How To Deal With Legal Issues In Online Businesses

How To Deal With Legal Issues In Online Businesses

Electronic Transaction Management

No matter the business niche you are operating in, payment fraud will be inevitable. This phenomenon has skyrocketed in recent times. As more and more transactions are conducted online, so will their exploitation and fraud. A tight and effective system is necessary to control the transactions with your customers. Implementing an application performance management software is imperative for finding vulnerable spots in your system. This is especially important in the case of hacking, where your customers’ valuable information will be leaked, and under law, you are obligated to inform the authorities, your customers, and the public within 45 days.

Keep in mind however that this varies from country to country. You might be inclined to sweep it under the rug or think it’s not a big deal because your business isn’t in a physical store, but hiding it can only make things worse. Pay attention so that your website doesn’t get compromised and collected private data leaks. If this happens, your business will suffer a huge reputation hit which damages your customer potential.


Depending on where your business is located, you will have different percentages of sales taxes. Failing to properly calculate your taxes can lead to a loss of profit. Not to mention all of the additional stress that accumulates over time. Properly research the types of taxes you need to pay and their amount, as well as separate enough time to adequately deal with them. This especially holds true when importing goods from foreign countries, as you might lose a percentage more here and there in customs. This is also possible when selling your goods/services on an international market, as your customers will need to pay more for them. Adjust the prices to the competition so that you don’t lose out.

Another possible issue could be ecotaxes. Ecotaxes are taxes that are made for products that are harmful to the environment. So if you are operating in a foreign country be sure to pay attention to these tax traps.

Liability and Insurance

This is a tricky one, as it’s possible to get sued over product defects that your business didn’t even manufacture! Of course, you would most likely win the case, but thousands of dollars would be spent on legal fees, and if you’re a small business, this can be catastrophic. You need to disclose the fact that you are using/selling third-party vendors. Wall yourself off of any potential lawsuits. If you can implement an effective mechanism on how to react to customer dissatisfaction you will have a much better time in management. Make sure to have every rule on deficient goods concise and simple.

Privacy Protection

With privacy becoming more and more of an issue for consumers, you will want to pay close attention to your privacy policy in order to avoid any potential problems from occurring.

Trademarks and Copyrights

A trademark is someone’s intellectual property. And as such, they are protected by business laws to prevent theft. As an example, we have the categories defined by the United States Patent and Trademark Office. They define the following:
• Trademark

A word, phrase, design, or a combination that identifies your goods or services, distinguishes them from the goods or services of others and indicates the source of your goods or services.

• Patents

Technical inventions, such as chemical compositions like pharmaceutical drugs, mechanical processes like complex machinery, or machine designs that are new, unique, and usable in some type of industry.
• Copyright

Artistic, literary, or intellectually created works, such as novels, music, movies, software code, photographs, and paintings that are original and exist in a tangible medium, such as paper, canvas, film, or digital format.

So basically, if you take the time to go through the process of claiming your intellectual property, you will be safe from idea theft and competitors using your intellectual property without your consent. This does go both ways, as you will be held accountable for using other people’s (protected) brands without their explicit permission as well.

Be Clear in the Terms of Use Agreement

Having a loud and clear ToU will limit the amount of liability you can take for user misconduct or any other legal issues. The agreement should be optimized as such so that it addresses the company’s type of business, what it will ask, what kind of data it will take, and other areas that would leave you vulnerable to lawsuits. This is best covered by an experienced law firm. One of which is Leyden Legal, as they have years of exceptional work under their belt and a reputation that holds true to their fine work in commerce law. The terms of use should be specifically tailored to your business, it’s not enough to just make a vague and general ToU as that can get you in trouble down the line. Remember, what works for one firm does not necessarily work for another.

Age Restrictions

No matter what kind of online business you are launching, one of the most important aspects will be to make sure it complies with the Children's Online Privacy Protection Act (COPPA). This will usually restrict you from collecting personal data from users below the age of 13. So if your business’s target demographic is kids under 13, you will need to read these regulations thoroughly.

Social Media Laws

Social media is a great platform for branding and gaining recognition but alas, it has its own set of issues. The regulations are regarding employment related to the use of social media, confidentiality, sponsorship, and branding guidelines.

Licenses and Permits

Depending on what kind of product/service you are offering, you will most likely need a permit of some sort. For example, when selling in real life, you will usually need a seller’s permit. But online, as LegalZoom puts it: “Unless you are selling products or services in a regulated industry such as health care, you don’t need a seller’s permit to conduct business online. But that may not be the case in your state and/or in your industry.”

This means that (most of the time) you have more freedom when conducting business online.

A reseller’s permit is an excellent idea when purchasing inventory in bulks. It allows you to not have to pay local sales taxes. This effectively eliminates the need to pay double taxes when conducting business (one for the sales tax, and the other to the authorities). Do your research on the permits in your country/area for further information, don’t be afraid to even ask around with your local authorities regarding it.

Author bio:

My name is Grace Wilson. I’m a 27-year-old biotechnologist and kind of a bookish girl. Surfing the Internet is my favourite, that’s why I’ve turned into blogging. Following a healthy mindset and lifestyle is what I consider my life principle. If interested, follow my Twitter.

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