E-commerce law is more important than ever. As the Internet continues to grow, businesses are finding more success online than they would as a brick and mortar business. With this success comes legal responsibility as well as opportunities for others to sabotage your e-commerce business. This is why it is essential for entrepreneurs in the e-commerce industry to understand the legalities that surround an online business.
E-commerce, also known as electronic commerce, is the online industry of buying and selling goods, products, or services via the Internet. E-commerce law encompasses all the legalities associated with the e-commerce industry. Each type of e-commerce company is required to abide by certain laws and regulations. These laws are numerous, and can be complex which is why having an experienced e-commerce lawyer on your team is essential. Not only will an e-commerce attorney help you if you run into legal issues, they’ll also help you stay in compliance.
Companies like Amazon and eBay that host millions of merchants and individual businesses selling physical goods are considered e-commerce platforms. Service-based retailers, also known as e-tailers, like Uber and Postmates are considered e-commerce businesses. Companies like Shutterstock or Skype are also considered e-commerce businesses because they provide digital products via the Internet like stock photos or messaging mediums. Even businesses who sell goods off of Instagram or other social media platforms are considered to be a part of the e-commerce industry. In a nutshell, understanding e-commerce legal issues applies to everyone operating in the internet marketspace. This includes, esports teams and players, social media influencers, product sellers on Amazon or on other platforms, bloggers, podcasters, internet marketers, and so on.
It is important to seek assistance from qualified counsel in e-commerce legal matters because you want to ensure that your company is protected online. If you are an online marketer, you want to ensure you are compliant with the policies of the Federal Trade Commission, and the Food and Drug Administration, for example. But there are many legal issues that can arise while forming an e-commerce site or working with an e-commerce platform like Amazon. After your business is formed, you might run into issues with unfair competition, such as a competitor producing fake reviews about your company, disparaging your reputation, or issues with intellectual property if your products or business model were to be copied by someone else, or if you are streaming someone else’s content without their consent. Having an experienced law firm on your side will help protect you and your business from a myriad of legal problems.
Unfair competition is a broad legal term that encompasses multiple areas of law. The most important unfair competition torts that affect e-commerce platforms are defamation, product disparagement, Trade Libel, and Tortious Interference. While most states have unfair competition laws, Section 43(a) of the Lanham Act is the federal law that protects against misleading advertising or labeling.
Internet Defamation occurs when a false statement of fact is published or broadcasted online that causes damage to a company or person’s reputation that harms their business in return. This can also be considered trade libel. E-commerce companies can fall victim to defamation through online reviews of the company or product or articles in the media that contain false, negative and defamatory statements about a company. Defamation can occur when your competitors seek to damage your business or angry customers have fabricated the truth about their experience with a product or company out of rage. Internet defamation attorneys can help remove defamatory statements from online platforms and seek compensation for the damages by suing for defamation.
Product Disparagement is another form of defamation and occurs when advertisers make a false or misleading product comparison or false statement of fact about a product that damages the company that produces the product. Internet attorneys can seek justice for companies fallen victim to product disparagement by suing under state product disparagement laws, state defamation laws as well as the federal Lanham Act that protects trademarks.
The Lanham Act is the primary federal trademark law in the U.S. and covers registration, infringement, false advertising and dilution. Section 43(a) of the Lanham Act addresses claims for unregistered trademark infringement, which is often referred to as “common law trademark infringement”. The Lanham Act also provides remedies for false advertising or “commercial disparagement”, product disparagement, and trade libel. The Lanham Act also addresses a claim for false designation of origin, which can include “passing off” and “reverse passing off”. False endorsements are also addressed in the Lanham Act.
Over the years, the law has been amended to include trademark counterfeiting and cybersquatting. As with any well-worn federal statute, the Lanham Act is full of nuances and exceptions, but below you can find the basics:
A review cannot be removed just because it is negative unless the author chooses to remove it themselves. A negative but truthful review is not defamation. If the review is false and damages the reputation of your company or product, it is possible to sue for defamation or trade libel. The Federal Trade Commission has a zero-tolerance policy on fake reviews. The FTC considers fake reviews a clear case of unfair and deceptive marketing.
You might not always be able to tell if a review is posted by an actual customer or someone seeking to damage your company. However, you may be able to identify them by some of these red flags:
The Federal Trade Commission has outlined what is acceptable and unacceptable marketing behavior within their guide known as “.com disclosures”. One of the primary goals of the FTC is to protect consumers from deceptive marketing. If your business is not compliant with the regulations regarding proper digital disclosures, your business could be investigated by the FTC, receive hefty fines, and/or be prosecuted in court. FTC regulations require advertising to be truthful and therefore not misleading. Claims made in advertisements must be substantiated or “backed-up” by evidence.
Yes, the same regulations that apply to online advertising also apply to social media. Nowadays, it is common practice to advertise through a social media influencer. It is important for the business and the influencer to always disclose when a post, whether it be a photo, video, or story, is paid for or sponsored by a business with hashtags like #ad, #paidpromotion, #paidpartnership, etc. This is also included in the FTC’s dot com disclosures.
There are many ways that an e-commerce lawyer can help you protect your e-commerce company. Creating a clear outline of your company’s terms and conditions can help your business stay protected when selling online. Standard Terms and Conditions for e-commerce businesses consist of:
Make sure to have a clear shipping and delivery policy that defines when customers can expect to receive their products and how their packages are going to be delivered by including time frame information as well as shipping costs.
It is important for your company to have a reasonable refund policy as it is an essential part of building trust with customers and could even be a deciding factor for someone purchasing your product. It is best to be generous with your refund policy and handle refund requests promptly so you can show customers that you care.
“Superb attorney, highly recommend Raees Mohamed! Truly a top e-commerce lawyer that has guided me through complicated Internet law issues, and for a very reasonable fee I might add.” -Google Review
“We were involved in a complicated online defamation case in which a someone pretended to be female students and filed made-up sexual harassment charges against both of my partner and myself–all in an attempt to steal an academic job. Raees and his team at RM Warner helped us wade through the complex world of anonymous online identities and defamatory attacks, eventually enabling us to put a stop to the attacks, clear our name, reveal who had been behind it all, and make sure that person faced real consequences for what he did to us. We are forever indebted to Raees and the RM Warner team.” – Google Review
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RM Warner Law is well-versed in e-commerce and advertising law as well as the Amazon Marketplace laws and regulations. We know exactly how to help Internet entrepreneurs, startups and e-commerce businesses thrive so get in touch today.
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