Research shows that 22 percent of all disposable income worldwide is now spent online. E-commerce can be a great way to advance your business, but a successful online store can be tricky to get established, and it is even trickier to ensure your business is legal. Yes, legal. While e-commerce and online-focused businesses are an international phenomenon, laws and legal systems are set nationally and can often be quite different.
In 2017, it was important to remember that businesses that operate online should be as much aware of their local legislation as of the legal rights of their customers, which depend on the customers’ country of residence and sometimes even location at the time of purchase, as we’ll see below. Even if your business is not based in a given country, breaking its laws can create repercussions that can harm your reputation and sales, at the very least.
E-commerce in the US holds 20 percent of global retail sales. Businesses have to deal with an amalgamation of complex legal issues. For instance, obtaining a federally registered trademark is the first step for manufacturers. It’s essential to protect your physical and intellectual property; the United States also has stringent privacy and anti-spam laws that can affect your business if you are too forward with marketing. You must; as with every country, the appropriate local authority is paid tax according to your business’ revenues within that country. For example, if you are a United Kingdom business operating in China, the tax must be paid to the UK government and the appropriate Chinese authority for your business.
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Regulations change widely according to the country you’re looking at. The nature of the product or service you’re selling in a specific country should be considered. Equally, countries may have specific laws that you will not be aware of without proper research. For example, any data collected on Russian citizens as customers or users of an online service must be stored on a database based within Russian borders for half a year, or the business may be banned from the country, as it happened with LinkedIn.
A big issue regarding the digital economy at the moment is that of the General Data Protection Regulation (GDPR, Eu Regulation 2016/679). This is a law designed to address can issue fines of up to 20 million Euros. The GDPR will essentially affect all businesses controlling the data of people located in the EU, regardless of where they are registered.
If your business provides any online service or product to individuals, you will likely handle EU citizen data. As such, you must comply with GDPR standards to protect your business from GDPR. Also, GDPR Article 44 prohibits transferring personal data beyond the EU unless the recipient country (business) can prove the data will be adequately protected. Thus, if you are not GDPR compliant, you face large fines, and it will be tough to move data outside of the EU, should you ever need to. In fact, the UK government has made clear its intention to adopt the GDPR regardless of Brexit.
Online businesses are expected to understand and adhere to the regulations of territories that they operate within. If you just have an open store, online traffic will likely come from all corners of the world. As such, it is essential to be GDPR compliant. Regardless, operating an online business on an international scale is an amazing way to develop your business, so go for it! Just make sure you have done all the necessary research beforehand.
