Conducting an online business still involves many legalities. However, most business people aren’t aware of the various legal aspects they need to consider in their operations. This often causes unforeseen legal issues to arise that could greatly damage a business.
We consulted the experts who shared these legal considerations that are important for businesses to consider;
1. Consumer Protection
Consumers have protection rights that ensure what they acquire online (goods or services) are legit, safe, and have value for money. Online businesses, therefore, should comply in three ways:
They should provide realistic information regarding their offers to assist the customers in gaining fully from them. All the info should be readily available before the customer makes a purchase.
The services and products must protect the safety, health and serve the economic interest of the customer. They should not be harmful or exploitative.
The merchant should implement measures to replace the goods or services if they are defective. They should also compensate the customer for any loss, injury, or inconvenience that might arise from the purchases.
Online entities should be careful to respect copyrights which are very easy to infringe due to the vast nature of e-commerce. Business owners should ensure their brand names, images, text, products, and all are unique to them. If someone else’s property has been used, it should either be permitted or attributed accordingly.
Infringing on copyright can attract problems for the website and/or lead to lawful action.
Mia Green, Chief Operating Officer of FindThisBest
3. Brand Protection and Ownership
An online brand may well become the most important and most valuable asset for the business world. But the vital thing is protecting it. I learned it a little late, but my major legal concern was to register my business as a trademark under the intellectual property laws of The USA. Lucky me, I had chosen a business name that was not already taken. Because you’re not allowed to choose an existing business name, I trademarked by business name, and no one else can use my business name until and unless I allow them.
4. Registrations with Government Authorities
Running an online business is just like running a brick-and-mortar business. There were some typical registrations that I did when operating my business. I registered by business name with the USA Securities and Investment Commission and obtained an American Business Number to register a domain name as a minimum. Regardless of my business structure, I registered for the Goods and Service tax as well. These legal concerns must be taken into consideration while running an online business.
Luke Zhang, Founder Dunk or Three
5. Site Use Terms and Conditions
Site owners should make the terms and conditions on the use of their websites very clear. These are the binding agreements that bring a customer and the site owner together. They define what is acceptable from what is not. The clauses define things like after-sale services, collectible data, legal bindings of both parties, product data, dispute resolutions, and so on.
A site that does not have terms and conditions can easily lose in disputes and lawsuits since they failed to outline acceptable and unacceptable site uses. This is a very important legal issue as it acts as the constitution of the website.
6. Data Protection
All countries have data protection laws regarding the use of digital services. Site owners should acquaint themselves with them before launching their websites, as they can be lethal if overlooked. A website should not collect and store prohibited data. Additionally, it should inform and request its users when it needs to collect personal information. This should be decided by the consumer.
Additionally, a site must be responsible for the protection of all the data collected from consumers. All possible measures should be implemented to prevent leakage as this can lead to serious legal measures.
Chris Brown, CEO of Tudor House Immigration Services
A business that exists only as a website without any form of incorporation is usually regarded as illegal. Unfortunately, in this age of expanding e-commerce, most online business owners are unaware of this. All the services and products rendered by an unincorporated online business are illegal.
The problems mostly show when a tussle arises and requires mediation. In this case, the websites always lose since, legally, it is not recognized. For example, if fraud occurs and the site owner reports to the authorities, they cannot be assisted as they are running an illegal entity that is strange to the law. An unincorporated business has no shelter or legal rights.
8. Domain Name Ownership
The person whose name appears on the domain name purchase details is regarded as the legit owner. Therefore, if a site owner needs to purchase a domain name, they should do it themselves or ensure their real details are used. If different names and details are used, the site owner has no jurisdiction over the website and will always be at the jurisdiction of the party whose details are used.
Site owners should ensure domains are purchased using their details, especially when third parties like developers or employees are involved.
Thomas Brown, the CEO of Wigsmaster
9. Business Licensing and Registration
Many people make the mistake of thinking that just because an e-commerce business has no physical space, that you do not need a business license. However, this often depends on state and local laws, as some businesses that are specially regulated may still need some form of general business license or permits. For instance, if you are starting an online alcohol delivery service, you will need to have a license in most states. Besides that, owning a business license plays a big role in increasing brand trust, as it helps to make your business look more legitimate to buyers as well.
10. Data Protection and Privacy
Most online retail websites are often reservoirs of a huge amount of sensitive customer information, which tends to be gathered through online contact forms, account registration, and even during the checkout process. As such, many governments require all e-commerce sites to be compliant with data protection laws by creating a comprehensive data protection policy that clearly lays out what data is collected from online visitors and how it is stored.
11. Tax Obligations
There are also a number of tax obligations to take into consideration when running an online e-commerce store because certain states have imposed laws where sales taxes must be collected for all online transactions. And since there isn’t just one single sales tax system, chances are you will usually need to research each state to make sure that you are staying compliant in order to avoid any potential penalties or any other legal ramifications.
Eden Cheng, Co-Founder PeopleFinderFree