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 8 Replacements for Google Notebook 2 7 Tools to Help Keep Track of Goals and Habits Effectively 3 7 Clever Goal Tracker Apps to Make the Most of Your Business in 2019 4 10 Smartest Productivity Software to Improve Your Work Performance 5 18 Best Time Management Apps and Tools (2019 Updated)

Read Next

Advertising
Advertising
Advertising

Last Updated on May 14, 2019

8 Replacements for Google Notebook

8 Replacements for Google Notebook

Exploring alternatives to Google Notebook? There are more than a few ‘notebooks’ available online these days, although choosing the right one will likely depend on just what you use Google Notebook for.

  1. Zoho Notebook
    If you want to stick with something as close to Google Notebook as possible, Zoho Notebook may just be your best bet. The user interface has some significant changes, but in general, Zoho Notebook has pretty similar features. There is even a Firefox plugin that allows you to highlight content and drop it into your Notebook. You can go a bit further, though, dropping in any spreadsheets or documents you have in Zoho, as well as some applications and all websites — to the point that you can control a desktop remotely if you pare it with something like Zoho Meeting.
  2. Evernote
    The features that Evernote brings to the table are pretty great. In addition to allowing you to capture parts of a website, Evernote has a desktop search tool mobil versions (iPhone and Windows Mobile). It even has an API, if you’ve got any features in mind not currently available. Evernote offers 40 MB for free accounts — if you’ll need more, the premium version is priced at $5 per month or $45 per year. Encryption, size and whether you’ll see ads seem to be the main differences between the free and premium versions.
  3. Net Notes
    If the major allure for Google Notebooks lays in the Firefox extension, Net Notes might be a good alternative. It’s a Firefox extension that allows you to save notes on websites in your bookmarks. You can toggle the Net Notes sidebar and access your notes as you browse. You can also tag websites. Net Notes works with Mozilla Weave if you need to access your notes from multiple computers.
  4. i-Lighter
    You can highlight and save information from any website while you’re browsing with i-Lighter. You can also add notes to your i-Lighted information, as well as email it or send the information to be posted to your blog or Twitter account. Your notes are saved in a notebook on your computer — but they’re also synchronized to the iLighter website. You can log in to the site from any computer.
  5. Clipmarks
    For those browsers interested in sharing what they find with others, Clipmarks provides a tool to select clips of text, images and video and share them with friends. You can easily syndicate your finds to a whole list of sites such as Facebook, Twitter and Digg. You can also easily review your past clips and use them as references through Clipmarks’ website.
  6. UberNote
    If you can think of a way to send notes to UberNote, it can handle it. You can clip material while browsing, email, IM, text message or even visit the UberNote sites to add notes to the information you have saved. You can organize your notes, tag them and even add checkboxes if you want to turn a note into some sort of task list. You can drag and drop information between notes in order to manage them.
  7. iLeonardo
    iLeonardo treats research as a social concern. You can create a notebook on iLeonardo on a particular topic, collecting information online. You can also access other people’s notebooks. It may not necessarily take the place of Google Notebook — I’m pretty sure my notes on some subjects are cryptic — but it’s a pretty cool tool. You can keep notebooks private if you like the interface but don’t want to share a particular project. iLeonardo does allow you to follow fellow notetakers and receive the information they find on a particular topic.
  8. Zotero
    Another Firefox extension, Zotero started life as a citation management tool targeted towards academic researchers. However, it offers notetaking tools, as well as a way to save files to your notebook. If you do a lot of writing in Microsoft Word or Open Office, Zotero might be the tool for you — it’s integrated with both word processing software to allow you to easily move your notes over, as well as several blogging options. Zotero’s interface is also available in more than 30 languages.

I’ve been relying on Google Notebook as a catch-all for blog post ideas — being able to just highlight information and save it is a great tool for a blogger.

Advertising

In replacing it, though, I’m starting to lean towards Evernote. I’ve found it handles pretty much everything I want, especially with the voice recording feature. I’m planning to keep trying things out for a while yet — I’m sticking with Google Notebook until the Firefox extension quits working — and if you have any recommendations that I missed when I put together this list, I’d love to hear them — just leave a comment!

Advertising

Advertising

Read Next