7 Legal Facts eCommerce Businesses Should Know

The rise of eCommerce has been so fast that it’s almost hard to keep track, especially when it comes to the law. The problem is that while technology moves at a blistering pace, the law is necessarily slow and methodical. As a result, some the most relevant pieces of eCommerce legislation were written nearly 20 years ago. That’s before smartphones, Facebook, Uber, apps, chatbots and a whole host of other leaps forward in eCommerce technology.

However, what the law lacks in speed, it makes up for in intelligent composition. As such, while some of these eCommerce laws may be somewhat old, they are still relevant. So here are seven legal facts which eCommerce businesses should know.
 

1. Legally, The Internet Is National

This may seem like a strange idea with the globalist rhetoric that the biggest figures in Silicon Valley so often espouse. However, it’s also true. Despite their best efforts, Facebook, Google, YouTube, Twitter, Instagram, Gmail and a whole host of other California-based websites are still banned in China. No amount of idealism about global citizenship will change that; the laws in China are made by the Chinese.

In the US, internet law is even a state-by-state issue. An internet user in Oregon can buy a gun online, no problem; an internet user in New York is going to have a lot more problems.

2. eCommerce Law is Based on Commerce Law

Commerce law has existed for hundreds of years and eCommerce law is part of that history. So just as it’s illegal to commit fraud, to falsely advertise and to refuse to give a receipt offline, it’s illegal to do so online as well.

Broadly speaking, this is the aim of eCommerce law. It also explains why eCommerce law differs from country to country. This is why you can buy alcohol online in the UK, so long as you are over the age of 18, but you have to be 21 in most parts of the United States — because that’s the law offline.

3. The Gig Economy Complicates Everything

The rise of Uber, Airbnb, Deliveroo and other apps involved in the so-called “sharing economy” has been something of a legal conundrum. On the one hand, the companies themselves say that what their online services allow people to do is perfectly legal. On the other hand, critics say that it’s not.

The confusion stems from the fact that private sales are often regulated very differently from other kinds of transaction. This makes perfect sense, of course. If my friend offered me some money to pick them up from the train station, no government would argue that I needed to go through the same kind of checks — or that I am entitled to the same employee rights — as taxi drivers.

So what about Uber drivers? Should they be subject to the same checks and employee rights as taxi drivers? Uber and its legal team say no, but many governments feel differently. Unless governments find an effective way to govern this kind of economy, this legal gray area is only going to get grayer.

4. Not All Privacy Policies Are The Same

An offline shop doesn’t need a privacy policy because privacy isn’t an issue. You walk in, hand someone some money and leave. You don’t have to disclose any information whatsoever. There might be some expectations of small talk, but there’s nothing legally binding about that. You can hide your face, refuse to speak and keep yourself entirely private. Offline shopping allows for total anonymity.

Online shopping does not. On the internet, purchases require bank details, an address for delivery and an email address for the receipt — and that’s just the tip of the iceberg. Alongside all that information is the stuff that websites have access to through cookies: your location, your internet history and your activity on their site. There is a lot of information that a website can get from its customers.

This is where privacy policies come in. The Data Protection Act 1998 is a British law which is found in similar forms in countries across the world. In short, while the law limits what companies can do with your information to an extent, the most important thing is that both parties agree on a “privacy policy”.

Facebook’s privacy policy is often criticized for being too lax, but it’s a privacy policy which people agree to because Facebook is free. The only reason eCommerce businesses’ privacy policies tend to be stricter is because people would otherwise buy from someone else. More often than we realize, it’s competition — and not the law — which controls how private our information is.

5. Large Companies Break The Law

In the opinion of many large corporations, law and government oversight stifle the innovation and creativity of entrepreneurs. There is a valid case for this argument, especially when laws designed to tackle big businesses hurts small businesses. However, regardless of your feeling towards the law, it’s best not to follow the lawbreaking practices of some large businesses.

Google, Amazon , nd Uber may have all broken various eCommerce laws in the name of pushing the boundaries of technology and their industries. Whether or not you agree with their defence is beside the point. The point is that while large companies can afford to pay for the lawsuits involved with breaking eCommerce law in the name of experimentation and risk-taking, small businesses cannot afford to do the same thing.

6. There’s No Harm Asking for Help

Law is complicated, which is probably why 64% of British business owners say they struggle with knowing which laws apply to them and 72% of business owners say that understanding new laws is a burden. This survey, conducted by HSE in 2015, may have been about health and safety law, but this same confusion from small businesses often applies to all law.

Whether it’s speaking to other business owners in the same industry or through speaking to a regulatory lawyer, asking for advice is a smart move. After all, feigned intelligence is a much bigger enemy to your business than honest ignorance.

7. There’s No Harm Copying Legal Practice

Because eCommerce is still a somewhat novel industry, it can be difficult to know which practices are legal. Yes, you could research every aspect of your business model to see what the law says. Or you could something much simpler: copy others.

Plagiarism is a serious offence and no-one would recommend stealing intellectual property from other businesses. However, when it comes to legal practice, copying others is perfectly fine. For example, all eCommerce businesses that offer online services are legally obliged to remind customers that they are able to cancel their service (free of charge) 14 days after starting it.

It’s because of this that services like Amazon, Netflix and the WWE Network all offer free service (and free cancellation) for a full month. This way, they are all acting well within the law. All these services are also legally obliged to remind their customers of their right to cancel their service. They all do so via email.
 


While innovation in business is a great thing, it’s nice to know that you can legally go with the crowd if you’re unsure. Creativity when it comes to your business model is a great thing, but businesses who decide to get creative with the law are often the same businesses who wind up breaking it.


Written by Mason Birbeck

Mason Birbeck's picture

 

Mason Birbeck is a regulatory lawyer based in Jersey. As the Head of Regulatory Law at Parslows, he leads a team of expert solicitors all dedicated to helping businesses with some of the finer, more complicated aspects of commerce and eCommerce law.

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