Common Legal Issues Faced by eCommerce Companies

As online media grows and evolves, online businesses thrive alongside this upward trend. Recent company reviews state that now every 5 in 8 businesses are operating online carrying out e-commerce business. Like any business – online or offline) -companies are still susceptible to legal implications if they don’t abide by the law.

When it comes to eCommerce business there are many legal issues that can arise due to the specific nature of the operation. If these issues are neglected and not taken care of correctly, they can lead to some serious problems for your online company – financially and for everyday operations. To help owners avoid such issues, we’ve outlined below the most common legal issues faced by eCommerce entrepreneurs. Hopefully, they come in handy!

Legal issues in eCommerce

Incorporation Issues

If your whole operation conducts all of its activity through your website, not being incorporated can cause real issues. If you aren’t registered as a company it means that your company isn’t a separate legal and financial entity from yourself. Most people incorporate their online business in order for personal liability protection so that their own assets aren’t at risk if debts or bankruptcy occurs. Often when people set up an eCommerce shop in a hurry they forget to do this and if things go south quickly, the debts build and they become personally responsible for owed money.

In addition, incorporating your business makes you look more professional, often offering tax benefits to you as the owner. In the future, if you’re planning on gaining investment for your company, maybe even employ staff, becoming incorporated is a crucial step to enable this future growth.

A word of warning, however, whilst it does, for the most part, offer a level of security, even if you’re registered it doesn’t protect you from any criminal charges.

Tax

Just because you’re not a physical store, it doesn’t mean that you can avoid paying tax. Like any other business, if you’re selling or buying you need to be abiding by taxation laws. Failure to pay taxes can cause greatly damaging legal action against your company and you will be forced to pay substantial fines. You’re not exempt because you’re online so make sure you contact your government’s tax agency to find out full information on what you’ll have to pay and charge. Different types of businesses will pay varying tax levels so make sure you do your research beforehand and don’t ignore it until it is too late.

Copyrighting

Whether its branding or getting content sorted for your eCommerce site, copyright is crucial for the protection of the company.

The owner of a copyright has the exclusive right to:

• copy the work
• modify the work
• distribute the work
• perform the work publicly
• display the work publicly
• product design
• brand imagery
• logo design
• naming rights

The most common copyright case for online sites comes in the form of copy or content – this relates to text, images, videos or music. You don’t legally have to register any work you create for copyright protection, however, if you do register any materials, you can relax knowing that they’re yours as of the registration date and you have power and entitlement under copyright law. This will help you if you ever run into a legal battle and need the help of consumer rights lawyers so by being protected you already have the upper hand.

When you come across the term “Public Domain”, this doesn’t mean that it is free to use. It simply refers to items in question that either don’t require copyright or when the protection has expired. Therefore, if you’re not creating the content yourself, you should buy a warranty from the seller or licensor stating that the seller owns all the rights in it and agrees to protect you if someone else sues you for using it. More information on copyright law can be found here.

Your Brand Identity

It doesn’t take a genius to know that the identity of your brand is of the highest importance online. Many businesses and products are easily available to consumers at the click of a button. Your marketing and PR must be unique and eye-catching when going up against your competitors. The first thing you’ll need to consider is to obtain your domain name or website address. This should be easy for your target market to remember and should reflect your business. Legally speaking, the name needs to be one that is not claimed by another company. If you choose something that is similar to a trademarked name or logo, you may find yourself in hot legal waters. You can check on sites such as Companies House to ensure you don’t end up picking something that’s already been taken.

As your brand gains traction, you may be susceptible to identity thefts including fake websites and social media handles in an attempt to divert traffic. Learn how to protect your brand from SEO manipulation, cybersquatting, and phishing scams.

Protect Your Trademark

Trademark your logo and product name to avoid major legal issues. You don’t want your rivals to have a brand that’s a replica of yours. Getting a trademark will secure your name. It will also give you the rights to serve up legal action against any business that is infringing. It’s important to be aware, that the trademark and patent office will not register a domain name as a trademark unless that domain name can genuinely claim to be unique. 

Privacy Policies

Privacy policies are often overlooked. For any online business, privacy is a huge threat. This can potentially cause major issues for consumers and you as the owners. Consumers will share their information with the business online and they legally are entitled to this information to be confidential. If for example, you sell products on your site, your domain will need to be secure so you’ll need to have a HTTPS (secure certificate) installed on your website to ensure the safety of people’s personal details (including payment details). One leak could cause the loss of custom, reputation damages, and legal proceedings against your company. So, do your research and follow protocol and you’ll be able to avoid any legal issues that could arise.

Author Bio

Veronica Pembleton is a freelance writer and research journalist, who specializes in marketing, law, and business.