There are many kinds of legal problems that your eCommerce business may experience. Some are issues surrounding taxation, while others have to do with contracts or even the product itself. Depending on the nature of these problems, they could significantly impact both your business and your consumers.
One issue that repeatedly occurs in eCommerce is whether state taxes should apply to products sold over the internet. One argument behind this is that out-of-state sales should not be taxed since no physical presence exists within that particular state. However, if revenue was not collected from those out-of-state sales, the argument goes that this would put brick and mortar stores at a disadvantage.
The problem with this is that many consumers are unaware of whether state taxes apply to them when they shop in an online store. This, in turn, could make it difficult for you to document any out-of-state purchases in question properly.
Whether you decide to charge your customers for certain taxes will be up to you, but if you choose not to, you should try your best to inform your clients about their obligations regarding taxation on purchases made through your business. You can do so through clear disclaimers on your website or the shopping cart interface during purchase checkout. It might also help to have a customer service representative reach out personally to inform customers about the taxation policies to know what to expect.
Another big concern for eCommerce transactions is whether certain transactions are binding once a contract has been formed. For example, if you have an eCommerce store selling software products, your end-user license agreement should have unambiguous terms and conditions. Using standard contract language can help ensure that any disagreement regarding EULA acceptance will be void since all users are asked to review the document before installing or using your product.
Suppose you receive complaints from consumers who say they were unaware of the terms associated with your product. In that case, you could consider pointing to this EULA acceptance as evidence of informed consent on their part. This way, you decrease the risk of any legal problems arising from the sale of your product.
It is also crucial for you to have a reputable attorney or legal department review your contracts before they are finalized. This can be extremely helpful in ensuring that there aren’t any glaring errors made that could inadvertently put your company at risk legally. It doesn’t have to be an in-depth analysis, but it does help if you know that someone with experience has gone over this contract before sending it out.
You might find similar issues when selling products on eBay or Amazon Marketplace. For example, some questions arise about whether certain items need to be displayed using the manufacturer’s name rather than an abbreviated version (i.e., Nike instead of NKE). Some companies, like Nike, say that this is a violation of trademark laws since customers might be led to believe the manufacturers themselves endorse the items.
If you sell on these marketplaces or even plan to do so in the future, then having clear disclaimers regarding your relationship with eBay or Amazon can help protect you from any legal problems that may arise. This way, you won’t be liable for any violations of these user agreements, and you will also have less difficulty proving what your responsibilities are.
Replacements and Refunds
Another problem related to product sales is providing replacements or refunds if an order hasn’t arrived on time or hasn’t been delivered at all. Some clients might decide they want their money back if delivery isn’t made within 30 days, while others are willing to wait up to 90 days.
Without clearly stated return policies, you may not have any recourse with customers unhappy about how their purchase was handled. At the very least, you should have a return policy visible on your website so that customers know what to expect.
If you are sued or want to sue a vendor or supplier, know that you can tap the services of reliable process servers to ensure that summons and complaints are served correctly. This will help prevent the possibility of a default judgment being made against you because of mishandled service of process.
Knowing your legal rights and responsibilities can help you better protect your company against other problems that might arise. The more prepared you are, the greater the chance that you will avoid expensive legal fees and that the outcome of any case you might have won’t be affected.