• As an online business, you have a number of responsibilities that have legal implications, such as handling online payments, customer privacy and online reviews.
  • There is a range of legal documents that are beneficial in the operation of a website, including Terms of Use, Terms and Conditions and a Privacy Policy.
  • Online businesses in Australia are obliged to adhere to the Competition and Consumer Act 2010, particularly Schedule 2, the Australian Consumer Law (ACL).

Selling Products and Services Online

When selling products or services online, you will be required to comply with the Competition and Consumer Act, which includes the ACL. This governs how businesses engage with their consumers. Online businesses must also adhere to specific online regulations, including the Australian Guidelines for Electronic Commerce.

Australian Consumer Law

The ACL applies to all Australian businesses that deal with consumers. The ACL regulates:

  • standards of business conduct;
  • unfair contract laws;
  • harmful business practices;
  • specific types of business-to-consumer transactions;
  • basic consumer rights; and 
  • consumer product safety. 

The ACL is part of the main federal law, the Competition and Consumer Act, which ensures that trading is fair for consumers.

The goods you are selling online must fulfil certain conditions and warranties set out by the Competition and Consumer Act. Some of these consumer guarantees include that the goods must: 

  • be of merchantable quality;
  • be fit for the purpose or job that they are meant to provide;
  • match the description or sample given; 
  • be free from defects and faults; and
  • be clear of finance or encumbrances not disclosed to the consumer.

If your online business offers a service, you are under the same obligations to carry out the service with due skill and care. 

Online Payments

There are some different methods for online transactions. A credit card is one of the most popular online payment methods. You may need a merchant account to accept credit card payments. Financial institutions usually charge merchant accounts fees for:

  • set up; 
  • transactions; and 
  • account keeping. 

To receive credit card payments online, many organisations use a combination of a merchant account and an online payment services provider or payment gateway. PayPal, Stripe, eWay and Paymate are examples of online payment service providers that act as intermediaries between merchants and consumers. The benefit of using these providers is that they will have a PCI-DSS compliant payment gateway.

Online Security

An online shop must protect the data it collects, including: 

  • names; and 
  • credit card details. 

You must inform website visitors of what measures you take to protect their personal details. This may include: 

  • SSL certificates; 
  • encrypted data; and 
  • safe storage. 

You can outline the details of how you handle personal information in your website’s Privacy Policy. 

Social Media

The use of social media raises some responsibilities for online business. When posting on your social media, you must ensure that you do not take images or content from other sources without permission. Otherwise, you could be liable for a breach of copyright. You will also want to ensure that you do not make any false or misleading claims as part of your marketing or promotional activities, including in relation to online reviews. 

Online Reviews 

It is important to ensure online reviews are genuine and avoid misleading statements. Your business is considered to be the publisher of anything posted on your site or social media pages, so you have the potential liability for defamation. You should moderate your reviews to prevent any issues. Additionally, if a customer posts a defamatory review about your business, this may entitle you to take legal action. To do this, it must fall under what is considered to be defamatory. 

Intellectual Property

When you are registering the domain name or developing content for your website, it is a good idea to pay careful attention to not only your intellectual property, but also the rights of others. You should consider registering any relevant trade marks that apply to your business and mark them where necessary on your website using the ® symbol. You will have copyright protection for any original content you produce for your website, including images and text. Be sure to get permission from the copyright holder if you wish to repost someone else’s content on your website or social media. 

Legal Documents for an Online Business

As an online business, there are three key documents you will want to have available on your website. These documents are:

  1. Website Terms of Use;
  2. Privacy Policy; and
  3. Terms and Conditions.

Website Terms of Use

Website Terms of Use apply to each website visitor and protect your website by covering the areas described in this paragraph. The Website Terms should cover issues such as: 

  • the accuracy of the content; 
  • your liability for content or material presented online; and 
  • the rights and obligations of using your website.

Privacy Policy

There are privacy laws that determine what you can do with the personal information of your: 

  • customers; 
  • supporters; or 
  • donors. 

The Australian Privacy Principles (APPs) apply to certain entities. Regardless of whether you are required to have a Privacy Policy under the APPs, it is typically best practice to have one to show your customers how you will handle any personal information they provide. If you are selling online to the EU markets, you may need to comply with the GDPR, which has strict obligations for businesses. 

Terms and Conditions

Where you are selling goods, these are often referred to as Sales Terms and Conditions. Where selling a service, this agreement is often called a Client Agreement or Business Terms and Conditions. These terms will be your business ‘Bible.’ It will address: 

  • what you are selling;
  • how what you are selling is sold and paid for;
  • when what you are selling is delivered; 
  • protection for your intellectual property;
  • ACL requirements; and 
  • disclaimers, including what you are not liable for.

Key Takeaways

  • Discuss your legal obligations and website requirements with your website design and development team.
  • You should constantly monitor your social media accounts and any third party sites where you have an official presence (such as forums), even though you may not host them. This is to ensure that there are no breaches of your legal obligations.
  • In addition to the initial setup costs of online businesses, there are ongoing costs in maintaining a website, including merchant fees applied for every sale.
  • Ensure that you have clear terms on your website for a Terms of Use, Privacy Policy and Terms and Conditions. 

LegalVision has helped thousands of online businesses sell their goods or services. To get in touch with LegalVision’s experienced e-commerce commercial contracts lawyers, call LegalVision today on 1300 544 755.

Frequently Asked Questions about Selling Products and Services Online

What is spam and how does it affect my online business?

Spam is electronic junk mail used to send bulk unsolicited promotional emails indiscriminately to a large volume of email accounts. Under the Spam Act 2003, it is illegal to send unsolicited, commercial electronic messages, except in specific limited circumstances.

What are some key steps in protecting IT data?

Protection can include providing a secure site through a secure socket layer (SSL) certificate, backing up data, authentication and use of passwords.

What IT risks face online businesses?

IT risks include hardware and software failure, human error, spam, viruses and malicious attacks, as well as natural disasters such as fires, cyclones or floods.

Do I need to register my online business?

All business owners in Australia have to register an ABN if your business will have turnover of more than $75,000. Regardless of revenue, you will need an ABN to issue an invoice to a customer.

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