Running and growing an ecommerce business is not just about developing world-class products and providing the best service. Even if you make seven-figure sales every month, a lawsuit can derail your business or even shut it down completely. U.S.-based e-commerce businesses are required to charge a fee: Almost all businesses now use online or mobile websites and/or social networking sites to promote their business, sell goods or services, conduct business transactions, and connect and communicate with customers or other businesses. While these « e-commerce businesses » face a variety of the same legal issues as traditional brick-and-mortar businesses, they also face other challenges that are unique to conducting business operations and transactions in an electronic environment. The range of legal issues that need to be considered and managed continues to grow, and ignoring this reality could result in financial liability, regulatory sanctions, or unauthorized use of the company`s intellectual property. Below is a non-exhaustive list of potential legal issues to consider to minimize the risks associated with running an e-commerce business. E-commerce can be legally integrated in different ways, just like brick-and-mortar businesses. The business can be a sole proprietorship, partnership, limited liability company, limited liability company, or S or C company. Each of these types of companies has different legal and tax consequences.

Therefore, one of the first tasks of an e-business is to choose the business structure that suits you best. Especially for e-business, you may want to choose a structure that legally and financially separates the business from you, the owner. E-commerce is arguably more financially vulnerable than traditional businesses. If you form the corporation as a separate entity, you are not personally liable if the corporation goes bankrupt or incurs unexpected debts. However, companies are free to change their structure after they are set up. You can start as a sole proprietorship because of the relative ease and then move to a more advanced form of entity in the future. If you don`t protect your trademark, this is one of the most important legal issues in the field of e-commerce. Since the brand is the logo and symbol of your company, the representation of your company through the web, it must be protected. If you don`t secure it, it won`t be long before you realize your trademark is being infringed. This is a very common legal issue that can become a deadly threat to your e-commerce. However, despite their relatively easy entry point and low start-up cost, online businesses still face many legal considerations. Business owners should be aware of these issues before starting an ecommerce business.

In 2014, approximately 145 million eBay user records were accessed by hackers in one of the most notorious data breaches in online history. Amazon had a similar problem in 2018, two days before Black Friday. But this time, it was their own technical issues that caused customer information to be leaked. Many of the same contractual considerations that affect brick-and-mortar businesses also play a role for ecommerce businesses. Of course, you may not have to navigate the complexities of commercial leases. However, the continued operation of your online business may be based on contractual agreements with multiple parties, including: Consumer protection legislation applies to both traditional transactions and e-commerce transactions. Most jurisdictions have laws in place to protect consumers from unethical business practices. If you sell in other jurisdictions, you need to know the rules. If you own a business in Ontario, you should be aware that consumer protection law applies to any online agreement you enter into with a consumer, whether or not that consumer is located in Ontario.

In order to comply with legal consumer protection requirements for e-commerce, you must provide accurate information about the conditions and costs associated with a transaction so that customers can make an informed decision about the purchase. Some of the most common legal issues faced by ecommerce businesses include: Pay attention to jurisdiction As electronic transmissions over the Internet reach parts of the entire world, businesses may be subject to the laws of many different countries or states in the United States regarding e-commerce activities. Consider narrowing the scope of jurisdiction as much as possible by indicating the applicable law, venue or forum, and limiting online activities to jurisdictions where the e-commerce business is willing to comply with applicable laws and regulations. Product liability lawsuits are one of the scariest things that can happen to a business. This is the legal liability that arises from the manufacture or sale of a defective product. If a product turns out to be dangerous, it is obvious to blame the manufacturer. But not all ecommerce sellers are private labels. How about reselling the product only through arbitrage or if you`re just a marketplace where the products are sold, like Amazon? Two privacy laws for customers that ecommerce store owners should familiarize themselves with are: There is no rush to get a law degree. However, you need to stay informed about the legal issues that your ecommerce website may face. E-commerce remains an important segment of the U.S.

economy. Online businesses are attractive to entrepreneurs for several reasons. Without the need for a physical business, they are a more accessible form of startup. You don`t even need to build a website, product, or distribution system from scratch. for example, in the case of agreements with third parties through Amazon, the infrastructure is already in place. E-commerce accounts for more than three-quarters of total retail growth. The company also predicts that global sales will reach $3.9 trillion in 2020. Many legal issues are caused by a misunderstanding of consumer rights, which are often written in small print or not detailed enough for a business owner to understand their terms and conditions. For example, contracts could be worded in such a way that they are difficult to read or understand, resulting in business owners signing their eldest daughter without knowing what they were agreeing to. You may not sell illegal items online as defined in your local laws, such as in physical stores. Otherwise, there are types of products that you are not allowed to sell without a special license, such as alcohol, tobacco, fresh produce, medical and pharmaceutical products. In addition, some ecommerce platforms and marketplaces may have separate listings of items that are restricted for sale on their platform.

You may not need a special business license, other than VAT registration, for your online store unless you sell certain types of products such as medical devices, health products, alcohol, fresh produce, and other types of regulated products. However, it is best to check the requirements with a local authority or lawyer. In the European Union, for example, the General Data Protection Regulation requires e-commerce sites to inform visitors when they collect user information and to obtain explicit consent before collecting or reusing personal data. In the United States, California requires certain for-profit companies to implement and maintain policies and procedures to protect consumers` personal information.