Protecting your e-commerce business from legal pitfalls

It can be relatively easy to make a website and start an e-commerce business, or to start selling online the same products you already sell in a brick-and-mortar shop. It’s something you can even do on your own, depending on your skills and needs. With more people purchasing online, it can be a great way to keep your business afloat.

But an e-commerce business also has its fair share of legal pitfalls, and because you sell online, you are essentially subject to the relevant laws in every state.

If you have a new or expanded e-commerce business, it’s helpful to consult a business attorney to ensure your systems meet required legal standards. Otherwise, you could open yourself and your business up to lawsuits and even closure.

Here are some key areas you need to think about in order to protect your e-commerce business from legal challenges:

Privacy issues and data security

As an e-commerce business, you collect significant amounts of customer data by necessity. That includes sensitive information such as addresses, phone numbers and credit card information.

Some states require companies to have policies in place to protect customers’ personal information. In some cases, your business could run into trouble if you have a customer in a state with strict rules for data protection and you don’t meet those requirements.

To avoid legal issues, develop a policy to safeguard your customers’ personal data.

Your policy should explicitly state rules related to data collection and “cookies,” laying out what data you will collect from site visitors and how you will use and store the data.

All policies should be easy for users to access on your site and provide a clear way for users to request that you not sell their information to third parties.

Lawsuits brought by customers

If you are selling goods online, you open yourself up to customers suing you for product defects, even for products you don’t actually make.

In 2018, Amazon faced a lawsuit like that when a customer was blinded in one eye after a defective dog collar she bought from a third-party seller on Amazon broke, causing her retractable dog leash to hit her in the face. A federal appeals court found that Amazon was liable for the customer’s injuries.

You might think that your business is so small that nothing like that could happen to you. But even for smaller e-commerce websites that case makes it clear that you need a policy protecting yourself from liability and describing any warranties for the products you sell.

Start by reviewing your “terms of use.” The more detailed you make your terms of use, the better you will be protected should an issue arise. Be clear as to whether you sell products from third parties. Lay out how a customer can return a product or cancel a subscription.

Website security and fraud protection

Keeping your website secure is critically important. Application Performance Management is a type of software that can help you avoid fraud by finding and fixing issues on the backend that could open your site up to fraud.

Any data breach must be reported, both to your customers and to the public. The deadline for doing so varies by state, but many require reporting a breach within 45 days.

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