Moreover, if you’re selling products geared toward kids, then ensure you’re not violating the Children’s Online Privacy Protection Act. You need to be extra careful if you’re targeting children. You couldn’t advertise to them and then try to convince them to purchase something.
2. Securely Handle Customer Financial Data
Security and payment breaches can cause a real threat. Moreover, half of the businesses now take necessary measures to protect themselves and their customers by getting cybersecurity plans.
Although it’s not required to legally take these measures, a cybersecurity plan presents any legal violations, financial losses, and damaged customer trust.
An example of an ecommerce law applicable to this is the Electronic Signatures in Global and National Commerce Act (the E-Sign Act), which states that businesses can use e-signatures as long as the customer agrees to it.
You can also take it a few steps further apart from just abiding by the e-sign act. You should also make sure that you take fraud prevention measures as well.
3. Intellectual Property
Your brand also needs to be protected. Thus, you must consider what protections, trademarks, and registration are needed.
If you’re selling goods that contain third-party brands, then the retailer will also need to have the right licenses from that third party.
4. Legal Requirements for Creating a Website
There are a couple of legal requirements imposed in making a web page. The first act is to secure the right to use the domain name you picked. You need to register with a domain administrator. Make sure that the Internet Corporation should accredit the one you picked for Assigned Names and Numbers (” ICANN “).
Once you get a domain name registration, starting an ecommerce business is mostly the same as with any other business enterprise. For instance, you may want to utilize a limited liability entity.
You may have to input several contractual relationships to ensure the products and services needed to get your business up and running. You may also need to pay close attention to any contracts needed since they have significant results. Usually, having an excellent CPA and legal advice is key to hiring the right people and choosing the right business name.
5. Obtaining Business Insurance
To protect your business from liabilities, you might want to get insurance for small businesses. We suggest you seek out a small business insurance provider to know the best fit for your business, location, and product.
Here are some insurance options that you might want to consider:
- General liability: Helps you cover costs to respond in a claim that your business has caused, like bodily injury and property damage;
- Product liability: This is essential if you’re selling high-risk products like CBD, medical devices, and vapes.
- Professional liability: Protects your business from error, malpractice, and negligence.
- Commercial liability: This kind of insurance protects you from incurring any financial loss that could leave you liable for property damage and advertising injury that’s a result of your services, employees, and overall business operations.
6. PCI Compliance
The Payment Card Industry Data Security Standard (PCI DSS) was implemented in the early 2000s for credit card issuers such as Mastercard, Visa, and American Express. This is designed to protect the consumer’s payment data.
Usually, any online merchant that accepts credit card payments should meet PCI compliance when they store, process, and transmit credit card data. Penalties resulting from non-compliance can lead to heavy fines, and your merchant account agreement may be terminated. Fortunately, many credit card processors have PCI measures already built into their services.
7. Register Copyrights, Trademarks and Patents
More often than not, although these are vital regulations, these terms are easily confused with one another. You need to have a solid understanding of each to avoid any unwanted legal issues on your end:
- Patent: This property right is associated with an intervention by the US Patent and Trademark Office temporarily in return for publicly disclosing the intervention:
- Copyrights: Gives protection to works that include artwork, writings, and music that are expressed.
- Trademark: Identifies a symbol, design phrase, or word that distinguishes the source of goods of one business entity from others.
If you are entitled to any of these, then make sure you apply. Moreover, make sure when selling a particular product or service, you don’t infringe any other copyright, patents, or trademarks.
Over to You
These top ecommerce laws and legal requirements are critical aspects of meeting the legal requirements when running an online business. Make sure that you comply with them to prevent data breaches, fraud, etc.