The Ultimate Legal Checklist for New eCommerce Businesses

The deceptively simple process of setting up an ecommerce business can mask the regulation and risk that lurks in the background. Let’s jump in and talk about the top 5 things you should have on your ‘legal’ checklist if you’re dipping your toes into the wonderful world of ecommerce.

Cyber security

Cyber security risks are number one on the list for a reason; they’re prolific. Cyber security breaches can cause loss of revenue for your business and significantly impact your business’ reputation. After all, your customers may be far less willing to part with their money if they believe there is a risk that your business’ cyber security has been compromised and they may get more than they bargained for.

The best way to address cyber security issues is by preventing them. This can be done by outsourcing IT security, using appropriate software and hardware and educating yourself about cyber security.

You can also (and should) take out cyber insurance. Cyber insurance premiums may not come cheap, but it is worthwhile particularly for ecommerce businesses.

You can read more about cyber security issues here.

Privacy and data

Chances are, if you are setting up an ecommerce business, you will at some point come in to contact with personal information. You need to ensure that you have a privacy policy which is readily available to your potential customers, and which complies with the Privacy Act 1988 (Cth). While the legal requirement to have a privacy policy only kicks in once you have a turnover of more than $3 million per year, some platforms will nevertheless require you to have a privacy policy in place.

Aside from the paperwork side of things, you need to be proactive and take steps to protect that personal information. Some ecommerce platforms will help you to achieve this goal, but don’t solely rely on third parties to protect your customers’ data, because the buck stops with you.

Sale terms and conditions

Your customers will no doubt have a flurry of questions and they may want these answered before they commit to making a purchasing decision. You can kill two birds with one stone by combining the answers to those questions with your terms and conditions of sale.

These don’t need to sound too “legal”, but importantly your terms and conditions of sale do need to comply with the Australian Consumer Law. If they don’t, you might be putting your ecommerce business in the sights of the consumer regulator, the Australian Competition and Consumer Commission, as well as potentially harming your business’ reputation.

Intellectual property

There are two viewpoints you need to consider when it comes to intellectual property (“IP”); how your business uses others’ IP and others can use yours.

Whether you’re selling other people’s products or you’re making and selling your own, you need to make sure you’re not infringing on anyone else’s IP. IP infringements can range from displaying other business’s logos without permission, using images from the internet that don’t carry the right to commercially exploit them, or copying and pasting other business’s text onto your website.

When it comes to how others use your IP, you should ensure that your website terms of use make it clear how the IP displayed on your website can and cannot be used. Further, if your brand starts to gain some notoriety at some point during your ecommerce journey, it may be worthwhile looking to register your trademark. Remember that purchasing a domain name doesn’t give you any IP rights in that domain name.

Online reviews

For any ecommerce business, online reviews can make or break your business. The majority of customers looking to buy online will look at customer reviews before making a purchasing decision.

Of course, no matter your good intentions, sometimes things happen outside your control and you may drop the “good customer service” ball. If this results in a negative online review, the best way to address this is by responding in a professional manner and trying to give your customer a positive experience out of a negative one. You should not, however, try to remove the online review if it is genuine.

On the other hand, if the review is fake or untruthful, you should contact the review platform (such as Google) and attempt to have the review removed.

About the author

Farrah Motley is an Australian-qualified business lawyer and the founder of Prosper Law. With over ten years’ experience in the legal industry and working at the legal coal face of Australian businesses, Farrah has established herself as an expert in commercial law.

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