Below are some of the most common legal issues faced by an ecommerce business. Amazon, the most recognizable face in the e-commerce industry, has come under legal scrutiny for its practices. In 2018, the U.S. Court of Appeals for the 3rd Circuit ruled that Amazon was liable for a dog collar sold to a third-party vendor that caused permanent vision loss to a Pennsylvania woman. However, there are some important legal aspects that you need to consider before contacting clients or potential clients. The three main areas of law you need to consider are privacy and data collection, intellectual property issues, and the rules and regulations of the FTC and other consumer protection agencies. With the gradual and increased use of online media, e-commerce is becoming an emerging trend rapidly. One in five businesses operates online and operates e-commerce businesses. But being functional online doesn`t mean you can escape legal issues.
There are also various legal issues related to e-commerce businesses. And if these issues aren`t resolved in time, they can lead to serious problems for your business. Promoting a sale or discount is an important tool for any retailer. Everyone rightly wants a deal, and customers are more likely to buy products when they think they`ll save money. While there`s nothing wrong with promoting a sale per se, retailers should think twice before trying to convince consumers that they`re saving more than they actually do. With continued restrictions on physical interactions and proximity, and many non-essential businesses forced to remain closed or temporarily reduce business hours, a shift to e-commerce has occurred. Many retailers with no prior presence in e-commerce are rapidly changing the way their businesses evolve, and there has also been a significant increase in bulk online purchases by consumers. In recent years, dozens of consumers have filed class action lawsuits alleging that some of the largest retailers and outlet stores, including Macy`s, Hobby Lobby, Michal Kors and, most recently, J. Crew Factory, are misleading consumers by inflating their benchmark prices. Lawsuits are usually brought by consumers who say they bought certain items because they believe they are discounted and would not have bought them if they had known they were actually paying full price. As regards factory outlets, buyers indicated that they consider the reference price to refer to the price of the product in the main store, whereas the product was actually manufactured to be sold mainly in the factory outlet.
“The one thing merchants will struggle with, as long as we have chip and signature cards, we`re going to see a shift to online fraud,” Mallory Duncan, senior vice president and general counsel of the National Retail Federation, told Yahoo Finance. “Merchants need to erect more transaction barriers to curb online fraud. Here are some legal issues that online retailers need to be aware of. The Facebook Beacon program is an early example of sensitivity in data use and collection. In 2007, the social media giant collected information about users` purchases from a number of online retailers without consent, and then posted those purchases on those users` Facebook walls. Among those affected was a man who bought an engagement ring for his girlfriend before a surprise proposal, which was marred when Facebook posted that he had “bought an Eternity Flower ring in 14 1/5 carat white gold at Overstock.com.” After a major backlash, the program was quickly halted and Facebook subsequently agreed to a $9.5 million settlement. Over the past decade, digital accessibility has been a major challenge for retailers, Sheridan said. She continues to see grocers inundated with letters threatening legal action, often from the same plaintiff companies. This increase in online trading activity has led companies to have to evaluate and analyze the customer buying process from a legal perspective. In particular, businesses may need to consider how goods and services are advertised and delivered to consumers.
Even if restrictions are eased, e-commerce is expected to continue to grow as consumers become accustomed to online shopping and are unlikely to be physically exposed when these alternative shopping methods become available. If a company has signed the Code of Standards for Advertising and Marketing Communications in Ireland (the Code), it must ensure that all online advertising complies with the standards set out in the Code. Similarly, a company must ensure that its advertising is not false or misleading, as this could result in liability under consumer protection laws. VAT laws now also apply to online shops. Unfortunately, they vary from state to state and country to country. If you have a physical presence in a state, you may have to pay sales taxes no matter where your customers are. Plaintiffs` lawyers can sue both the brand and the grocer — it`s more lucrative for them if they try to hit both bags, Sheridan said, noting that grocers may have indemnification clauses with the brands they work with, placing the responsibility for reviewing claims on the brand and forcing them to pay the grocer`s legal fees. if there is a lawsuit. Here are some of the top legal issues grocers face and steps they can take to avoid being sued, according to Sheridan.
Sustainability: As companies seek to capitalize on consumer demand for environmentally friendly products, there have been a number of consumer and government lawsuits against brands that buyers and stakeholders say are “greenwashing” or exaggerated environmental benefits, Sheridan said. General or unqualified claims such as “environmentally friendly,” “low waste,” “green” and “clean” should be explained, she said, recommending grocers contact the Federal Trade Commission`s (FTC) green guides for guidance on environmental marketing claims and specific definitions for terms such as “recyclable” and “non-toxic.” To ensure that your customer`s or user`s agreement is legally valid, use a clickwrap method.