6 Legal Challenges E-Commerce Businesses have to deal with

E-commerce businesses are constantly facing new legal challenges as the industry evolves rapidly with new technologies, online systems and compliance arising every day. As such, they typically don’t face the same challenges as typical brick-and-mortar businesses. However, in order for e-commerce businesses to stay ahead of the curve, it’s important to be aware of these challenges and how to navigate them.

This article will discuss 6 of the most common legal issues e-commerce businesses face from a legal perspective:

• Brand protection;
• Data privacy and security;
• Terms of use;
• Online refunds and exchanges;
• Online regulatory compliance; and
• Online contractual agreements.

Brand protection

One of the biggest challenges for e-commerce businesses is brand protection. Without a physical storefront, it can be difficult to develop and maintain a reputation. A good brand reputation attracts customers. The challenge is to ensure that the reputation of an e-commerce business is not harmed by other businesses or individuals.

Online Defamation

To protect your business against online defamation, the steps you can follow is to avoid controversial subjects and stay away from arguments. If any defamatory comments come through, delete them immediately if possible. Avoid arguments on social media. Do not repost, retweet, share, or backlink to any defamatory material. If you are victim of online defamation, you can contact us for legal assistance.

Trade Marks

A trade mark can be a business name, logo, a slogan, or any other distinctive sign that identifies a business’s products or services. The owner of a trade mark has an exclusive right to use it in relation to the goods and services specified in the registration. This means that other businesses cannot use the same or a similar trade mark without the permission of the owner, otherwise they may be liable for trademark infringement.

To protect content and materials from unauthorised commercial exploitation, consider doing the following:

1. using a ™ or (R) symbol in connection with prominent placements of unregistered trademarks or registered trademarks; and
2. registering trade marks and other important intellectual property by applying for registration with IP Australia and other applicable authorities to enhance your rights should anyone infringe your IP.
   

Clauses to include in your Website Terms and Conditions

Another method of protecting your brand is by including a non-disparagement clause and a trade mark notice in your website terms and conditions. This will act as a preventative measure where someone has used your goods and services, and subsequently speaks badly of your brand. For instance, where a person leaves a negative Google Review about your business or uses you trade mark without authorisation.

Data privacy and security

Data privacy and data security are becoming a big challenge for all businesses, but it can be especially difficult for e-commerce businesses. When customers make purchases online, they share sensitive details like their credit card number, home address, photos, phone number, and email addresses.

It’s important for businesses to protect this information and ensure that it’s not accessed by anyone who shouldn’t have it. One way to do this is to have a strong Privacy Policy in place. This policy should outline how your business collects, stores, and uses customer data and what kind of sensitive details you collect from visitors. Links to your online privacy policy should be clearly visible and easy to find so users can request not having their personal information sold elsewhere without their consent. If your customers are or may be located in the European Union, or if they are EU citizens located in Australia, you should ensure your Privacy Policy complies with the GDPR.

Additionally, e-commerce businesses should take steps to secure their website and protect customer information. This may include investing in cyber security insurance or using encryption when storing data. By taking these measures, e-commerce businesses can help protect their customers’ data and create a more secure online shopping experience.

Terms of use and limitation of liability

Many business owners are familiar with the terms of use agreements that govern how visitors use and access their website. However, what many people don’t realise is that these agreements can also be used to limit liability and protect businesses from potential legal trouble. By including waivers and disclaimers in your terms of use agreement, you can make it clear that you are not responsible for any damages that may occur as a result of visitors or customers using your site. This can be incredibly useful in the event that something goes wrong, and a user files a complaint or proceedings against your business.

In addition, businesses can also use their terms of use agreement to restrict how users can use their site and what they can do with the information they find there. This can help to prevent misuse of confidential information or copyrighted material.

Most importantly, your terms of use should include waivers and disclaimers that limit your liability in case something goes wrong. For example, if a visitor to your website is injured as a result of using your product, you want to make sure that you’re not held liable. Including these types of provisions in your terms of use can help protect you from costly lawsuits down the road.

To make sure your customer or user agreement will stand up legally, use a clickwrap method. A clickwrap method is where your customer or user has to tick a box or click “I Agree” to your Terms and Conditions and acknowledge that their information will be collected and dealt with in accordance with your Privacy Policy. This could be when they sign up to receive your marketing messages, or when they make a purchase on your website.

Online refunds and exchanges

Every refund or exchange requires processing, and there are often associated shipping costs as well. In addition, some businesses may require customers to return items in original packaging, which can add to the cost. As a result, it is important for businesses to carefully consider their refund and exchange policies before launching an e-commerce site.

A refund policy is essential to build customer trust, but it can also be costly for businesses. Consider providing information to the user in relation to the following:

1. the name and the address of your business;
2. the general characteristics of the products/services;
3. the price of the products/services, including all taxes and fees;
4. the cost of postal or transport charges, which are not included in the price of the products/services, related to their delivery;
5. the cost of using a mean of communication from distance, when it is calculated in a way, different from the one indicated in the general tariff;
6. the payment method;
7. delivery and implementation of the contract;
8. the right of the customer to withdraw from the contract;
9. the conditions in which the product may be returned;
10. the period for which the particular offer or price shall be valid; and
11. the minimal duration of the contract for contracts of constant or periodical delivery of products/services.

Another challenge with return and exchanges is that returns can lead to extra stock on hand. This can be problematic for e-commerce businesses that operate from their home and store inventory at home as there oftentimes limits on how much inventory can legally be stored at home.

If you’re shipping internationally, pay extra attention to the laws surrounding the sale and import/export of alcoholic beverages, nail polish, perfumes, and CBD products. These are just a few examples of items with specific legal restrictions when it comes to shipping, both domestically and overseas.

Online and e-commerce regulatory compliance

As the internet is a global medium, e-commerce businesses may be subject to laws in multiple jurisdictions.

Many e-commerce businesses rely on third-party platforms or service providers, which makes it difficult to ensure compliance with all applicable laws and regulations. Compliance with some laws, such as those governing online advertising or payment mechanisms, can be complex and time-consuming.

Finally, the rapidly changing nature of the internet means that new legal challenges can arise at any time. Marketing compliance is also complex, as businesses must ensure that their marketing practices do not violate consumer protection laws. These compliance challenges can be costly and time-consuming, but failure to comply with applicable laws and regulations can lead to significant penalties. Some examples of fines and penalties are available on the Australian Competition and Consumer Commissions’ website and can reach thousand or millions of dollars.

As a result, it is essential for e-commerce businesses to discuss their particular situation with an experienced lawyer and have a compliance strategy in place.

Online contractual agreements

Any business that wants to succeed needs to have a clear and well-written legal contracts. This is especially true for e-commerce businesses, which are often reliant on payment platforms, suppliers, employees, and website hosts.

A contract establishes the terms of the relationship between the business and the other party, and it can help preventing disputes. However, if a contract is not drafted correctly, it could create legal liabilities for the business. Ensuring you have clear and concise terms and conditions is one way you can try and limit your liability.

Further, payment platforms may be used by customers from all over the world, which can make it difficult to enforce the terms of a contract.

Similarly, website hosts and other service providers may be based in different countries, making it hard to resolve any disputes that may arise. Finally, website hosts may change their terms of service without notice, resulting in unexpected liability for the e-commerce business. As such, it is essential that you up to date with these terms, and making and amendments as required to ensure compliance.

Key takeaways

There is a wide range of legal challenges that e-commerce businesses face. As such, it is imperative that you are conscious of the risks that are inherent in everyday business activities. Understanding these risks will ensure you can minimise legal liability and ensure customer satisfaction, in addition to maintaining the professional reputation of your business.

If you need an experienced e-commercial lawyer for tailored commercial legal advice, please do not hesitate to get in touch with our team by calling 1800 820 083 or by submitting a query via our contact forms.

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