Laws Up in the Cloud: Operating Your Business On Amazon

Unless you’re wandering around with your head in the clouds, you may have heard that Amazon has come to Australia. This means cheaper products, easier access and faster delivery for consumers. But what does this mean for you as a business owner? Many retailers will decide to operate through the Amazon platform rather than trying to compete in a losing battle. This article provides you with guidance on operating your business on Amazon.

What is Amazon?

Amazon is an online marketplace. It’s different from a traditional business where there is a relationship between the consumer and the seller. Amazon is not directly involved in the business of sales. Rather, it provides a platform for such a process to take place. For retailers, this means that any responsibilities and liabilities fall directly on them.

Laws of the Cloud

While there is no legislation specific to marketplaces in the cloud, the following legal issues are the most important considerations when operating a business on a marketplace like Amazon:

• consumer rights;
• terms and conditions;
• liability; and
• reviews and reliability.

If you are selling products or services, it is essential to understand and comply with the consumer guarantees under the Australian Consumer Law (ACL). Consumer guarantees include that the goods or services:

• must be of acceptable quality. This is not just what you, as the seller, deem to be acceptable, but what the average consumer would expect for the particular good or service at the price they are paying;
• be fit for purpose. You must make the purpose of the service or product known to the consumer before purchase and, upon delivery, must match the description; and
• meet delivery standards. This must be within the time agreed or, if none was agreed, within a reasonable time.

If you fail to meet any of these guarantees, the consumer has a right to seek a:

• refund;
• repair; or
• replacement.

Therefore, your refund policy should:

• be well drafted;
• clearly detail the process and time to apply for a refund; and
• adhere to your obligations under the ACL.

In particular, having a blanket “no refund” policy is specifically prohibited.

Terms and Conditions

It is vital that the consumer understands:

• where the product is coming from;
• who is responsible for ensuring their consumer rights; and
• who is liable if anything goes wrong.

By removing itself from any direct relationship with consumers, Amazon does not attract any direct liability. As a seller, you need to draft and review your terms and conditions. This document becomes the contractual agreement between you and your customers. You should ensure your terms and conditions are clear and answer questions like what happens if:

• a customer complains about delivery;
• someone steals your intellectual property (IP); and
• a customer or client does not pay.

Reviews and Reliability

Now that you’re operating your business on Amazon, the question is: how do you boost your sales? With an online platform like Amazon, consumers rely on reviews and ratings.

Due to the powerful effect of posts and comments, the Australian Competition and Consumer Commission (ACCC) released guidelines to regulate the authenticity of online reviews. The core principles of the ACCC’s guidelines instruct sellers that:

• transparency about commercial relationships is key; this is important for sponsoring or engaging marketing influencers to review your product;
• they should not post or publish misleading reviews;
• omitting or editing reviews may be misleading.

Honesty and transparency ensures you are legally compliant but also increases the reliability of your services and improves your reputation in the market.

Key Takeaways

Jumping on the Amazon bandwagon and operating your business through a marketplace can greatly improve your sales. However, you should understand your rights and responsibilities before doing so.

Further, you should note your legal obligations under the ACL and adhere to them. It is important to draft documents such as your terms and conditions in accordance with your legal obligations. Finally, it is best practice to follow the ACCC’s principles when dealing with reviews. If you need help operating your business on Amazon, get in touch with LegalVision’s competition lawyers on 1300 544 755 or fill out the form on this page.