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Ecommerce Compliance Checklist

By: Ted Rogers
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When setting up an ecommerce company, it can seem daunting when looking into all the compliance checkboxes that need checking. After all, you’re responsible for ensuring that you comply with regulations and best practices to protect your customers, your business, and yourself.

To help put everything into perspective, Digital River’s ecommerce compliance checklist will guide you through eight key areas you need to consider.

1.   Business Formation and Registration

One of your first priorities to ensure ecommerce compliance is to establish a solid legal foundation. This involves registering your business and obtaining any necessary licenses and permits to ensure you operate lawfully and meet tax obligations.

Registering Your Business

There are a range of ways to action this, including:

  • Limited Liability Company (LLC)
  • Partnership
  • Sole proprietorship

Each comes with its own legal and tax implications, so consult with an advisor to choose the best structure for your needs.

Obtaining Licenses and Permits

Depending on your location and the products you sell, you may need specific licenses or permits to operate legally. Research local government requirements and obtain the necessary documents before starting your business.

Registering for Taxes

Understand your tax obligations based on your business structure and location. This might involve obtaining a sales tax permit and registering for federal and state income taxes.

2. Consumer Protection and Transparency

Building trust with your customers is crucial to long-term success in ecommerce. This section focuses on establishing clear and transparent practices that protect consumer rights and ensure a smooth buying experience.

Clear and Accessible Terms and Conditions

Outline customer rights and responsibilities and make them easy to access on your website. Your terms and conditions should cover the following criteria as standard:

  • Purchases
  • Returns
  • Refunds
  • Warranties
  • Data privacy

Transparent Pricing Information

Clearly display  all physical product and digital goods prices, including the applicable taxes and shipping costs, before checkout. Avoid hidden fees or misleading pricing practices. As well as ensuring compliance, this also has the additional benefit of building trust with customers.

Customer Returns and Cancellation Rights

Make sure that you understand and are adhering to any local regulations that concern a consumer’s rights to cancel or return purchases within a specific timeframe.

3. Data Privacy and Security Checks

Safeguarding customer data is crucial in a digital marketplace. Make sure to prioritize implementing robust data privacy practices and fraud security measures to ensure your customers’ information is protected and that you comply with relevant regulations.

Comprehensive Privacy Policy

Clearly explain how you collect, use, and store customer data. Obtain consent for data collection and explain how individuals can access, modify, or delete their information.

Secure Data Practices

Use strong password protocols, encryption for sensitive data, and secure payment processing systems. Regularly update software and maintain firewalls to protect against data breaches.

Data Privacy Regulation Compliance

Be aware of and adhere to all data privacy regulations applicable to your location, such as the General Data Protection Regulation (GDPR) in the European Union.

4. Payment Processing Essentials

Secure and reliable payment processing is crucial for any ecommerce business, whether you’re consumer facing or focusing on B2B. This section explores selecting a reputable processor, understanding compliance requirements, and ensuring a smooth and secure checkout experience for your customers.

Selecting a Payment Processor

Choosing a reputable, PCI DSS (Payment Card Industry Data Security Standard) compliant processor that offers secure and reliable payment services is crucial to ensure payment processing compliance.

Get to Know PCI DSS Requirements

Even if you don’t directly store credit card information, PCI DSS compliance might still be required if your payment processor stores it on your behalf. Familiarize yourself with the requirements and work with your processor to ensure compliance.

Displaying Accepted Payment Methods and Fees

Inform customers about the payment methods you accept and any associated fees or limitations. This gives consumers the ability to make an informed decision and checks off another important box on the compliance checklist.

5. Intellectual Property Use

Ecommerce, like business at large, thrives on innovation. To protect what makes your company unique, it is necessary to safeguard intellectual property (IP) rights. This will ensure your business, branding, and any creative partners are protected. It cuts both ways; it’s also crucial that you make sure you aren’t infringing on the IP of others.

Collect All Necessary Licenses

If you sell products that are protected by intellectual property rights (i.e., trademarks or copyrights), ensure you have the proper licenses or permissions from the rights holder for their commercial use.

Respect the IP of Others

Don’t use any materials or creatives that you aren’t licensed to use. Set checks in place to make sure your company isn’t using copyrighted material or infringing on trademarks without proper authorization.

6. Logistics, Shipping, and Returns

Offering a seamless, transparent logistics experience to your customers must extend beyond the initial purchase. Make sure that any shipping and return policies are easy to locate and understand to help manage expectations and keep your business in compliance.

Clearly Display Your Shipping Policies

If a customer struggles to understand how you plan to get their order to them, it’s going to be a red flag. It is important to be as clear as possible with these details, making sure the following are addressed:

  • Shipping cost information
  • Estimated delivery times
  • Any relevant restrictions

Provide Transparent Return and Exchange Policies

There are inevitably going to be times when customers need to return or exchange a product. Making this a seamless process can be the difference between loyalty and loss of their business. This is also important in terms of compliance, so make sure to clearly outline the steps to return or exchange products as well as any associated fees or limitations.

7. Product Safety

Ecommerce businesses have a responsibility to ensure the safety of the products they sell. This goes beyond simply offering high-quality goods, but also involves complying with relevant regulations and best practices to protect customers, build trust, and mitigate legal liability.

Safety Regulations and Certification

Research and comply with all applicable regulations related to product safety in your region and for the specific product categories you sell. This might involve regulations on:

  • Flammability
  • Electrical safety
  • Chemical composition
  • Various other criteria depending on the product type

If your products require specific certifications or safety markings, ensure they are obtained before offering them for sale.

Quality Control and Planning

Establish procedures to ensure product quality and consistency throughout the supply chain. This might involve working with reputable suppliers, conducting regular product testing, and maintaining thorough documentation. From here, develop a plan outlining your approach to product safety, including processes for handling product recalls and customer complaints.

Provide Clear, Accessible Product Information

When you’re listing products, it’s easy to get caught up with their benefits and conveying why customers should take them through to checkout. However, it’s very important that you clearly describe any product features, specifications, and potential safety risks or warnings upfront.

8. Marketing Compliance and Accessibility

Beyond the core legal framework, ecommerce businesses must be aware of and in compliance with marketing and advertising regulations. As part of this, and to ensure your website can be reached by a wide audience, inclusive practices and accessibility must be factored in.

Advertising Regulations and Sponsorships

Understand and comply with regulations governing online advertising, such as those related to deceptive advertising, spam, and data privacy. Clearly disclose any sponsored content or influencer partnerships to maintain consumer trust and avoid deceptive practices.

Prioritize Inclusive Messaging

Be sure to avoid any perceived discriminatory practices by ensuring that your marketing and advertising campaigns are inclusive and do not show prejudice against any protected groups, based on any of the following factors:

  • Race
  • Religion
  • Gender
  • Disability

Ensuring Accessibility

Refer to web accessibility guidelines, such as the Web Content Accessibility Guidelines (WCAG), to ensure that your website is usable by those with disabilities. This might involve using clear and concise language, providing alternative text descriptions for images, and making sure that keyboard navigation is functional. You should also offer alternative formats for your content, such as audio descriptions for videos or transcripts for podcasts, to cater to individuals with diverse needs and preferences.

The Importance of Maintaining Ecommerce Compliance

Operating a compliant ecommerce business goes beyond just checking boxes. It’s about building trust, minimizing risks, and fostering a sustainable and successful business.

  • Boost Customer Confidence: By adhering to regulations and best practices, you demonstrate your commitment to ethical and responsible business conduct. This builds trust with your customers, encouraging them to choose you over competitors.
  • Reduce Legal and Financial Risk: Non-compliance can lead to hefty fines, lawsuits, and even business closures. Staying compliant significantly reduces these risks, protecting your business from financial and legal repercussions.
  • Increased Operational Efficiency: Operating within the legal framework creates a stable foundation for your business to grow. Compliance with regulations like data privacy ensures smooth operations and avoids disruptions caused by non-compliance issues.
  • Gain a Competitive Edge: In today’s competitive ecommerce landscape, demonstrating compliance can be a significant differentiator. Customers are increasingly conscious of responsible business practices, and being compliant can set you apart as a trustworthy and reliable choice.

Remember, compliance is an ongoing process, not a one-time task. Regularly review regulations, update your policies, and consult with professionals when needed to ensure your business stays compliant and continues to thrive.

Contact us today to learn more about how, as your merchant of record, Digital River can help ensure you’re on the right track to completing your own ecommerce compliance checklist and simplify your ability to reach new markets. For more news and insights, be sure to visit our Resources page.