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4 Legal Considerations For Ecommerce Businesses

eCommerce is still relatively new, so it's not surprising many businesses don’t properly understand the law.

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eCommerce is still relatively new, so it's not surprising many businesses don’t properly understand the law.

As a sector, eCommerce is still a relatively new phenomenon, so many businesses don’t properly understand the law. It some ways, it feels like the internet has been around for a long, long time. After all, unless you were born before 1989, when Tim Berners-Lee invented the world wide web, you won’t have lived in a time without it.

In other ways, however, the internet is still a brand new thing — and eCommerce is an even newer idea. This is certainly the case with regards to the law.

One of the oldest and most important offline commerce laws in the UK is the Bank of England Act which, though it was updated in 1998, dates all the way back to 1694. In other words, for about 300 years, commerce law didn’t really change all that much.

Then eCommerce came along and the rulebooks had to be rewritten. For someone like me, who is the lead partner of a law firm of Jersey solicitors, this meant getting acquainted with a lot of new law.

However, it’s not just people like me who need to be informed. In fact, there are several legal issues eCommerce businesses should consider before diving into the brave new world of online business.

1. The Internet Has Eroded Physical Borders…But Not Legal Ones

Without getting too political, it’s fair to say that one of the main goals of many of the biggest internet companies has been to further push the process of globalisation. Global internet companies have long espoused global internet citizenship and a kind of global internet law.

Companies like Airbnb, Uber, Amazon, Google, YouTube, Twitter and Facebook may be based in the US (in fact, they’re pretty much all based in one particular region of San Francisco, California) but they are used all over the world.

Still, just because they are used all over the world, that doesn’t mean they are able to circumvent the laws of the countries in which they operate. Different countries have different eCommerce laws and — even though the internet might make it feel like this isn’t the case — it really is.

Google

Google is an international company abiding by national laws

So while it’s true that US eCommerce laws are pretty similar to the UK’s and the UK’s are pretty similar to all of the other EU countries, this is not the case the world over.

In China, internet censorship is fierce and many of those Silicon Valley companies (Google, Facebook, YouTube, Twitter and Instagram, to name but a few) are banned, hidden behind the satirically named the Great Firewall of China.

Hong Kong, Macau and Taiwan are exceptions to this rule because they are all simultaneously part of China and not part of China. All of this goes to show how complicated eCommerce law can be around the world. This is something to bear in mind if you plan on expanding your business into other countries.

2. eCommerce Law is Often Based on Commerce Law…

A helpful shorthand for understanding eCommerce law is that the same laws that apply offline usually apply online. False advertising, fraud, copyright infringement and more or less everything else you can think of are as illegal online as they are offline.

The world over, pretty much every country’s commerce laws and eCommerce laws are the same.

As a result, while it’s completely illegal to buy a gun online in the UK, it’s perfectly legal to do so in the US.

In fact, even the same state-based and city-based laws apply, which means an internet user in New York City is going to find it much harder to buy a gun than an internet user in Portland, Oregon. The internet doesn’t magic away any of this by creating loopholes. The law is the law.

3. ...Except When It’s Not

While the internet doesn’t make the law disappear, they do allow opportunists to do things which would be harder to do offline. Going back to the firearms example: the internet makes it easier to exploit the fact that private gun sales are much less regulated than ones handled by a registered business.

In theory, posting on Twitter that you have a gun for sale and then selling it is no different from posting in a local newspaper that you have a gun for sale and then selling it. In practice, of course, it’s very different.

The internet has made private gun sales a lot easier. In fact, they’ve made the private sale of pretty much anything a lot easier. In turn, this has led to the rise of the “sharing economy”: the unregulated economy of the internet essential to the existence of Uber, Airbnb, Deliveroo and many others.

Whether or not what these companies are doing is right or wrong is not for me to say. However, it is legal — for the most part. Let’s take Airbnb, for example. If I want to rent my spare room to a friend for a couple of nights for £10 a night, then I can.

Do I have to follow the same regulations as a hotel or hostel does? Of course I don’t. I’m just a person privately renting my room to a friend. Why should I be bound by the same restrictions as a hotel or a hostel?

However, what if I was able to set up an account online which let me privately rent my room to hundreds of different people? What if I was able to buy a flat from someone and then rent it to hundreds of different people online?

What if I owned two, or three, or four of these flats? And, because all of this isn’t done by a hotel or hostel, what if I was able to do all this without the need to follow regulations that hotels or hostels are expected to follow?

This is essentially what Airbnb allows people to do — and some are critical of this. Uber does the same thing for the taxi industry, so some are critical of that. Deliveroo does the same thing for food delivery, so people are critical of that, too.

living room

The sharing economy circumvents rules 'old economy' businesses must follow

4. eCommerce Challenges the Meaning of “Privacy”

Privacy isn’t really an issue when it comes to offline commerce. I can buy something from a shop without saying anything and remain completely anonymous. Pick up a newspaper, hand someone some money and leave.

Societal rules dictate that I make small talk, many shops use CCTV cameras and I may have to submit my pin and bank account details to a machine if I make card payments. However, the buck stops there. Big Brother can only do so much spying offline.

Online, however, things are different. In order to buy something online, websites need a lot of information as a matter of course. My name, my address, my bank account details, my email, sometimes even my phone number: I have to give up all this information to a company before I buy something online.

Think about that for a second. For hundreds of years, it would have seemed like madness for someone to want so much information from you in order to buy something. However, on the internet, this is the norm.

Then there’s all of the information that companies have access to that you might not have even thought about. Pretty much every website (eCommerce or otherwise) has some kind of cookie policy.

These policies (which we often agree to by ticking that box that usually comes up asking if their cookies can be used) give the website access to your certain parts of your internet history, depending on what that particular website’s cookie policy is.

Then there are privacy policies, which can vary wildly from website to website. Facebook’s privacy policy gets a lot of criticism for being so lax, but all of it is clearly outlined by Facebook itself.

The website has access to all of the information you give it (your age, likes, dislikes, email, location and anything else you may have posted) and they use this to direct adverts at you. They don’t sell your information (despite what you may have heard).

big data

If data is the unstoppable force, then privacy is the immovable object

Rather, they use the immense amount of information they have about you to create adverts with pinpoint accuracy. In return, advertisers pay Facebook huge money to direct these incredibly specific advertisements at you.

So yes, while eCommerce businesses could make their customers give over as much information as possible in order to use it for profit, most don’t because most customers wouldn’t stand for that. Facebook is free; that’s why people put up with what it does.

However, Match.com is not free, so most people wouldn’t put up with it if it had a privacy policy like Facebook’s. It doesn’t — because people expect better when they pay for something.

In the world of eCommerce, the law hasn’t really changed. It’s the businesses and the customer expectations that have changed.

It’s a buyer’s market out there, with customers expecting certain eCommerce businesses to act some ways and certain eCommerce businesses to act other ways. For businesses, the takeaway from all of this is learning the difference between what is legal and what customers will put up with.

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4 Legal Considerations For Ecommerce Businesses

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