11 Important e-Commerce law to Grow Your Online Business

General approach

  • the Civil Code of the Russian Federation (the “Civil Code”);
  • Federal Law No. 149-FZ “On Information, Information Technologies and Protection of Information” dated 27 July 2006 (the “Information Law”);
  • Federal Law No. 38-FZ “On Advertising” dated 13 March 2006 (the “Advertising Law”);
  • Federal Law No. 152-FZ “On Personal Data” dated 27 July 2006 (the “Data Protection Law”);
  • Federal Law No. 63-FZ “On Electronic Signatures” dated 6 April 2011 (the “e-Signature Law”);
  • Law of the Russian Federation No. 2300-1 “On Protection of Consumers’ Rights” dated 9 January 1996 (the “Consumer Protection Law”);
  • Federal Law No. 126-FZ “On Communications” dated 7 July 2003 (the “Communications Law”);
  • Federal Law No. 161-FZ “On National Payment System” dated 27 June 2011 (the “National Payment System Law”);
  • Federal Law No. 259-FZ “On Digital Financial Assets, Digital Currency and on the Introduction of Amendments to Certain Legislative Acts of the Russian Federation” dated 31 July 2020 (the “Digital Financial Assets and Currency Law”);
  • Russian Government Decree No. 2463 dated 31 December 2020 on rules for distance sales of goods (the “Distance Selling Rules”); and
  • various regulations on Internet sales and provision of financial products and services.

Key developments

Online sales and the development of e-commerce in general are key strategic initiatives in Russia. Despite an overall drop in the economy in 2020, the COVID-19 pandemic has fuelled a surge in online shopping in the country and put even the most remote of Russian locations on the e-commerce map. This has triggered a series of amendments to Russian legislation in this field, and the process is still ongoing.

The recent legislative trends include:

  • controlling the Internet;
  • introducing new rules on distance selling of goods, including for pharmaceuticals;
  • developing new state e-services;
  • spreading the use of e-signatures both by legal entities and individuals;
  • extending control over providers of online services, such as online cinemas, social media; and
  • developing the regulation of digital financial assets and digital currency.

Supervisory authority

There is not a single specific authority regulating e-commerce in Russia. Several authorities regulate this activity through their spheres of competence:

  • personal data protection and Internet, communications – the Federal Service for Supervision of Communications, Information Technology and Mass Media (“Roskomnadzor”);
  • advertising and competition – the Federal Anti-monopoly Service;
  • development of legislation in the communications sphere – the Russian Ministry of Digital Development, Communications and Mass Media (“MinTsifry”);
  • e-payments and national payment system – the Central Bank of the Russian Federation;
  • consumer protection, including in terms of Internet sales – the Federal Service for the Protection of Consumers’ Rights (“Rospotrebnadzor”); and
  • various regulations related to e-commerce, distance selling, etc. – the Russian Government.

Jurisdiction and applicable law for e-commerce disputes

The settlement of disputes arising from Internet transactions in Russia is governed by the conflict of laws rules contained in the Civil Code as well as procedural norms of the Commercial Procedure Code and the Civil Procedure Code.

Choice of forum

As a rule, the parties are free to subject their online transaction to any law and any dispute resolution forum, provided it has at least one foreign element that is connected to the respective law or jurisdiction, for example where:

  • a party to the transaction is a foreign entity;
  • the subject matter of the contract is located abroad or the services to be rendered under the contract are rendered abroad;
  • the server used for the transaction is located on the territory of a foreign country.

If the parties do not prescribe any applicable law, the law of the country most closely connected to their contractual relation will govern their relations.

Competence of courts in e-commerce disputes

Even where foreign law is applicable to the concerned relationship (whether pursuant to the choice of the parties or conflict of laws rules), several mandatory provisions of Russian law will still apply to the respective transaction.

Russian consumer protection legislation is especially relevant in this regard (please see the Consumer rights in e-commerce section below) and, according to established court practice, will apply in any situation where an online business targets Russian consumers even if it has no legal presence in the country.

Accordingly, Russian courts establish their jurisdiction in all disputes concerning e-contracts where a foreign entity offers goods to Russian customers over the Internet, even where such foreign entity does not have a legal presence in Russia or where its website is registered in a foreign domain zone. According to established court practice, regardless of the jurisdiction chosen by the parties, Russian courts may still assert their jurisdiction over a cross-border e-commerce dispute, for example when:

  • the defendant conducts business in Russia (e.g. where it has a company, branch or representative office registered in Russia, or its management body is based in Russia, or it has property in Russia, or even where its website is registered in the Russian domain zone (.ru) and/or targets Russian consumers);
  • performance under the contract takes place in Russia;
  • damage to property or an event causing such damage occurred on the territory of Russia;
  • seeking the protection of business reputation of a Russian entity;
  • unjustified enrichment took place on the territory of Russia;
  • domain names are registered in the Russian domain zone (.ru), or in foreign domain zones where the registrar is a Russian entity; or
  • in other cases where the dispute is closely connected with Russia.

Arbitration clause and arbitral awards

Russian courts tend to refuse to review a case if there is an arbitration clause in a contract.

In cases where a decision has already been adopted by a foreign arbitral tribunal, this decision will generally be enforceable through Russian courts pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, subject to a few exceptions.

Distance selling of goods

Distance selling of goods, including trade over the Internet, is generally governed by the relevant provisions of the Civil Code, the Consumer Protection Law and certain field-specific legislation.

On 1 January 2021, the Distance Selling Rules entered into force, replacing Russian Government Decree No. 612 dated 27 September 2007. The updated rules preserved most of the previously existing norms and introduced some novelties intended to more effectively protect Russian consumers, such as when an online seller receives:

General rules and exceptions

Distance selling of goods is defined as a sale and purchase agreement concluded based on the buyer’s acquaintance with the offered goods by means of catalogues, brochures, booklets, descriptions, pictures, etc. communicated via TV, post, phone, Internet or any other means excluding the buyer’s direct acquaintance with such goods when entering into the agreement.

The most popular type of transactions of this kind is trading over the Internet through online retailer stores, aggregator websites or special apps.

Online trade in Russia is regulated by the same set of rules as trade in person, subject to several exceptions.

Firstly, some goods cannot be sold remotely, such as:

  • alcoholic drinks;
  • tobacco products;
  • narcotic or psychotropic substances and poisons;
  • occult goods; and
  • weapons and other types of goods of limited civil circulation.

The Russian Government is currently discussing the legalisation of online trade of alcohol.

Secondly, certain goods can in principle be sold online, but they are subject to special regulation:

  • This includes the recently legalised online retail sale of over-the-counter drugs. Since April 2020, such trade is allowed for pharmacies holding a licence for pharmaceutical activities and a special permit obtained from the Federal Service for Surveillance in Healthcare (“Roszdravnadzor”). New rules introduced in May 2020 set the conditions for obtaining a special permit, requirements for information to be provided to consumers, the rules for the drugs’ delivery and return, etc.
  • Another example is the online sale of jewellery and other products made of precious metals or stones, where special rules apply as well.


The offer must contain complete and reliable information describing the offered goods as well as information about the seller, including its name, registration number and address.

A distance sales agreement is considered concluded from the moment the seller:

A product is recognised as not intended for distance selling where the sale of such product via a website or an app implies a preliminary negotiation of the conditions of the sales agreement, including negotiation as to the availability, name and quantity of the goods, and in other cases where the seller has clearly defined that the respective goods are not intended for distance selling. This rule allows the seller to avoid the application of distance selling rules to its business where such application is not desirable.

Delivery of goods

The means and term of delivery of the goods are defined by the sales agreement. If such term is not prescribed, the goods are to be delivered within a reasonable time, or within seven days upon receipt of the respective request from the consumer.

Goods can be delivered by third parties provided the seller informs the consumer accordingly.

The purchased goods are delivered to the consumer at the address specified by him/her. If the consumer is not present at the time of the delivery, his/her relatives or friends can accept the goods without any proxy, ID or other documentation.

Rejection of goods

The consumer has the right to reject the goods at any time before they are received regardless of whether he/she has paid for them.

E-contracts and e-signatures

Under Russian law, a contract may be concluded electronically if the parties to this contract use qualified electronic signatures or exchange electronic documents (e.g. scanned copies of signed documents).

  • The contract must contain a provision under which it may be executed by exchange of scanned copies.
  • To conclude the agreement by exchanging scanned copies by email, it is necessary to check that the documents were sent by the proper parties to the contract.
  • It is advisable for the parties to a contract to use the domain name containing their respective company names.

It is not possible to e-sign a contract when:

  • the contract is subject to mandatory notarisation and/or state registration (e.g. agreements on the alienation of participatory interests in the charter capital of a limited liability company); or
  • the law stipulates that the contract must be concluded by signing a single document (e.g. corporate agreements, agreements on the creation of a joint-stock company).

The contract is also deemed concluded if a party starts to perform the contract in response to a written offer (e.g. paying the amount provided for in the contract).

An e-signature is defined as a piece of information in electronic form that is attached or otherwise related to another piece of information in electronic form (information that is to be signed), and that is used to identify the person signing such piece of information.

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There are three types of e-signatures:

  • simple e-signatures (e.g. login and password, code from a message, email);
  • enhanced unqualified e-signatures;
  • enhanced qualified e-signatures.

The last two types of signatures differ from each other by the level of encryption protection.

Simple e-signatures

Documents signed by a simple e-signature will only be deemed legally binding if provided for by:

  • law (e.g. requests filed by citizens with state or municipal authorities using simple e-signature are deemed signed by a wet ink signature); or
  • an agreement on e-signature. That said, it is advisable to sign such an agreement using handwritten (wet ink) signature or qualified electronic signature.

Enhanced unqualified e-signature

  • it is created using e-signature creation data (a private encryption key) by way of encryption of information using an e-signature code which is obtained as a result of cryptographic transformation of information using an e-signature key;
  • it allows to identify the person who signed an electronic document; and
  • it allows to detect whether the electronic document was amended after it was signed.

Moreover, the document signed by an enhanced unqualified e-signature should contain a verification procedure.

Documents signed by an enhanced unqualified e-signature will only be deemed legally binding if its use is provided for by law or set forth in a contract, as with a simple e-signature.

Qualified e-signatures

Only enhanced qualified e-signatures are unconditionally equivalent to handwritten (wet ink) signatures.

This type of signature is the preferable type for tendering. Even though the Russian laws on tendering do not specify what type of e-signature should be used, an enhanced qualified e-signature is usually required to participate in the tendering process.

Russian case law on e-signatures lacks uniformity and, if a dispute arises on whether a document signed by some type of an e-signature is valid or not, it will be decided on a case-by-case basis.

E-payments and money transfers

In accordance with the National Payment System Law, electronic means of payment allow a client to transfer funds within the framework of cashless payment forms using information technologies (including payment cards) or other technical devices.

Digital currency

In January 2021, provisions of the Law on Digital Financial Assets and Currency come into force.

This law introduces a legal framework for the circulation of digital financial assets ( “DFAs”) and digital currency in Russia. The adoption of this Law is a continuation of the policy of gradual regulation of the digitalisation of the Russian economy. In the context of this policy, the concept of “digital rights” had been introduced into Russian legislation in October 2019 as a starting point for the further development of regulation in this area.

For the most part, the Law on Digital Financial Assets and Currency is devoted to regulating the circulation of DFAs, while in fact only one article addresses digital currency.


The Law defines digital currency as a set of electronic data (i.e. a digital code or designation) contained in an information system:

  • which is offered and/or may be accepted as a means of payment;
  • which is not a monetary unit of the Russian Federation, a monetary unit of a foreign state and/or an international monetary or account unit; and
  • where no one is liable to the owners of the electronic data, except for the operator and/or information system nodes that are only obliged to maintain the procedure for the issue of these electronic data and to make entries in or changes to the information system.

Restrictions on the circulation of digital currency

Russian residents are not able to use digital currency when making settlements (i.e. to accept or offer digital currency as consideration for goods, works or services). In addition, in Russia, it is prohibited to disseminate information about the offer and/or the acceptance of a digital currency as consideration for goods, works or services.

Thus, even though digital currency is defined as a “means of payment”, Russian residents are not able to use it as such. In practice, the circulation of digital currency in Russia amounts to operations for the transfer of digital currency from one owner to another using the Russian information infrastructure (i.e. using Russian domain names and network addresses, or using technical means or software and hardware complexes located in Russia).

Russian residents must declare their ownership of digital currency and their transactions with digital currency in accordance with Russian tax legislation. Otherwise, their claims related to digital currency will not be enforced in courts.

Consumer rights in e-commerce

  • The consumer has the right to reject the goods at any time before delivery and within seven days of delivery.
  • The consumer does not have the right to return goods that have individually defined properties if they can only be used by that consumer.
  • If the consumer rejects the purchase, the seller must refund the consumer within ten days of his/her claim all sums paid under the contract with the deduction of the cost of return shipping.

The rights of consumers in case of defects in the goods purchased online are similar to those of consumers when purchasing goods in person.

Failure to provide any information prescribed by law to the consumer may lead to seller’s enhanced liability for any damage caused to the consumer or his/her property. A consumer may also request the court to amend or terminate the contract if it contains terms that are unfair or unfavourable to him/her (including where the consumer was not given sufficient opportunity to renegotiate such terms).

Domain names

In Russia, domain names are not qualified as intellectual property objects. Therefore, unlike these objects, domain names cannot be licensed or alienated, instead they can be transferred via a registrar.

Domain names are registered and delegated to an organisation or an individual under an agreement with the relevant registrar. This process is not subject to specific legal regulation in Russia.

Key players

There are several accredited registrars of domain names in Russia having exclusive competence for local TLD .ru and those in Cyrillic (e.g. .рф, .москва).

There is also a Coordination Centre for TLD RU/РФ, which works as regulator and accreditation centre for registrars and technical support for DNS for national domains.

Domain names and trademarks

Domain names, as well as trademarks, are registered on a first-to-file basis. The existence of a domain name in LTD .ru/.рф or any other LTDs is not listed as a ground precluding registration of an identical or similar trademark. Vice versa, a domain name identical or similar to a trademark may be registered.

If a trademark similar to a domain name or vice versa is registered in bad faith and this registration is aimed at damaging a competitor, these actions may be considered as unfair competition.

The mere fact of trademark registration prior to registration of a domain name is not sufficient to prohibit the use of a domain name. Nevertheless, courts in Russia tend to take a favourable approach towards trademark owners. Therefore, when a trademark is registered, the burden of proof on the claimant is alleviated.

Domain name disputes

Even though domain names are not intellectual property objects, disputes regarding trademarks and domain names form a substantial part of intellectual property disputes in Russia.

Russia is not part of UDRP (the Uniform Domain Name Dispute Resolution Policy), and there is no similar alternative dispute resolution procedure in place. Therefore, domain name disputes are resolved by state courts.

Procedural legislation does not establish jurisdiction rules for domain name disputes. In the past, the courts took a conservative approach: disputes involving persons who are not individual entrepreneurs (e.g. if a domain name is registered by an individual) were traditionally resolved by courts of general jurisdiction.

In 2019, the Russian Supreme Court declared that all disputes related to breaches of means of individualisation (including domain name disputes arising from rights to trademarks or trade names) must be resolved in state commercial courts. This decision was considered as a positive shift on the Russian market.


Under the Russian Tax Code (Article 174.2), foreign companies that supply electronic services (“e-services”) to customers located in Russia must pay VAT.

E-services are services delivered over the Internet or another similar electronic network in an automated fashion with the use of information technology. E-services include the provision of rights to use online products such as (i) software (including video games, e-books, music and audio-visual content); (ii) advertising services; (iii) domain name registration and hosting services; and (iv) data storage, providing access to online search engines, etc.

  • the sale of goods and/or services ordered through the Internet where supply takes place without using the Internet;
  • the sale of or provision of rights to use software (including video games) on tangible media;
  • the provision of consulting services via email; and
  • services for providing remote access to the Internet.
  • for B2B provision of services: when an organisation is registered with the Russian tax authorities;
  • for B2C provision of services, when the consumer:resides in Russia;pays through a bank or an electronic payment operator located in Russia;uses a Russian IP address when obtaining an e-service; oruses a telephone number with Russian country code when obtaining an e-service.
  • resides in Russia;
  • pays through a bank or an electronic payment operator located in Russia;
  • uses a Russian IP address when obtaining an e-service; or
  • uses a telephone number with Russian country code when obtaining an e-service.

Neighbouring regulation

E-commerce is tightly connected with such fields as intellectual property, data protection and advertising.

  • the Intellectual Property chapter;
  • the Personal Data Protection chapter;
  • the Advertising Issues chapter.

The programme is supported through funding provided by the Government of Finland.

Key Issues Addressed:

  • Electronic Transactions and Electronic Signatures
  • Data Protection and Privacy
  • Consumer Protection
  • Computer Crime
  • Intellectual Property
  • Competition
  • Taxation
  • Information Security

Delivery of capacity-building training workshops

Training courses on the Legal Aspects of E-Commerce are available in English, Spanish and French. They are delivered through:

  • To enhance knowledge of e-commerce legal issues
  • To prepare lawmakers and government officials for the drafting of legal frameworks
  • To discuss e-commerce legislation harmonization within a region
  • Distance learning using the UNCTAD Train for Trade platform.
  • On site workshops to deepen understanding of complex legal issues

Assistance with preparing and enacting legal frameworks includes

  • Conducting inventories and reviews of legislation that affect the use of ICTs
  • Drafting legislation harmonized with regional and international legal frameworks
  • Validation round tables of national stakeholders for the public and private sectors to discuss and finalize draft legal frameworks
  • Briefing Parliamentarians to facilitate law enactment

Comparative regional reviews of e-commerce legislation harmonization aim to:

  • Assess the status of cyber-laws in a particular region by surveying the law reform process
  • Provide recommendations for further harmonization of legislation, where required
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Ecommerce Legals and Law

Ecommerce transactions should be legally straightforward. You get money up front for the sale, in return for delivery of a product as described within the timeframe specified. A standard set of terms and conditions should cover the vast majority of transactions.

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Your terms and conditions should outline that buyers are entering into a contract to when they purchase goods from your website. Outline the terms of delivery, shipping, refunds and payments, exclusions of liability and terms of use for your website. Finally, specify the choice of law and jurisdiction of wherever you’re based – this will shift the case to your own legal system, so you don’t find yourself negotiating some unknown foreign law interpreting your terms in the event of legal issues.

While most transactions will be fine, a not insignificant percentage of transactions will be fraudulent. Fraud occurs when a buyer uses false details or someone else’s payment information to make a purchase. By the time they are found out, they’ve already disappeared with your product, and you could be left footing the bill. Some fraudsters also order products, say they never arrived and demand a refund, or chargeback their credit cards once the receive the products they’ve bought.

This can be extremely damaging for your business, especially given the often slim operating margins. You can protect yourself from fraud to a certain extent, but you probably won’t be able to avoid being targeted if you reach any scale. Your best option is to keep a record of all transactions and refund behaviour and attempt to identify patterns that might give you a case against a particular customer. While expensive and uncertain legal routes are available, most ecommerce operators just take the hit and move on.

Choosing a reliable payment processor can help weed out the fringes of fraudulent activity, but you also need to remain vigilant and monitor what’s going on in your business if you want to stay one step ahead.

Ecommerce Shipping and Delivery Policy

A clear, defined delivery policy is a must-have, so that customers know when to expect their products and how their packages will be delivered. You will need to specify the expected delivery timeframes and costs, as well as detailed terms on any shipping promotions. A number of merchants use shipping discounts and promotions to encourage a higher average spend – for example, free shipping on orders over £200. Policies like this can help squeeze extra revenue into the bargain.

By making your shipping information clear on your product pages, and within your terms and conditions, you can prevent any problems from arising with disgruntled customers. This means customers are more likely to understand the shipping terms you offer, with the security of their agreement to your terms in the event of disputes.

Ecommerce Refunds Policy

Refunds are an important part of building trust with customers, and you will hamper conversions if you don’t recognise that refunds will sometimes be required. It is wise to be liberal in your refunds policy, and you must refund cancelled purchases within the statutory ‘cooling off’ period – 14 days. You can ask the customer to pay the cost of returns, and you are entitled to expect goods to be returned to you in a merchantable condition.

Accepting that refunds are a natural part of the business, and responding promptly in handling refund requests will help assure customers that you care, while ensuring you don’t end up shy of consumer selling regulation.

Include your refunds policy prominently on your website, and certainly within your terms and conditions so that buyers can see what they are getting into. By getting the customer to read agree to these terms and conditions before their purchase, you can be sure they understand and accept the terms of refunds beyond their statutory rights.

You can keep refunds low by using better photos on your product pages, improving the accuracy of your descriptions, and making sure your products are well packages and promptly despatched. Try to make it easy for your customers to keep your product, by limiting the potential reasons they could request a refund.

Ultimately, refunds can hit your bottom line, and this can become a problem as you try to scale your shop if you don’t keep a grip on the reasons your customers are refunding. Track refund activity and the reasons for refund requests, so you can work on getting the percentage down.

Protecting Your Interests

Terms and conditions are essential for protecting your business, and possibly your personal, interests when selling online. In an ideal world, you would never encounter disputes or difficulties in ecommerce. In the real world, it’s an absolute guarantee with scale. By taking care over drafting your terms and conditions, and consulting a lawyer where the budget allows, you can clearly set out the terms of business, and secure agreement from your customers at the point the contract of sale is created.

Standard Ecommerce Terms and Conditions

  • Information Commensurate with latest Consumer Contract Regulations: The latest Consumer Contract Regulations stipulate information that must be made clear to consumers purchasing online via your terms and conditions. These include your contact details, including clarification of your business identity, the products you sell, and how you can be contacted by your customers. This is not optional, so it pays to do your homework on what must be included when drafting up your terms and conditions.
  • Liability Limitations: Limited liability is a standard practice across most contracts, in a bid to limit any future claims that may arise from the transaction. There are some claims to liability you can’t contract away from – such as those causing death or personal injury – but broad exclusions of other types of damages can be effective in reducing your future obligations (and keeping legal costs to an absolute minimum).
  • Jurisdiction/Choice of Law: Under which laws will the contract of sale be interpreted? This matters particularly in ecommerce, where you may end up resorting to the lottery of legal systems when selling across the EU, or indeed the world, if you don’t seize the initiative.

Terms and conditions generators and templates are available, which model on some of the most common terms used in ecommerce contracts. Alternatively, for maximum protection, speak to a lawyer.

Ecommerce Data Protection

Data protection is an area of the law all website owners should be mindful of. If you intend to collect personal information about your website visitors, you will need to be registered under the Data Protection Act, and to handle your data in compliance with the law at all times.

You are not allowed to migrate information collected from your customers or website visitors outside of the EU, and you can only hold information relevant to the needs of your business. If a customer asks for their information to be removed from your records, or to be revealed to them, you are required by law to do so.

Failure to adhere to Data Protection laws can land you in hot water, with fines likely if you get taken to task. Be mindful of your responsibilities – it is helpful to keep up to date with legal goings-on relevant to the ecommerce sector, if you’re not engaging the services of a lawyer to manage this on your behalf. As with all matters legal and accounting, it’s best either way over time if you move to outsource.

When starting a small business ecommerce site, retail is one type business that many people lean toward.  While it may seem that the requirements for conducting retail business online are easier than those for a brick-and-mortar store, it’s important to know you still have rules, regulations and standards to comply with.

In the United States, the Federal Trade Commission (FTC) is the primary agency that regulates ecommerce activities. This includes regulations for a number of ecommerce activities such as commercial email, online advertising and consumer privacy.  Another organization that ecommerce site owners should become familiar with is the PCI (Payment Card Industry) Security Standards Council. This organization provides security standards and regulations for handling and storing your customer’s financial data.

Some of the important regulations you will need to learn about before starting your online retail business include protecting consumer privacy, handling customer data, collecting taxes and complying with online advertising regulations.  In this ecommerce regulations guide we discuss these four issues and provide details that every ecommerce site owner should know to comply with federal laws in the U.S.

Protecting Your Customer’s Privacy Online

Online privacy is a big issue as many ecommerce sites collect and retain personal information about customers. Some of the personal data you will likely obtain would include a customer’s name, address, email address, and possibly their credit card and other types of financial information. As the ecommerce site owner it is your responsibility to ensure this personally identifiable information is protected, and that when you collect such data you comply with federal and state privacy laws.

Online Advertising Compliance

Ecommerce site owners must know about the applicable laws for online advertising. Like traditional advertising for brick-and-mortar stores, online retailers must also comply with regulations when advertising online. The FTC regulations for advertising are designed to protect consumers and to prevent deceptive and unfair acts or practices.

How to Collect Taxes Online

When you shop at a store you pay tax on the purchase, and the Internet does not change this — but there are differences.

Have you ever noticed that some ecommerce websites charge you tax when you make an online purchase, while others don’t? The reason is because if a business has a physical presence in a state (e.g. a store or office), then it is required by law to collect state and local sales tax from customers.  However, if the business doesn’t have a “physical presence,” then collecting tax on purchases is not required.

This dates back to a 1992 Supreme Court ruling that said states cannot require mail-order businesses, and by extension, online retailers to collect sales tax unless they have a physical presence in the state.

For ecommerce site owners, the one thing you will have to research is how your state classifies a physical presence. In legal terms, this is called a “nexus,” and each state defines nexus differently.

Navigating sales tax laws can be difficult. To ensure you are in compliance with tax laws, it’s always best to contact your state’s revenue agency to ensure you have the correct information on taxation before starting your ecommerce venture.

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How to Handle Customer Financial Data

The PCI Security Standards Council is the organization — founded by a number of financial institutions including JCB International, MasterCard and Visa — that is responsible for the development and implementation of security standards for account data protection. Through its PCI Security Standards, the organization seeks to enhance payment account data security.

To achieve PCI compliance, an online retailer must meet all PCI DSS requirements. The PCI DSS standard is broken down into six milestones with a number of requirements to be fulfilled at each stage. The PCI Security Standards Council website offers this PDF, which is designed to help merchants to better understand the requirements. It is probably the best resource online to begin to understand what compliance entails.

There’s no question that meeting PCI compliance is a challenge for small business ecommerce site owners — and being certified as PCI-compliant is a time-consuming process.  One way that a small business can meet standards is to outsource PCI to a third party that has the experience and payment system to ensure your business meets PCI regulations.

Resources/Further Reading

The early days of eCommerce were a bit like the wild, wild west. It was uncharted territory, and everyone was doing everything they could to cash in on the craze. Unsurprisingly, eCommerce laws were quickly put into place in order to protect everyone involved in an eCommerce transaction. After all, this was no craze; in fact, eCommerce sales are expected to surpass in-store purchases in just three years!

What Is Ecommerce Law?

Ecommerce law is a set of legal issues that impact the online retail industry. Each type of eCommerce company must abide by certain laws and regulations, just like any other business, and failure to do so can result in legal issues and lawsuits.

While retail eCommerce giants like Amazon or Walmart, and service-based retailers like Uber and Lyft, undoubtedly have an army of eCommerce lawyers ready to tackle any challenge, it’s not as easy for small and medium-sized eCommerce businesses due to budgetary constraints. So, let’s take a look at some of the online business regulations that every eCommerce business needs to be aware of.

11 E Commerce Laws Every Business Needs to Know

It’s important that all eCommerce businesses consult with a lawyer familiar with eCommerce law, as well as an insurance agent, in order to protect themselves and their business. In the meantime, we’ve done our best to outline the laws and regulations you need to familiarize yourself with and ask a professional about.

Forming a Business Entity

Forming a limited liability company (LLC) is one of the most important things an eCommerce business can do for itself. When you form an LLC, you’re establishing a new business entity that’s legally separate from its owners. This protects the owners’ personal assets from being used to pay creditors should the company run into financial trouble.

So, if the LLC can’t pay its debts, the LLC’s creditors can go after the LLC’s bank account and other assets. However, the owners’ personal assets such as their home, vehicles, and bank accounts, can’t be touched. An LLC owner only risks the amount of money that has been invested in the business. As with anything, there can be exceptions, so it’s best to consult with a lawyer specializing in eCommerce law.

Paying Taxes

“Nothing is certain except death and taxes,” once said Benjamin Franklin. So, eCommerce businesses need to apply for a tax ID and look into whether they qualify for sales tax exemption and resale certificates. It’s important to remember that every state and country has different expectations and standards when it comes to taxes, so researching your target market is crucial.

For example, if most of your customers are in the US, you’ll probably want to list your process pre-tax as is common in the states. However, if your target market is Australia where shoppers are used to seeing post-tax prices, you’ll want to include tax in your display price.

Other eCommerce tax laws are based upon what you’re selling and where you’re selling from. Here are just a couple of examples:

  • If you’re selling clothing out of New York, clothing is taxed in your state.
  • Value-added tax (VAT) applies to all non-essential goods in Britain.
  • Items sold in plastic bottles in California have a $0.11 recycling fee, plus additional taxes.

This is just one of the many reasons why consulting with a tax professional can benefit your eCommerce business.

Choosing a Payment Gateway

How do you want to get paid after making a sale? There are a variety of payment gateways, but not all are created equally. Here are a few considerations when choosing your payment gateway:

  • Is it hosted or non-hosted?
  • Is it equipped with anti-fraud features?
  • Are there any restrictions on products?
  • Are there transaction, termination, monthly, or setup fees?
  • How do they handle payment processing issues, chargebacks, and holdbacks?

Using Trademarks, Patents, and Copyrights

Despite these words sometimes being used interchangeably, they’re all very different. Here is how the United States Patent and Trademark Office defines each.

  • Trademark: A word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.
  • Patent: A limited duration property right relating to an invention, granted by the United States Patent and Trademark Office in exchange for public disclosure of the invention.

Depending on the product or service you’re selling, you may want to apply for one or all of these. Even though it’s not necessary to do so, most eCommerce businesses will want to protect and control their intellectual property rights online. Even if you do not, you should at least check to be sure you’re not infringing on other company’s patents or trademarks; for example, if you sell mobile phone cases with an unlicensed Mickey Mouse on them, you’re probably going to get in some hot water with Disney.

Understanding Shipping Restrictions

What are you shipping? Some items are prohibited to be shipped, while others are only restricted by certain carriers (so, if UPS won’t ship your product, check FedEx, or vice versa). Most carriers highlight restricted items online. Some of the most commonly restricted products include:

For information on shipping internationally, view the Federal Trade Commission’s Electronic Commerce: Selling Internationally guide which covers taxes, duties, and customs laws.

Determining Inventory Size

You may be content with shipping products that are being stored in your garage or attic. However, your business could eventually become too large to legally run out of your home! If you’ll be holding a significant amount of inventory, you need to check your lease, deed, or zoning codes to see if there are any restrictions on running an eCommerce business from your home.

Stay in Business Compliance With Kitting Services

Focus on running your business—we’ll take care of order fulfillment, doing everything right the first time.

Understanding Age Restrictions

Without exception, all websites must comply with the Children’s Online Privacy Protection Act (COPPA). The regulation most likely to affect your eCommerce business states that you’re not allowed to collect any personal information from a child under the age of 13.

Obtaining Business Insurance

To protect yourself and your business from liability, you’ll want insurance for small businesses. We recommend speaking with a small business insurance provider to learn which would be best for your business, product, and location. Some insurance options you may want to consider include:

  • General liability, which helps cover your costs to respond to a claim that your business caused property damage or bodily injury.
  • Product liability, a must-have for high-risk products, like CBD, vapes, or medical devices.
  • Professional liability, which protects your business against malpractice, error, and negligence.
  • Commercial liability, which protects your business from financial loss should you be liable for property damage or personal and advertising injury caused by your services, business operations or your employees.

Licenses and Permits

Does your business need a license or permit? While most online businesses don’t need them, yours may, depending on where you’re located, what you’re selling, and the selling laws of that state or country. Legal Zoom is a great resource for learning about eCommerce regulations surrounding licenses and permits.

Following PCI Compliance

Let’s say your business suffers a data breach, and resulting investigations reveal that your processes were not PCI compliant. Then, you may be subject to thousands of dollars in government and payment card issuer fines and fees, and lawsuits and insurance claims may be brought against you for failing to comply with PCI standards. This can cost you money, customers, and ultimately, your business.

Following FTC Compliance

While we’ve done our best to outline the laws and regulations you need to understand as an eCommerce retailer, there’s no substitute for the advice of a professional. To keep your nose clean, we recommend reaching out to one to be sure all your i’s are dotted and t’s are crossed. And, if you’re looking for a fulfillment solutions provider like we mentioned earlier in this story, contact the experts at The Fulfillment Lab today! We offer far more than just storage space. It all begins with our warehouse kitting services.

В Беларуси ИП и ЮЛ вправе не платить НДС по услугам Upwork, т.к. с 21.06.2018 года UPWORK GLOBAL INC. зарегистрировался в налоговом органе Республики Беларусь.

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