Business tips

Four website compliance requirements for e-commerce businesses

Are you fully up to speed on the legal requirements for e-commerce businesses in Australia? If not, you could be exposing your business to a number of risks. Ursula Hogben, Managing Director of LegalVision, outlines four must-haves for businesses selling online.

E-commerce has made it possible for hundreds of thousands of businesses and local producers to start selling their wares online. Website owners, however, need to ensure that their sites comply with national business regulations.

Managing Director of legal adviser LegalVision, Ursula Hogben, explains that business laws and regulations apply to e-commerce businesses in the same way that they apply to other businesses. She notes, however, that the digital age presents new challenges for e-commerce businesses. “Your intellectual property [IP] is easier to access, which is a risk for businesses,” she says.

Hogben outlines four areas that e-commerce business owners need to pay attention to.

1. Complying with Australian Consumer Law and having sales terms (mandatory)

All businesses in Australia that sell to consumers must comply with the national laws relating to consumer law and consumers rights.

Hogben explains that before 2011, each Australian state and territory had their own consumer laws. These were brought together on 1 January 2011 as the Australian Consumer Law (ACL).

The ACL does not specifically cover online business, but covers a broad spectrum of business and consumer issues, including:

  • national consumer contracts
  • national law guaranteeing consumer rights when buying goods and services
  • national product safety law and enforcement system
  • national law for unsolicited consumer agreements covering door-to-door sales and telephone sales
  • national rules for lay-by agreements
  • penalties, enforcement powers and consumer redress options.

Hogben explains that for an e-commerce business, it is important that product descriptions and photographs are accurate and not deceptive.

“Your website information must not be deceptive,” she says. “In addition, a website should have sale terms and conditions that set out obligations under the Consumer Law. This covers things like the consumer’s right to re-do, repair or a refund. It is important to note that the Consumer Law applies whether or not your website has terms and conditions. Your terms and conditions expand on the Consumer Law, for example you can limit your liability to say that you are not liable for anything outside the Consumer Law.”

The ACL is administered and enforced jointly by the Australian Competition and Consumer Commission and the state and territory consumer protection agencies, with the involvement of the Australian Securities and Investments Commission on financial services matters.

The ACL website has detailed information about how businesses can comply with regulations.

2. Including contact information online (mandatory)

It is mandatory for businesses to have key business contact information – including a company name, physical address and ACN – on letterheads and invoices, says Hogben. In the digital age, she adds, this can be interpreted to include websites, so you should have full contact details and your ACN clearly displayed on your website. “A website is like a letterhead in the cyber age,” she explains.

3. Complying with the Privacy Act and having a privacy policy (mandatory)

The Privacy Act deals with the collection and use of personal information. This was updated in March 2014 to require more disclosure of how businesses collect and use personal or sensitive information.

Hogben says she advises businesses that it is best practice to have a privacy policy that clearly outlines how personal information is being used.

“For business that have $3 million or more in annual revenue and are collecting personal information [like email addresses and names], it is mandatory to have a privacy policy,” she points out. “If your business is doing less than $3 million a year, it is optional to have a privacy policy. However, if you are collecting personal information to use in direct marketing, for instance email campaigns, or if you are sending personal information to be stored overseas, then you generally need notification to, or consent from consumers, such as in a Privacy Policy.”

4. Copyright notice and website terms of use (not mandatory but a good idea)

These days, businesses’ IP – such as images and product descriptions – are easily available online. Under Australian IP law, whoever creates a piece of work owns the copyright to it. While having a copyright notice online does not change who owns the IP, Hogben advises it is “sensible” to have a copyright notice online to show who created the IP. A copyright notice is the copyright symbol, creator’s name and year, e.g © Ursula Hogben 2014.

“It is wise to have website terms of use that address your intellectual property rights,” she adds. “These can include how the website can be used including, for example, sharing your blogs with attribution to you, and prohibited conduct, for example, a competitor using your website or its content.”

How to ensure your website is legally compliant

Hogben says that, in theory, business owners could write their own terms and conditions, refund and returns policies, privacy policy and copyright notice, if they have the time to thoroughly familiarise themselves with the various regulations, including the Australian Consumer Law, the Privacy Act and intellectual property laws.

However, she points out, lawyers are specifically trained in these areas and with laws and regulations constantly being updated, for most businesses it is sensible to consult a lawyer or to use high-quality official online legal documents.

LegalVision provides online DIY documents, which allow business owners to fill in their own business details and then generate a legal document themselves.

DIY documents provide a minimum level of protection. “It is wise to check that these have been drafted by an Australian lawyer,” she warns.

When do online businesses need to seek legal advice?

Ursula Hogben suggests that e-commerce businesses find out what legal documents they need, then work with their lawyer to create documents that work for their business and website. For example, a marketplace has three legal relationships: business to business, business to seller and buyer to seller. It is important that your lawyer is up-to-date with the requirements for an online marketplace.”

She adds: “A lawyer will cover off areas you aren’t aware of, and legal documents last a long time,” she says. “Having proper documents is one way to resolve issues and to ensure that your website is covered by terms and conditions.”

Hogben adds that a business lawyer can also point out other aspects that a business owner may not have considered – for instance, insurance and how to limit liability and minimise business risk with good business practices.

LegalVision generally deals with e-commerce businesses at three stages:

1. When an online business is launching

LegalVision will either draw up or check a website’s legal documents, such as terms and conditions, and check they are all in order. It will also check that if a website has a public forum where users can leave comments, the business is protected from liability, including for defamation, where possible.

2. When something has gone wrong with e-commerce

Hogben says online business owners often get in touch once something has gone wrong with a product, refund or an order. She says this can be a catalyst for business owners to get good sale terms (product) or client agreement (services).

3. For queries about intellectual property

LegalVision gets questions about intellectual property rights when a business owner feels their IP is being infringed by another business or if someone else has approached a business about a perceived infringement.

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