4. Legal Guide for E-commerce

Although establishing your online business is an amazing opportunity to grow your business in the digital world, there are some issues you have to be aware before you even set up an online store. The legal aspect of running an e-commerce website helps you define your business and your relationship with the customers. The goal is to enable seamless cooperation and provide documents that regulate any issues that might occur along the way. This makes doing business much easier for you, but it also helps your customers to feel safe and confident about your business. 

In the first place, you should have in mind that the laws differ from country to country. To run a successful business online, it is recommended that you explore the laws that are valid in your country and how each of the following issues is resolved based on the applicable laws. It is also helpful to have some parts of regulations available as documents for your customers. Not only do these help protect you and your business, but they will also contribute to establishing a better relationship with the customers. Your company will instantly appear more legitimate and professional, enabling customers to feel secure when buying from you.

Most of the documentation here follows a certain standardized form, which has to state obligations and rights of both parties involved, your business on one side and a customer on the other.

Trademark registration

A trademark is an important part of owning a business because it protects the brand names and logos. It helps you promote your brand and establish a recognizable name on the market. Customers can identify a certain trademark with a certain brand, gaining you credibility and reputation.

Simply choosing a name is not enough because you have to make sure that you:

  • Conduct a trademark search – This way you check if anyone is using the same name (regardless if they have registered the name or not). If the name you are planning to use is already a registered trademark, you should avoid possible trademark infringements.
  • Determine the name confusion – You should evaluate the likelihood of the name becoming recognizable and distinguished on the market. Analyze the industry and competitors to make this decision.
  • Decide to register a trademark – If you want to protect your business and your brand, registering a trademark is a recommended option. Your goal is to make this name recognizable and trustworthy among customers, so you do not want to risk anyone taking the name to enjoy the benefits or possibly damage your reputation.

A trademark can be designated by the following symbols:

  • ™ – “TM” in superscript symbolizes an unregistered trademark, a mark used to promote or brand goods.
  • ℠ – The letters “SM” in superscript stand for an unregistered service mark, a mark used to promote or brand services.
  • ® – The letter “R” surrounded by a circle is used for a registered trademark.

Countries offer formal trademark registration, which is used to protect the brand and the name associated with the brand. You should explore the regulations and the conditions for trademark registration, or you should hire legal help from someone who specializes in the legislation for the country where you do business.

Terms of use

Terms of use, also known as terms of service or terms and conditions, is a document that regulates the rules the users must agree to if they want to use the service. It is used for legal purposes, especially in cases when the personal data of the users are being stored, such as the case with an e-commerce website. Each customer agrees to accept the terms of use that are provided by the site owners. Besides being legally binding for both parties, the terms of use can also be subject to change, which is something that is also highlighted as a part of the document. As a website owner, your responsibility is to make the terms of use available to the users who want to review the file.

This document is often designed based on a certain template, as you will notice that most terms of use have similar sections as the part of the document. Those parts include:

  • Company information

The first part of the document should provide the information about your company, as the purpose of the document is to regulate the relationship between your company and the online user.

  • User rights and responsibilities

The second part usually defines the user rights when it comes to the website, products, or services you provide. This section should also focus on user responsibilities and any actions that may be prohibited. Defining a proper way to use the website or service also helps to prevent misuse. This section may also highlight the existence of a separate document that regulates the usage of the personal data (Privacy Policy).

  • Additional business information

Sometimes, it might be helpful or necessary to give more information about providing the service, as well as possibilities that could lead to modifying or terminating the services due to a certain reason.

  • Disclaimer and limitation of liability

In this section of the terms of use, you clarify the legal liability for the damages incurred by the users. This particular section helps you protect your business from any loss or damage that cannot be foreseen or are caused due to no fault of your own.

  • About the terms

The final part is where you state the fact that the terms of use may be subject to change, of which the user may or may not be informed. It is also in this section that you state if the document has been officially registered and in accordance with particular laws (usually those applicable in the country your business is founded). In the case of any legal issues that may occur, it is helpful to state the legal entity that will be in charge of solving those disputes. This is especially important when working with customers on an international level, as it is impossible to be aware of the legal regulations for numerous countries. You can also provide information on how to get in touch, in case the user has a question or an issue related to the document.

The terms of use should regulate all aspects of doing business with customers, including all the phases where an issue might occur. When running an e-commerce business, you should think about the terms related to the following segments:

  • Terms of payments
  • Terms of delivery
  • Terms of shipping
  • Terms of refunds
  • Terms of use of your website

Each of these segments is an area where issues might occur, which is why it is helpful to have the terms ready to regulate all of the transactions. For example, if there is a problem with the delivery, you, as well as the customer, can always refer to the terms of delivery. In essence, a customer must accept the terms of use before the transaction is initiated, which means that all of those conditions are applicable from that moment onwards.

Refund policy

During an e-commerce transaction, the money is paid upfront, and in return, the product is sent and delivered within the specified timeframe. In this process, it is crucial to realize that refunds are sometimes required. It is a part of doing business online, and having a clear refunds policy on your website allows you to provide a bit of guarantee for the customers. When you define the refunds policy, you determine the conditions under which the product can be returned. In the case of providing a service, it is also possible to issue a refund, but most service providers actually enable trial period instead. The period of 7 to 30 days is commonly used as a test period, during which the customer has the right to change his or her mind.

If the customers are eligible, they have the right to return the product and receive a full or partial refund.

When you provide refunds policy on your website and asking to accept those terms before initiating the transaction, you get customers to read and accept these terms. This way, they are familiar with the conditions that apply when a customer wants to claim a refund, regardless if that claim is due to the product damage, failing to fulfill the expectations, etc.

Handling refunds requests promptly is a way to establish a good relationship with the customers and to gain a good reputation. Take every refund request with seriousness and treat customers fairly. If they are eligible for a refund based on the conditions of the refunds policy, you are then obliged to issue a refund. Sometimes a customer might ask for a refund even though conditions are not fulfilled for that refund to be issued. For instance, a customer might want to return the product after three months when the refunds policy states that the product may be returned within 14 weeks. In these situations, you could always refer the customer to the refunds policy document.

Regulations defining refunds are usually part of the terms of use, but they are a significant segment of the document. You should have this legal aspect in mind when creating the terms of use for your e-commerce website.

Privacy policy

Another legal document, binding for you as a product/service provider and a customer, is used to define terms of gathering and managing customers’ data. Privacy policy is used as an official statement to protect customers’ privacy and any personal information gathered on the website.

Personal information can be anything that defines a user, such as a name, address, the date of birth, contact information and even credit card information. These data are often provided by the users themselves when they fill in a form, but they can also be gathered through the use of third-party integrations, such as the usage of the cookies.

The important thing is to understand that as a business you can store and manage the data provided by the users, but you need to provide the information on how these data will be used. For example, the customers have the right to know if the data is kept confidential or shared with your partners, and this is something you should state in the privacy policy document.

Privacy policy should be based on the applicable law, which is why the geographical aspect and legal jurisdiction have an important role when creating the document. The content shared through the document should thus be in accordance with the applicable regulations in the county where your business is set up. Have in mind that personal data protection is a very hot topic in today’s reality when the user data have a great value for businesses and establishing the relationship with the customers.

Besides the data protection, where you agree not to disclose personal information about the users who give you the right to use the data for your own business, there is another segment related to privacy, and that is anti-spam. Since email marketing is a very powerful method for reaching the customers and promoting your business, it is essential that you follow anti-spam regulations and be extra careful when using the user information to contact the customers.

Typically, a privacy policy document can include:

  • The kind of information you collect

This information is required by the customer, and it is usually the name, the email address, etc.

  • How you collect the information

You should inform the customers how you collect and store the data. You could also mention the usage of cookies, in which case some data may be left on the user’s computer to track the habits and personalize the online experience.

  • What you will do with the information

The customers have the right to know in what kind of purposes will the data be used, for example, for contacting the customers in the future, sending promotional announcements, etc. This section should also state whether you plan on sharing or even selling the information about the customers.

  • Reviewing and deleting information

The customers should have insights into the information collected about them, as well as the instructions on how to change or delete them. The customer can send a request for his or her data to be removed from your database in which case you have to act upon this request.

  • Time period for storing information

Information is often stored much later after the transaction is over. This is something you should inform the customers about.

  • About privacy policy

At the end of the document, you will provide information about the effective date of the privacy policy and any further information about your business. Since the document might be changed over time, you could state this information here, or you could even provide information about previous updates of the document.

When you are selling online, it is essential to be aware of all the regulations and laws that are applicable in the country where you do business. Not only is it going to be helpful in the long run and assist with successfully running a business, but being familiar with the valid regulations will also spare you any issues and disputes that might occur with customers.

The documents that regulate the usage of your e-commerce website should be accurate, current, valid and concise. The customers should find them easily on your website and review them before deciding to do business with you. These documents keep your business credible in the mind of the customers while building trust in your brand.

Due to the legal character of these documents, it is recommended that you seek legal advice on the matter in the particular country. To help you with some general guidelines typical for some countries, you could refer to this online resource: A Legal Guide to Ecommerce. You will find general laws and regulations valid in Australia, Canada, Singapore, United States of America, United Kingdom and New Zealand.

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