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Australia is one of the largest e-commerce markets globally, rapidly growing each year. The e-commerce business model is growing in popularity each year. A large reason for this is because e-commerce businesses are relatively easy to establish and involve low upfront costs. Therefore, if you intend to involve yourself or your business in the e-commerce industry, it is important to be aware of the legal challenges you may face. However, you may find it challenging to keep up to date with relevant changes to the law due to the constantly evolving nature of the e-commerce industry. This article will take you through three common legal challenges that e-commerce businesses face and some ways that you can navigate these obstacles.

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Privacy and Data Protection

One critical legal challenge that e-commerce businesses often face is issues regarding data privacy rules. All businesses need to know how to handle sensitive consumer data. However, due to the prevalence of online transactions, it is especially critical for e-commerce businesses. For instance, sensitive data that you may encounter with an online business may include:

  • customer names; 
  • addresses; 
  • phone numbers; 
  • payment details; and 
  • even a record of consumers’ website activity. 

Adequately protecting privacy and data can be even more difficult if you are targeting international consumers. Furthermore, depending on where your e-commerce business advertises and operates, you must be aware of the different rules and obligations.

Despite any difficulties you may face, there are several ways to address data privacy issues. Firstly, your e-commerce business should prioritise publishing a privacy policy. This privacy policy should outline what will happen with customers’ sensitive information once they make a transaction. Furthermore, it should include any data collection and retention details. Additionally, you should only seek to use the most trusted and secure platforms to authorise payments. Doing this will help mitigate any breach of information relating to payment details.

Contractual Agreements

Another common legal challenge that you may face with your online business is the considerations around contractual arrangements. E-commerce businesses often enter into a range of contractual agreements, including agreements with: 

  • their customers;
  • payment platforms; 
  • suppliers; 
  • employees; and 
  • website hosts. 

Therefore, having a comprehensive understanding of your contractual obligations will help you prevent legal disputes.

The Australian Consumer Law regulates all e-commerce transactions in Australia. These laws will assist in preventing any legal disputes with your business. For instance, all e-commerce websites should ensure they provide the following information to their customers:

  • clear and detailed information about the product itself;
  • delivery information; and
  • exchange and refund policies.

By outlining these rules within your terms and conditions, you can limit your liability and avoid legal disputes. Additionally, ensure that the terms and conditions agreement is easily accessible to your customers so they may view it whenever they need it.

Intellectual Property 

Another legal challenge that you may face with your e-commerce business is intellectual property (IP) issues. Your business’ IP refers to all of its intangible assets, including: 

  • content; 
  • images; 
  • logo; or 
  • business name. 

If you are a small business and just starting, you need to be cautious to protect your IP to prevent other users from using your branding for their benefit. For example, you might need to trademark your brand assets to prevent others from stealing them and keep an eye out for any copyright infringement of images of your products.

On the other hand, e-commerce businesses need to be cautious to avoid using another brand’s IP without their consent. Although it can be easy to publish content that is already available online, this can lead to legal disputes that may tarnish the reputation of your business. In fact, to avoid this, you should only use original content and images or royalty-free content.

Key Takeaways

In short, the commerce business model is becoming an increasingly popular way to conduct business. If you own an online business, you must be aware of the potential legal challenges you may face. Notably, these unique set of challenges include issues relating to:

  • privacy and data protection;
  • contractual agreements; and
  • intellectual property. 

If you need assistance understanding your legal rights and obligations as an e-commerce business, our experienced e-commerce lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

What is an e-commerce business?

The term ‘e-commerce’ derives from the term ‘electronic commerce’. It refers to a business model that sells goods and services via the internet. Many businesses combine traditional business models with e-commerce. Although strictly e-commerce businesses are becoming increasingly popular. In addition, E-commerce businesses can access a broader market. This makes it a popular business model for smaller businesses that would traditionally have a narrow reach.

What are the common legal challenges faced by e-commerce businesses?

E-commerce businesses face a unique set of challenges. These include issues regarding privacy and data protection, contractual agreements and intellectual property.

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