Advertising
Advertising

3 Legal Issues Online Retailers Must Be Aware of

3 Legal Issues Online Retailers Must Be Aware of

Many experts believed that the eCommerce industry would peak in 2011. However, it has been growing faster than anyone would have predicted. The industry reportedly grew 14.6% in 2015. It grew another 16% year-over-year in the third quarter of 2016.

Rapid industry growth creates new opportunities for online retailers. However, it has also attracted more scrutiny from regulators. Governments around the world have imposed new laws for a variety of reasons, including:

  • Protecting consumers from unscrupulous merchants
  • Limiting the competitive edge that online retailers have over their brick-and-mortar counterparts
  • Combatting fraud
  • Fighting money laundering
  • Limiting access to potentially harmful products

Here are some legal issues online retailers must be aware of.

1. Online Sales Taxes

When Amazon first began selling products online, it didn’t have to pay sales tax. The law stipulated that only brick-and-mortar businesses needed to pay it.

Advertising

Sales tax laws are now applied to online stores as well. Unfortunately, they vary from state to state and country to country. If you have a physical presence in a state, you may need to pay sales taxes regardless of where your customers are located.

In California, you may also be required to pay sales taxes if you have a representative in the state, even if your main office is based elsewhere. Some states will also require you to charge a sales tax if you sell to customers in their jurisdiction, even if your business is technically based elsewhere.

“Navigating sales taxes is challenging for all businesses,” says Ryan Kh, business development consultant and founder of Catalyst for Business.

“I encourage my clients to review sales data and see which states they receive the bulk of their sales. They may want to establish a physical presence in one of those jurisdictions to avoid the pains of double taxation online retailers often face. Of course, it depends on whether those states have a reasonable tax rate.”

2. Minimum Advertised Price

If you are selling products from another company, they may impose restrictions on advertising. One of the most common restrictions is the minimum advertised price policy many suppliers have.

If you enter into an agreement with a manufacturer, you must follow this policy carefully. According to an infographic by TradeVitality, there are a number of reasons MAP policies are enacted, including preventing merchants from engaging in price wars, which can put pressure on the manufacturer to lower their wholesale price.

It’s important to read the agreement with each supplier carefully. Never advertise a price below what they will allow.

3. Dealing with Fraudulent Payments

Fraudulent payments are a serious concern for online merchants. Unlike brick-and-mortar businesses, online retailers must usually accept liability for any fraudulent payments.

Advertising

Why is the liability different for e-commerce companies? The law states that if a brick-and-mortar retailer uses a CHIP Reader, then it is not their responsibility to determine whether or not fraud took place. It’s up to the bank to monitor the account for fraudulent activity if the retailer took all reasonable precautions.

When an online retailer accepts payment, the transaction is classified as “card not present.” Since the retailer isn’t able to confirm the identity of the buyer, they usually assume the liability. If it is a fraudulent purchase, they will have to pay restitution to the cardholder.

However, this law is not absolute. It is usually based on the assumption that online retailers offer less security than the customers bank. If you can show that you have exceeded expectations with your online security, you may be able to shift the liability back to the bank.

“The liability shift protects the entity who offers the greater level of security by holding the other entity with less secure systems responsible for fraud,” said Carolyn Balfany, a safety expert with MasterCard.

However, it’s difficult to meet this burden, unless the customer has a lax bank that overlooked red flags of fraudulent activity.

“The one thing that merchants are going to have to struggle with, as long as we have cards that are chip and signature, we will see a shift to online fraud,” Mallory Duncan, senior vice president and general counsel at the National Retail Federation, told Yahoo Finance. “Merchants will have to put more roadblocks in the way of transactions in an effort to keep down the fraud occurring online.”

Conclusion

eCommerce companies are being more tightly regulated these days. They must be aware of all laws and take all reasonable precautions to abide by them.

Featured photo credit: Pexels / Negative Space via pexels.com

Advertising

More by this author

Annie Qureshi

Entrepreneur

6 Startup Costs You Should Never Cut 5 Tips for Marketers to Build an Instagram Audience 6 Apps for a Better YouTube Experience 5 Business Ideas for New Entrepreneurs in 2017 photo editing 3 Photo Editing Tools to Bring You into the Social Media Limelight

Trending in Technology

1 5 Best Language Learning Apps to Master a New Language 2 11 Meeting Scheduler Apps to Boost Your Productivity 3 To Automate or not to Automate Your Personal Productivity System 4 7 Best Project Management Apps to Boost Productivity 5 10 Smartest Productivity Software to Improve Your Work Performance

Read Next

Advertising
Advertising
Advertising

Last Updated on November 5, 2019

5 Best Language Learning Apps to Master a New Language

5 Best Language Learning Apps to Master a New Language

Learning a new language is no easy feat. While a language instructor is irreplaceable, language learning apps have come to revolutionize a lot of things and it has made language learning much easier. Compared to language learning websites, apps offer a more interactive experience to learn a new language.

The following language learning apps are the top recommended apps for your language learning needs:

1. Duolingo

    Duolingo is a very successful app that merged gamification and language learning. According to Expanded Ramblings, the app now counts with 300 million users.

    Duolingo offers a unique concept, an easy-to-use app and is a great app to accompany your language acquisition journey. The courses are created by native speakers, so this is not data or algorithm-based.

    The app is free and has the upgrade options with Duolingo Plus for $9.99, which are add free lessons. The mobile app offers 25 languages and is popular for English-speaking learners learning other languages.

    Advertising

    Download the app

    2. HelloTalk

      HelloTalk aims to facilitate speaking practice and eliminate the stresses of a real-time and life conversation. The app allows users to connect to native speakers and has a WhatsApp like chat that imitates its interface.

      There is a perk to this app. The same native speakers available also want to make an even exchange and learn your target language, so engagement is the name of the game.

      What’s more, the app has integrated translation function that bypasses the difficulties of sending a message with a missing word and instead fills in the gap.

      Download the app

      Advertising

      3. Mindsnacks

        Remember that Duolingo has integrated gamification in language learning? Well, Mindsnacks takes the concept to another level. There is an extensive list of languages available within the app comes with eight to nine games designed to learn grammar, vocabulary listening.

        You will also be able to visualize your progress since the app integrates monitoring capabilities. The layout and interface is nothing short of enjoyable, cheerful and charming.

        Download the app

        4. Busuu

          Bussu is a social language learning app. It is available on the web, Android, and iOS. It currently supports 12 languages and is free.

          Advertising

          The functionality allows users to learn words, simple dialogues and questions related to the conversations. In addition, the dialogues are recorded by native speakers, which brings you close to the language learning experience.

          When you upgrade, you unlock important features including course materials. The subscription is $17 a month.

          Download the app

          5. Babbel

            Babbel is a subscription-based service founded in 2008. According to LinguaLift, it is a paid cousing of Duolingo. The free version comes with 40 classes, and does not require you to invest any money.

            Each of the classes starts with with a sequential teaching of vocabulary with the help of pictures. The courses are tailor made and adapted to the students’ level, allowing the learning to be adjusted accordingly.

            Advertising

            If you started learning a language and stopped, Babbel will help you pick up where you started.

            Download the app

            Takeaways

            All the apps recommended are tailored for different needs, whether you’re beginning to learn a language or trying to pick back up one. All of them are designed by real-life native speakers and so provide you with a more concrete learning experience.

            Since these apps are designed to adapt to different kinds of learning styles, do check out which one is the most suitable for you.

            More About Language Learning

            Featured photo credit: Yura Fresh via unsplash.com

            Read Next