Buying and selling online is more than a flash in the pan. Once dismissed as a craze that few would embrace, ecommerce continues to skyrocket in popularity. Whether you are just starting your online business or you’ve already dipped a toe into online selling but want to make sure you are doing everything correctly, it is crucial that you know some of the major laws that have been put in place to protect both internet buyers and sellers.

What are ecommerce laws?

Just as brick-and-mortar companies are governed by regulations, so are ecommerce endeavors. This is the case whether you are a global behemoth like Amazon or a tiny start-up with only you as the sole employee. Since we’re guessing you don’t have the financial resources to hire a stable of lawyers like those monster companies do, it makes sense to learn about some of the major ecommerce laws and best practices that will govern your business for the foreseeable future.

1. Establish your business by forming a limited liability company (LLC).

One of your first actions when launching your business should be to establish it as its own separate entity. This means that it needs to be distinct from your personal assets and accounts. Should the worst happen and the LLC is unable to pay its debts, only its own accounts and assets will be targeted by creditors. By the way, this is a best practice not only for ecommerce companies but for all businesses.

2. Prepare to pay taxes.

Reckoning with Uncle Sam regularly is an inevitable part of our lives, and ecommerce businesses are no exception. To that end, you should apply for a Tax ID Number from the Internal Revenue Service. Also, take time to learn about the tax laws that govern your ecommerce sales. Not only what you sell but also where you sell it will have an impact on the taxes you pay and what you charge your customers. If things start to become more complex than you feel comfortable addressing, it makes sense to hire a tax professional.

3. You need to choose a payment gateway to process online transactions.

Think of a payment gateway as the intermediary between your website and your customer and their bank. Picking the right one ensures that transactions are fast and secure. Consider the following factors when choosing a gateway from your online payment processing provider.

• Is it hosted or non-hosted?
• Is it equipped with robust anti-fraud features?
• What fees will you be expected to pay? These may include charges for setup and early termination, as well as per-transaction or monthly charges.
• Are you restricted from selling any specific types of products that might affect your business?
• Does the payment gateway you’ll access offer reliable uptimes? 
• Can you rely upon excellent customer service in the event of chargebacks, processing difficulties, or other issues?

Getting access to a secure and reliable online payment gateway is one of the best ways to streamline your online store, so don’t compromise when it comes to this step.

4. Protect your intellectual property rights.

Whether you are marketing a product you have invented and manufactured or you are selling things made by others, you need to keep intellectual property rights in mind. Get to know the meanings of the following three terms as defined by the United States Patent and Trademark Office:

Trademark: A word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.

Patent: A limited duration property right relating to an invention, granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention.

Copyright: Protects works of authorship, such as writings, music, and works of art that have been tangibly expressed.

If you have come up with your own product, you may want to apply for a patent to protect it from infringement or theft by others. By the same token, it is in your best interests to check that nothing you sell violates the patents or trademarks of other companies.

5. Learn about shipping restrictions.

Don’t just assume that you can ship your products with your carrier of choice without first checking to be sure. For example, many carriers restrict items such as animals, aerosols, cigarettes, fruits and vegetables, drugs, live plants and more., Consult the Federal Trade Commission’s website if you are selling internationally to learn about any applicable duties, customs laws, and taxes.

6. Your inventory size may determine the location of your ecommerce business.

Your lease, property deed, and/or community zoning codes may have restrictions that regulate how you can use your property. For instance, you might be forbidden from running a larger concern with substantial inventory from your home or garage. Find out what restrictions apply to you so that you can set up your operations accordingly. In the end, you may need to rent warehouse space or hire a third-party fulfillment company to manage your orders.

7. Age restrictions apply to all ecommerce sites.

All websites are required to comply with the Children’s Online Privacy Protection Act (COPPA). This legislation expressly prohibits you from gathering or collecting any personal information from a child under 13. Review your product offerings and your country’s codes to ensure that you are complying with any existing age verification regulations.

8. Your ecommerce business should be insured.

As is the case with other types of business, you need to protect your ecommerce business from liability. Speak with an insurance provider, focusing on the following options.

• General liability to protect against claims that your business caused bodily injury or property damage.
• Product liability.
• Professional liability to protect against malpractice, negligence, or other mistakes.
• Commercial liability to protect your business if you are found liable for property damage, advertising, or personal injury caused by your staff, operations, or services.

9. Some businesses require licenses or permits.

Although not all do, yours may. Whether you will or will not be subject to licenses or permits will depend on your location, what you are selling, and the laws governing the region where you are doing business.

10. Comply with PCI rules.

The Payment Card Industry Data Security Standard (PCI DSS) has been developed to protect cardholders and their sensitive data. Should you ever be the victim of a data breach, you could be found liable and required to pay significant financial penalties by the government and card issuers. Moreover, you could be slapped with lawsuits and insurance claims, lose your customers’ trust, and may even lose your business entirely. For that reason, be sure that your website and ecommerce payment platform have programs in place to help you maintain PCI compliance. 

11. Learn about Federal Trade Commission (FTC) regulations. 

Any business wanting to advertise or market online must comply with FTC statutes. These include the following.

• CAN-SPAM Act. This details requirements for commercial emails, including the right for consumers to opt out.
• Consumer Review Fairness Act. This gives consumers the ability to share their opinions about your business, products, and services in any forum.
• Regulations that prohibit you from deceptive marketing practices.

For a complete list of FTC rules, visit their website.

Succeeding in the ecommerce realm requires that you have a thorough understanding of the laws and practices that govern it. Remember, they are set up to protect you and your valued customers. Research and ongoing vigilance in this area will ensure that your business has the underlying infrastructure to succeed in the online marketplace.