The world of online selling is constantly evolving – and so are its laws. Staying abreast of rising issues in the online retail arena can help you make the right moves to protect your eCommerce venture and its reputation.
E-commerce is booming, and it’s here to stay. In the USA, eCommerce grew by over 30 percent, accelerating predicted growth levels by over two years. With online shopping levels at the predicted level for 2022, it is one of the best times to join the online retail revolution. Whether you are a seasoned brick and mortar retailer looking to expand into the eCommerce world or you’re a new entrepreneur planning to launch your first online store, preparation is key. While the world of eCommerce may seem lucrative right now, it is not without its barriers and challenges, including legal issues. Like every other business owner, eCommerce businesses must anticipate and take precautions to protect their business from legal action and other ramifications that may arise.
Ensure Your Business is Protected from Liability and Warranty Claims
Retailers can be held liable for a product malfunction, or if the product they sell causes harm or illness to the intended consumer. As an eCommerce seller, you are required to clearly outline the product warranty and potential side effects, even if you are just the retailer. Similarly, eCommerce businesses can open themselves up to legal action for defectively manufactured or designed products. While the onus in these cases is normally shared heavily towards the manufacturing company, retailers are expected to do their due diligence to provide a safe and true representation of any product they advertise to sell. If there is an issue after products have been sold, eCommerce businesses must show that they actively provided a fair warning on the potential hazards.
Neglecting to do this leaves your online business in a vulnerable position, open to medical injury lawsuits. One good example: the recently tried lawsuit case against eCommerce giant Amazon, where they were found liable for product defects, including burning laptops that were sold on its website by third-party merchants. Implementing strict quality control and labeling measures can help eCommerce businesses avoid litigation in these instances. For damage control, securing liability insurance for your eCommerce business can help with the cost of legal representation, settlement costs, and any medical compensation.
Be Aware of Your Employee Contractual Obligations as an Employer
If you plan on employing behind-the-scenes workers such as warehouse staff, you are also required to observe federal employment laws, including The Americans with Disabilities Act, The Fair Labor Standards Act, and Section 1981 of the Civil Rights Act. There are also additional state laws that expand on these statutes, all aimed at protecting employees. For instance, eCommerce businesses are also barred from discriminating against employees on the basis of race, religion or gender orientation. While this is a legal requirement for all businesses, it is also a good eCommerce branding move to encourage diversity in their online business identity. For instance, 52 percent of adults feel that companies should be actively looking for ways to avoid unconscious bias in their branding; companies that fail to promote diversity therefore risk their reputation.
Protect Your Website and Sensitive Customer Information
As an online retailer, your website will be a reservoir of confidential customer information, including payment details and personal contact details. Since operation in the eCommerce arena allows you to sell beyond national borders, eCommerce business owners must be aware of the applicable laws governing consumer data protection in each of its markets. For instance, The General Data Protection Regulation of 2018 mandates that businesses must be confident of the security of their customers’ data, even if they choose to outsource these functions to third parties.
Similarly, in the USA, a combination of both federal and state laws are in place to protect the privacy and data of consumers. The Consumer Online Rights Privacy Act states that consumers have the right to access their data or to opt-out of their information being collected. Companies, including eCommerce businesses, are also required to gain explicit consumer consent before collecting their data.
Lay Out Clear e-Commerce Product Return Policies
While there are currently no federal laws governing a Return and Refund policy for eCommerce businesses, it is a wise decision to draft one before your first sale and to make it a store policy to include a copy with each sales invoice or delivery note. According to USA.gov, retailers are allowed to craft their return policies, but must post them in a place where they will be visible to customers – typically in a customer FAQ on their website.
However, retailers are required to accept returns of defective items by federal law. Also, states like Florida have implemented their own regulations on business returns. For eCommerce businesses in Florida, they must clearly display their stance if they choose not to provide refunds and returns. If they fail to do so, the 2020 Florida Statutes states that customers have the right to return the product purchases within seven business days for a full refund. Before drafting your return and refund policy, it is advised that you check the current state requirements.
These are just a handful of the legal issues eCommerce businesses need to be aware of. The world of online selling is constantly evolving – and so are its laws. Staying abreast of rising issues in the online retail arena can help you make the right moves to protect your eCommerce venture and its reputation.
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