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Are you breaching these e-commerce regulations?

Posted by MoneyNet Staff on May 1, 2017

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Introduction to e-commerce regulations

Managing an online store, apart from the usual suspects like finding new customers and increasing your sales, also means being compliant with regulations. With all the opportunities e-commerce presents, it also carries a legal side that is equally important. Yes, we know - it’s tedious at best, but it’s there for a reason. Simply put, different countries have different e-commerce regulations. Understanding them and knowing which ones apply to your business is crucial to avoiding breaching these regulations and paying hefty penalties. This is a process that demands constant updates as the law is subject to change. Therefore as an e-seller, you have to stay in the loop regarding various regulations in order to have a successful online store.

This post will cover the basic e-commerce regulations that apply across the globe. Please be advised that all the information listed here serves only as a pointer in the right direction and nothing more. No post of such nature can replace official legal advice nor address the specific issues an online business might encounter that only a professional legal counsel can resolve. With that in mind, here’s the info you need to know.



1. Taxes

Tax is among the first things a business needs to understand when selling online. Almost every country has different tax standards and procedures. Sometimes, you’ll even run into multi-regulations within a country (such as the US, we’ll address that shortly). This all means you need to do some homework and understand how they work in your targeted market.

Speaking of the US, local consumers expect prices exclusive of tax as opposed to EU and Australia, to name a few, where the prices are all-inclusive. The goods you sell, as well as a specific location also play a part in tax schemes. For instance, the state of New York charges sales tax on a variety of products and services like retail, whereas the UK applies VAT tax to all non-essential goods.

There are countless examples of tax differences between markets which further underline the need for understanding specific instances that might affect a business. When it comes to complex stuff like the tax regulation, you’d best play it safe and hire professional help. A tax professional can provide you with much-needed insights on how to charge tax for your business (depending on the specifics such as location, product, etc), help you apply for tax ID and other necessary documents, as well as explain how to qualify for tax exemption.

2. Licenses and permits

Naturally, all companies must have a business license, both physical and online stores. When you manage a business without the proper licenses, you risk fines that could permanently damage your business. As with practically everything in e-commerce (hey, it’s a global undertaking, after all), requirements vary based on the country in which your business is located or where you plan to sell. You might need a special business license for selling special products to a regulated industry or for a specific product in a new market. In this case, getting e-commerce licenses and permits is not much different from a process for the regular storefront business. Even though it's implied that you have necessary licenses and permits, there are still variances in different countries that may limit your growth or stop you from operating altogether in case you breach them.


Let’s say you are looking to expand your business by entering the Chinese market, the most appealing market in the world. What you might not know is that you have to meet certain requirements both brand and product-wise. On top of that, you need to have an ICP license for a website hosted in Mainland China if you don’t want to take chances with getting through China’s Great Firewall.

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3. Shipping restrictions

Shipping is a huge part of online selling and unless you are having your shipments fulfilled by a third-party service, there are some things you need to know. Most notably, you cannot ship anything you want as some items are restricted or prohibited from shipping. Good news is that not all shipping companies restrict the same items so you have some flexibility there.

As an example, USPS (United States Postal Service) has a list of shipping restrictions where items like aerosols and perfumes are prohibited from being shipped internationally but can be shipped domestically. Such instances might require additional paperwork and fees. You also need to note that some items may be shipped internationally unless the country you are shipping to prohibits it. Otherwise, be careful in what you send.

4. PCI compliance

PCI (payment card industry) compliance is a must-have for e-sellers. Due to the nature and volume of online transactions, online businesses are among the favorite targets for data theft. Regardless of the size of your business, if you are accepting credit cards - you must be in compliance with PCI. This means ensuring transactions of credit card information through a secure environment.

However, here’s the trick as being PCI compliant isn’t just about providing a secure checkout experience. It is also (and a big part at that) about not keeping any purchasing information during and after the transaction. This includes storing cardholder data, credit card numbers and any other personal data. We live in an age where data theft and security breaches are increasingly persistent. An insecure payment gateway can easily be your worst enemy as you can be subject to fines, card replacement costs, costly forensic audits or worse - unable to process credit cards at all. Make sure you opt for a payment gateway that boasts high levels of security and credibility.

Conclusion

Regulations can limit the speed and scope to which a business can grow if they are breached in any way. Thus, an online seller simply needs to make sure that its online store is fully compliant with all the relevant e-commerce regulations. These regulations can be diverse, comprising of taxes, various licenses and permits necessary for uninterrupted e-commerce business, shipping, as well as privacy and payments requirements and everything in between. Understanding them will help you further grow your business and save you hard-earned money and time. Keep in mind though that this information and the regulations themselves are changing so be sure to update yourselves regularly in order for everything to go as smooth as possible.

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